Your Oppo opinion please 

"zeontestpilot" (zeontestpilot) 09/30/2015 at 06:30 • Filed to: Opinion

0

47

So, my wife and I have a credit card that is at its limit, and has been for a while. We’re slowly paying it off, but a good chunk of it is interest. MrsZtp suggested we get a newer card to pay off the old balance, then pay off the newer card that won’t have any interest. Has anyone done that here? Is it even recommended?

I’m not too comfortable with the idea of getting a new card, and I know the idea of transferring the balance and paying it with no interest is attractive, but my gut says it’s a bad idea (not sure why it says that though). I’m a bit content with how things are because we are currently stable with our costs/spending. Adding another credit card to the mix might upset that balance, so naturally I’m being super cautious.

So oppo, has anyway here paid off a old credit card balance with a new card? I’m looking for opinions and insight. Thanks.

Edit: I forgot to mention, we haven’t used the old card in a while. And we mainly used it for expensive purchases that were rational or something that needed to be fixed adapt, like the car.

CalzoneGolem > zeontestpilot 09/30/2015 at 06:44

1

Ok, but then your new card would start getting interest and then you’d have to just pay that one off?

You don’t think you’d max the old card out again and then just end up with twice the debt?

JGrabowMSt > zeontestpilot 09/30/2015 at 06:51

8

Dont. Stop using the card and make higher payments.

I know its not the most detailed or best nswer, but credit cards are complicated beasts.

Using a new card to do that could work, but the only time you should is when you can get some form of rewards or a significantly lower interest rate, which Im not sure would happen in todays market.

zeontestpilot > JGrabowMSt 09/30/2015 at 07:01

0

I forgot to mention, we haven't used the card in a while. It's was for emergency costs really, like every time the other cruiser broke down.

zeontestpilot > CalzoneGolem 09/30/2015 at 07:03

0

That’s why I’m hesitate, I realized that as well. But I wasn’t sure if there was a second side of the coin that I might of missed.

yamahog > zeontestpilot 09/30/2015 at 07:05

3

How long will it take you to pay off the balance? Discover is constantly running 0% interest balance transfer promotions. I would only think it was an OK idea if I could pay off the transferred balance within the promotional interest free period without accruing excessive fees. Gonna have to sit down with a calculator and figure out what will work.

davedave1111 > zeontestpilot 09/30/2015 at 07:10

0

I don’t know about how it might affect your credit rating in the US, but that’s a completely normal, even recommended, thing to do here.

http://www.moneysavingexpert.com/credit-cards/b…

zeontestpilot > yamahog 09/30/2015 at 07:13

0

No idea, we’ve been paying for it for a while. She has a card application on my dresser, I'll have to check what it is.

CalzoneGolem > zeontestpilot 09/30/2015 at 07:13

1

The best you could do is a new card with a lower interest rate or maybe a period of reduced or no interest.

zeontestpilot > davedave1111 09/30/2015 at 07:14

0

I just don't want any more debt. That's my end goal. But currently im not getting into more debt (ignoring interest), so that's good too.

random001 > zeontestpilot 09/30/2015 at 07:15

2

I can tell you from much experience that this is not a bad idea. Try the Chase Slate card for starters. I was laid off for 8 months, and got some CC debt built up from just living. When I got a job, it was clear that paying the balance with the interest was going to be very rough. I got a new card with a 0% transfer interest for 18 months, made a plan to make sure it was paid off in 18 months, and 6 months in things are still on track.

That said, all my credit cards now live in a locked box. I take one out a month, buy groceries on it, and pay it off to keep them active, but then it goes right back in the box. So far, this has been a great plan, but locking them in a box has been a necessary step in the whole process.

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > zeontestpilot 09/30/2015 at 07:21

2

Call your current CC and ask for a lower interest rate. Most are willing to do that so long as you keep making payments.

JQJ213- Now With An Extra Cylinder! > zeontestpilot 09/30/2015 at 07:54

2

Just be careful because sometimes the cards have crazy hidden balance transfer fees. On occasions, these fees can be higher than if you just paid the original card off.

Although opening the new card may look better for your credit score, typically its best to just pay down this older card a bit faster...

