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Balance Transfer 0% APR

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middlefield
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Joined: 24 Jan 2013

Balance Transfer 0% APR  Reply with quote  

I am a student and in the process of trying to find a second job. For years I have carried a zero balance on my credit cards, but I don't have any savings right now to compensate for the balance that my regular paycheck doesn't cover. I don't like carrying a balance as it is a slippery slope of overspending, and I have a high interest rate (14%). I have any outstanding balance of about $1000 that is going to take me a few months to pay off, even with a second job.

The other day Capital One (who is who I have one of my cards with) offered me a "Transfer and save with a 0% APR for 12 months" offer.
These were the conditions:
Transfer your higher-rate balances to your Capital Oneģ account for a quick and easy way to save. Your rate will stay at a 0% APR for 12 months. And if you havenít paid off your balance after 12 months, the rate on your remaining balance will simply go to your existing purchase rate, currently 14.90%. This is a variable rate, as previously disclosed.
Youíll pay a balance transfer fee of 4% of each transaction amount.

Is it worth me taking them up on this offer until I get my finances back on track? Or should I just keep the balance on my credit card and chip away at it? Will I be able to transfer a balance from my other credit card to it? Does this mean I would be signing up for a whole new credit card? Will it effect my credit score?

Thank you so much for your help!
Post Fri Jan 25, 2013 12:16 am
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Wino
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It depends on how long it takes you to pay off the $1000.

You are going to pay $40 to transfer the money. If you assume equal monthly payments to pay it down, you'd have to pay it down in 5 months to come out ahead by not transfering ($207.51 per month), for a total interest payment of $37.56. If you pay it off in 6 months ($173.98 per month), your interest paid will be $43.91.

So, how much can you throw at the $1000? I have put the spreadsheet here:
https://dl.dropbox.com/u/97169430/TransferFunds.xlsx

You can change anything in the yellow to determine the costs. I can "fancy it up" some if you like, but it will allow you to determine whether a straight transfer is worthwhile.
Post Fri Jan 25, 2013 3:34 am
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middlefield
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Cash: $ 2.35

Posts: 11
Joined: 24 Jan 2013

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Thank you so much! It seems like it probably isn't worth the hassle of switching it over. That is a great spreadsheet I have saved it on my computer for future reference! Very Happy

I'll probably be able to put a couple hundred to it next month, I'm just afraid of it growing and growing but I stepped back and took a look at my finances and I think I can get it under control in under six months. I am signed up to substitute teach so that will be some extra money coming in too!
Thank you again!
Post Sun Jan 27, 2013 7:20 pm
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