Need MM Opinions: Opening new card for balance transfer?

abrewer5

Good morning!

I hope everyone had a happy Easter!

I currently have a large balance on my Discover card that I'm slowly working to pay down. It's currently at $1777 with a 19.99% interest rate. Which is insane! I'm paying roughly $30 a month in interest. That being said, I regularly receive credit card offers for a lower interest rate or even 0% with no balance transfer fees. My local credit union just sent me an offer for 2.99% for 9 months with no annual fee and no balance transfer fee. I've already bought a house a year ago so the credit inquiry won't interfere right now. So that being said, should I open a new card with a lower interest rate (or even 0%) and transfer the balance or should I keep it on my current card at a higher interest rate?

I've been working hard at paying off debt and a roughly $200/month debt payment (for 9 months) towards this card balance wouldn't be too hard to meet.

Thanks in advance!

formerlyGDaisy09

Hi! My husband and I used this approach and were able to pay off about $24,000 in CC debt interest free. H had built up that debt in his early 20s, I found out about it after we were engaged and were working on combining our finances. 

Having that deadline where the 0% interest promo expired gave us a deadline to have everything paid off by, we were paying about $900 a month towards the debt and it took us 26 months to pay it off.  H committed to never building up that debt again.  The only time I anticipate ever paying interest on a credit card again is if we have a true emergency (major house/car repair or some kind of medical event) that our e-fund won't cover.  Once H received the physical card in the mail he cut-it up so there was no temptation to spend any more. 

CuriousKiddosMama

I did this with a small debt once- it was actually a small student loan. Just make sure if you do transfer it, you can pay it off during the promotional time period. I would even be more aggressive at the beginning if you can just to build in an oops month if that's possible. So if you were going to pay $200, but can possibly budget it, maybe pay $250 or $225 that way you may even pay it off early.

formerlyGDaisy09

also remember you are going to pay a small fee (usually 3-4%) to transfer the balance.

KatieCutie05

1700 in CC debt isn't that bad. Is 200 the max you can pay? Make some more sacrifices and pay more toward it. The interest rate isn't your problem. The 1700 you owe is your problem. Just pay it off and don't go into CC debt ever again. Don't open another CC expecting it to solve your problem - you can't pay off debt with debt. Its not worth the trouble. Just pay it off and move on with your life.

formerlyGDaisy09

KatieCutie05 said:

1700 in CC debt isn't that bad. Is 200 the max you can pay? Make some more sacrifices and pay more toward it. The interest rate isn't your problem. The 1700 you owe is your problem. Just pay it off and don't go into CC debt ever again. Don't open another CC expecting it to solve your problem - you can't pay off debt with debt. Its not worth the trouble. Just pay it off and move on with your life.

Actually, now that I'm thinking more...I'd advise this over what I said earlier. Opening cards worked for H and I...but that was for $24,000, nearly 15 times what you're talking about. H and I were actually prepared to take the last few thousand from our e-fund to just be done with it. we're now putting the money we were using to make CC payments back into the e-fund to replenish it. 

If you can make a couple $500 payments and just be done with it that's better than transferring it and dragging it out. you're going to pay $50-70 in transfer fees anyways...so paying the interest for a few more months if you can pay more agressively is about the same.

abrewer5

Gdaisy09 said:

KatieCutie05 said:

1700 in CC debt isn't that bad. Is 200 the max you can pay? Make some more sacrifices and pay more toward it. The interest rate isn't your problem. The 1700 you owe is your problem. Just pay it off and don't go into CC debt ever again. Don't open another CC expecting it to solve your problem - you can't pay off debt with debt. Its not worth the trouble. Just pay it off and move on with your life.

Actually, now that I'm thinking more...I'd advise this over what I said earlier. Opening cards worked for H and I...but that was for $24,000, nearly 15 times what you're talking about. H and I were actually prepared to take the last few thousand from our e-fund to just be done with it. we're now putting the money we were using to make CC payments back into the e-fund to replenish it. 