Biggus Dickus (RevsBro) > zeontestpilot 09/30/2015 at 07:56

0

r/personalfinance

OPPOsaurus WRX > zeontestpilot 09/30/2015 at 08:12

1

We did that. It works. Think of where the money is going. If you pay $300 a month, on your current card probably $250 of that is interest. Say you have $5000, at that rate, it will take 100 months ($50 goes to balance) to pay it off. If you switch and pay $300 a month straight to the balance, it will take 17 months to pay it off. The thing to watch is that after the free period is up the interest rate is high.

The other thing that is helping is that I got a new job. The old job wasn;t meeting the bills and we used the credit card on a daily basis. Now that I dont work for a cheapass, we dont use the CC.

zeontestpilot > random001 09/30/2015 at 08:13

0

Thing is, we use it for emergencies or big purchases that need to be handled asap. Would this plan work with that?

OPPOsaurus WRX > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) 09/30/2015 at 08:14

0

I tried that, I had been with them for 10+ years and they said see ya later.

zeontestpilot > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) 09/30/2015 at 08:14

0

Didn't know you could do that, I'll give it a shot.

Short-throw Granny Shifter is 2 #blessed 2b stressed > zeontestpilot 09/30/2015 at 08:15

3

Like the other commenters said, if you can use a new card to defer then lower you interest rate, it would be foolish not to. Every basis point reduction in your interest rate represents real money that you will save.

Do what you need to do to get that debt paid down. Credit cars debt is a crap shoot that you don’t want to go down for too long.

zeontestpilot > JQJ213- Now With An Extra Cylinder! 09/30/2015 at 08:16

0

Didn't think of that, good point though.

zeontestpilot > Biggus Dickus (RevsBro) 09/30/2015 at 08:16

0

What's that? A Reddit page or something?

jariten1781 > zeontestpilot 09/30/2015 at 08:17

2

If you do it I suggest you deliberately destroy the physical cards. That stops it from being easy to reach for in ‘emergencies’ (which aren’t typically as dire as we think they are in the moment).

miadaman? yes please > zeontestpilot 09/30/2015 at 08:24

1

It’s a good strategy as long as you have the discipline to use it only for its intended purposes. Many people go down this route and end up feeling so secured (“I can always apply for another card”) that their spending habit regress back to pre-debt days.

If the debt is a result of your own financial mistakes and you do not have someone oversee your spending, I would recommend to stay with 1 card (to learn a harsh lesson if anything). If you have a trusted friend/adviser that has intimate knowledge of your financial health, this is not a bad way to go.

Either way, you need to create a repayment plan on paper and as soon as you find yourself deviate from it, do a review and stay the course. In addition, look into getting a personal line of credit. I’m not sure whether you’ll get approved but LOC have much lower interest rate than CC.

Good luck!

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > OPPOsaurus WRX 09/30/2015 at 08:29

0

Wow. What a bunch of dicks.

yamahog > zeontestpilot 09/30/2015 at 08:30

2

Yea, without getting into specific numbers, if you are able to transfer the debt and pay it off entirely during the interest free period (even if you have to use slightly higher payments), that is ideal. If you can’t pay it off in full during the interest free period, then you need to start crunching numbers with interest rates (there are some online calculators out there to help) to determine if you can pay down enough interest free to make it worth transferring vs sticking with your current card and rate.

Wobbles the Mind > zeontestpilot 09/30/2015 at 08:34

3

Go to your bank or credit union and request an unsubsidized loan for any debts you would like to lump together. If you have this credit card and maybe some rewards cards with balances, they will pay those off (you will need to bring in a current statement for all accounts).

Doing this leaves you free of card debts, guaranteea you pay everything off in 3 or 4 years depending on the term you decide on. Your credit score will also shoot up substantially 30 days after. I went from a 675 to 775. I did this in April and am still clear on my cards. The boost in score also made the providers “upgrade” my accounts to higher rewards terms, larger credit lines, and so on.

PS9 > OPPOsaurus WRX 09/30/2015 at 08:35

2

Say you have $5000, at that rate, it will take 100 months ($50 goes to balance) to pay it off.

