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Using a balance transfer wisely.....loan calculators

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Peaches
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Using a balance transfer wisely.....loan calculators  Reply with quote  

Hi everyone

I have a personal loan with Discover for 17,500 at 18%, Min payment is $550 and I usually pay $600

Decided to try to balance transfer it away to some 0% intro rate and was able to aplly for get two cards with 0% rates.

One is for 0% until 10-13 with a 3% fee $6,900 limit
Other is 0% until 5-14 with 3% fee 10,000 limit.

This seems like a no brainer to me to transfer that balance of the Discover loan to the CCs and work like heck to make sure they are paid of before the rate teaser expires.

Any pitfalls that I am not foreseeing that anyone can advise on?

Also, I am currently on a debt elimination strategy using this calulator.
http://download.cnet.com/Debt-Reduction-Calculator-for-Excel/3000-2057_4-10770226.html

The issue is I can only sort by highest interest first, lowest, or custom.

Anyone know of one that will consider introductory rates and account for the expiration?

Thanks for the help in advance
Post Mon Feb 11, 2013 10:10 pm
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oldguy
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quote:
The issue is I can only sort by highest interest first, lowest, or custom.
Anyone know of one that will consider introductory rates and account for the expiration?


A calculator won't be of help, there are only two loans and the rates are the same on both, ie 3% BT and 0% interest..

But what you are planning won't work, you would need to pay over $1200/mon to finish by 5/2014. "Working like heck" won't double your available income - if you could do that you wouldn't have taken the personal loan to start with.

What is the default rate? Is it much more than your current 18%. If not you could take the two cards, enjoy the lower rates for up to 14 months, and then start paying around 18% again.
Or, if the default rate is higher, 20% or 25%, maybe you could take only the 5/2014 $10k loan, that's $714/mon for 14 months, and get that behind you whilke keeping $7500 at 18% on your personal loan?
Post Mon Feb 11, 2013 11:15 pm
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Peaches
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The rate on the 6900 card will default to 7.24% after Oct 2013
The rate on the 10000 card will default to 14.9% after May 2014

I can pay the $1200/mo.

It just seems that I should realize a more substantial savings over the next couple years from going from 18% on $17500 to 0%
Post Tue Feb 12, 2013 12:49 am
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oldguy
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The rate on the 6900 card will default to 7.24% after Oct 2013
The rate on the 10000 card will default to 14.9% after May 2014


OK, good deal! Start paying extra on the $10,000 and default to 7.24% on the $6900 - that avoids the 14.9%.
Post Tue Feb 12, 2013 1:53 am
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Sabu72
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I think your plan is a decent one and can work (although understand that carrying debt as high as your credit limit can lower your credit score...like using $10,000 against a $10,000 limit). My concern with your plan is whether you are being honest with yourself. If you can afford $1200/mo, then why are you only paying $50 more than your current payment on the loan? The problem with going from a fixed payment to using a balance transfer is people get lazy with them - suddenly something comes up and they stop paying that $1200/mo that they planned, and go back to the $600/mo - or worse, missing a minimum payment on one of the cards and winding up with insane interest rates as a result.

One giant pitfall to keep in mind is this - most of these cards have now begun a practice of charging full interest starting from the DAY you MAKE A PURCHASE if you use it while you are carrying a "teaser rate" balance transfer balance. In other words, you lose your grace period on purchases until the teaser rate balance is paid off. Whatever you do, don't use those cards for anything else while you are paying them off - not even for a coffee & a donut!!

Also, not sure what cards you applied for, but keep in mind that you cannot pay a Discover Loan with a Discover Card balance transfer.

If you really are committed to it and make those payments as planned, it is worth it.
Post Tue Feb 12, 2013 5:19 pm
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