If you can make a couple $500 payments and just be done with it that's better than transferring it and dragging it out. you're going to pay $50-70 in transfer fees anyways...so paying the interest for a few more months if you can pay more agressively is about the same.

This is great advice if I could afford to make $500 payments, but at this point I can't. If I could I wouldn't have the debt at all.  I don't use the card anymore, and definitely don't plan to get into anymore credit card debt, I've learned my lesson.  

My thought process was to put more towards the actual balance of the card rather than interest. In 9 months I'd pay $270 towards interest that could have went towards paying down the card instead. I'm only looking at cards that have no balance transfer fees, so as far as that fee goes there shouldn't be an issue.

Maybe once my wedding passes (in 25 days, thank god) I'll have a little more money on the side to throw at it.

Thanks for the advice. I guess I'll just keep the discover card and continue to pay interest on it.

brij2006

First I would call in and negotiate the interest rate with your current card.  You can usually get them down to around 10%.

Then I would take every CC and cut them up. Be done with them altogether and never ever use them again.

I'm also going to agree with the others that the interest rate isn't the problem.  It's the debt itself that's on the card.  Put together a very strict written budget and tackle it intensely.  Also, put any wedding money toward it to get the card paid off and start your married life without CC debt.

Feel free to post your budget here.  Everyone is great at seeing where things could be cut or give ideas on how to manage it a little better so you can get rid of this debt ASAP.

formerlyGDaisy09

abrewer5 said:

Gdaisy09 said:

KatieCutie05 said:

1700 in CC debt isn't that bad. Is 200 the max you can pay? Make some more sacrifices and pay more toward it. The interest rate isn't your problem. The 1700 you owe is your problem. Just pay it off and don't go into CC debt ever again. Don't open another CC expecting it to solve your problem - you can't pay off debt with debt. Its not worth the trouble. Just pay it off and move on with your life.

Actually, now that I'm thinking more...I'd advise this over what I said earlier. Opening cards worked for H and I...but that was for $24,000, nearly 15 times what you're talking about. H and I were actually prepared to take the last few thousand from our e-fund to just be done with it. we're now putting the money we were using to make CC payments back into the e-fund to replenish it. 

If you can make a couple $500 payments and just be done with it that's better than transferring it and dragging it out. you're going to pay $50-70 in transfer fees anyways...so paying the interest for a few more months if you can pay more agressively is about the same.

This is great advice if I could afford to make $500 payments, but at this point I can't. If I could I wouldn't have the debt at all.  I don't use the card anymore, and definitely don't plan to get into anymore credit card debt, I've learned my lesson.  

My thought process was to put more towards the actual balance of the card rather than interest. In 9 months I'd pay $270 towards interest that could have went towards paying down the card instead. I'm only looking at cards that have no balance transfer fees, so as far as that fee goes there shouldn't be an issue.

Maybe once my wedding passes (in 25 days, thank god) I'll have a little more money on the side to throw at it.

Thanks for the advice. I guess I'll just keep the discover card and continue to pay interest on it.

Great advice from @brij2006, you can probably get them to lower their interest rate. Yes, use the money from your wedding to pay it off. 

sounds like with out wedding spending you might have extra to throw at the CC(25 days is not that far off to ustify opening another CC).  whe H and I started we didn't have $900/month to throw at it, but from budgeting on groceries, not going out to eat as often, limiting ancelary shopping, calling and asking about lower rates on our homeowners and car insurance, canceling cable, and taking a bunch of other steps we were able to come-up with several hundred dollars a month that had previously been going to other things we could live without. It makes us appreciate those things more now. 

abrewer5

Gdaisy09 said:

abrewer5 said:

Gdaisy09 said:

KatieCutie05 said:

1700 in CC debt isn't that bad. Is 200 the max you can pay? Make some more sacrifices and pay more toward it. The interest rate isn't your problem. The 1700 you owe is your problem. Just pay it off and don't go into CC debt ever again. Don't open another CC expecting it to solve your problem - you can't pay off debt with debt. Its not worth the trouble. Just pay it off and move on with your life.

Actually, now that I'm thinking more...I'd advise this over what I said earlier. Opening cards worked for H and I...but that was for $24,000, nearly 15 times what you're talking about. H and I were actually prepared to take the last few thousand from our e-fund to just be done with it. we're now putting the money we were using to make CC payments back into the e-fund to replenish it. 

If you can make a couple $500 payments and just be done with it that's better than transferring it and dragging it out. you're going to pay $50-70 in transfer fees anyways...so paying the interest for a few more months if you can pay more agressively is about the same.

This is great advice if I could afford to make $500 payments, but at this point I can't. If I could I wouldn't have the debt at all.  I don't use the card anymore, and definitely don't plan to get into anymore credit card debt, I've learned my lesson.  

My thought process was to put more towards the actual balance of the card rather than interest. In 9 months I'd pay $270 towards interest that could have went towards paying down the card instead. I'm only looking at cards that have no balance transfer fees, so as far as that fee goes there shouldn't be an issue.

Maybe once my wedding passes (in 25 days, thank god) I'll have a little more money on the side to throw at it.

Thanks for the advice. I guess I'll just keep the discover card and continue to pay interest on it.

Great advice from @brij2006, you can probably get them to lower their interest rate. Yes, use the money from your wedding to pay it off. 

sounds like with out wedding spending you might have extra to throw at the CC(25 days is not that far off to ustify opening another CC).  whe H and I started we didn't have $900/month to throw at it, but from budgeting on groceries, not going out to eat as often, limiting ancelary shopping, calling and asking about lower rates on our homeowners and car insurance, canceling cable, and taking a bunch of other steps we were able to come-up with several hundred dollars a month that had previously been going to other things we could live without. It makes us appreciate those things more now.

Thanks for the advice. I'm on the phone with them now to see if I can get my rate reduced.

 

Xstatic3333

That's great you're calling about your rate!

In general, I think balance transfers can be okay as long as 1) you've done your homework and can definitely pay it off during the promo period if they'll charge back-interest, 2) you haven't built new debt in at least several months, 3) you've done the homework and the money saved outweighs any fees, and 4) you don't have any big credit checks coming up. I think you pass my test! However, PPs' advice to try a tighter budget first is also very sound. If you post yours we'd be glad to help!

I used a balance transfer to help pay off about $2000 of $7000 in CC. There were a few unusual things in my case though. The offer was from a card I already had open, but wasn't using. Also, no back-interest was charged on any remaining amounts, and the after-promo rate was only 9%, not too bad for a CC. It made sense in my situation. I was in school at the time, and could only put about $100/month to the debt.

HoneyBee973

With a low balance like yours, I would not open a new CC and do a balance transfer. Definitely see where you can cut back, and put extra towards the pay off.

formerlyGDaisy09

Xstatic3333 said:

That's great you're calling about your rate! In general, I think balance transfers can be okay as long as 1) you've done your homework and can definitely pay it off during the promo period if they'll charge back-interest, 2) you haven't built new debt in at least several months, 3) you've done the homework and the money saved outweighs any fees, and 4) you don't have any big credit checks coming up. I think you pass my test! However, PPs' advice to try a tighter budget first is also very sound. If you post yours we'd be glad to help! I used a balance transfer to help pay off about $2000 of $7000 in CC. There were a few unusual things in my case though. The offer was from a card I already had open, but wasn't using. Also, no back-interest was charged on any remaining amounts, and the after-promo rate was only 9%, not too bad for a CC. It made sense in my situation. I was in school at the time, and could only put about $100/month to the debt.

this was how we paid off the last $5000 of the $24000 mentioned above.  one of my cards offered 0% interest for 18 months...if you already have other cards it might be worth seeing if they offer something similar.