This bit of fuckery right here is why I do not deal with credit cards.

Tripper > zeontestpilot 09/30/2015 at 08:39

3

Get the 0% card, anyone telling you not to has not done the math. If you have a card with a 20% apr and a 2k balance, you can kiss $32 of whatever payment you make that month goodbye.

If you flip it to a 0% card you will probably pay something like 1-3% to transfer the balance, but that is it. Divide the balance up by the number of months you have to pay it at 0% and pay that amount. If it is a high balance and your credit is good, you might want to think about a personal loan to get it paid off.

gogmorgo - rowing gears in a Grand Cherokee > zeontestpilot 09/30/2015 at 08:39

1

I tried that once. Now I have TWO credit cards at or near the limit.

Basically what happened is I was able to transfer about half my balance to the new card, which was going to be interest free for eight months. Then I got distracted during exam period and made a payment one day late, which brought down the wrath of the interest gods.

If you can afford it, make payments that are bigger than the minimum. The smaller the total balance, the less of your money gets burnt in interest. Also avoid using it, even in emergencies, because then all the progress made in paying it down just goes away.

zeontestpilot > jariten1781 09/30/2015 at 08:44

0

The emergencies we used it for were mostly when the car kept breaking down, our only car. It added up quickly.

The only thing we used it willy nilly on was two iPhone 4s, back when we first got the card a couple of years ago, so we could built credit. We then quickly got that paid off.

I forgot the card is in my wallet half the time, I'm more of a debit card person.

zeontestpilot > miadaman? yes please 09/30/2015 at 08:54

0

Most of the card was spent on car related things; like new tires (they were physically dead) and car repairs (with one car, you need it working). But the car kept breaking down, so more repairs were needed.

We have a 2nd car now, because the first had so many problems.

I dislike the card I really do, but it’s best for emergencies. It’s why I’m here though, because I’m extremely hesitant to just get a new one. But I’m keeping an open mind on the subject, especially from people with more experience then me.

zeontestpilot > gogmorgo - rowing gears in a Grand Cherokee 09/30/2015 at 09:05

0

My emergencies consist of getting my car fixed so I can use it again. We have a 2nd car now, so that alleviates some issues.

I believe we are paying above the minimum amount. My wife deals with paying the bills, since she’s home more than me.

davedave1111 > zeontestpilot 09/30/2015 at 09:10

0

Well, note the 6 key points they have on that site - two of the six are effectively ‘don’t borrow more’.

miadaman? yes please > zeontestpilot 09/30/2015 at 09:13

0

Not to worry at all, financial awareness are not taught in school so it is great that you are taking actions. I would look into opening a personal line of credit, it serves the same purpose as credit card but with much lower interest rate. Look into both secured and unsecured LOC as well as interest only option (make sure you understand the differences). Be honest with your bank adviser and tell him you want to use the LOC to lower your interest payments, as long as you can demonstrate that you are able to make steady payments back, I don’t see why it would be an issue.

On a related note, things like tires and repairs should be budgeted in your regular spending. It’s not recommended to consider them as emergency because they are expected costs of owning cars. Having them there will just eat into your actual emergency funds (for instance, if you were to get into an crash and want to stay off insurance’s books).

Tripper > zeontestpilot 09/30/2015 at 09:18

1

This is not directly related to your issue but I feel compelled to warn you and anyone else reading about 0% “store” credit cards. I got sooooo fucked by one. A lot of times furniture stores, best buy etc... will offer credit cards for large purchases with differed interest. Any of you with school loans already know all about this. With differed interest, when the promotional period runs out you get hit will the full interest rate on the remaining balance.

I was not aware that this was the type of deal that I signed up for when I financed half of my fiancees engagement ring. I had been saving up to pay the balance just before the promotional period ran out, but I was waiting for a check to come in so I figured I would pay it a few days after the promotional period had ended and then try to negotiate my way out of paying what I thought would be around $100 in interest...I went to check my balance hoping to see a balance of $0.00. To my dismay the new balance was $2,400!!!

I was able to negotiate that amount down to $1,700 but still! I took a $1,700 hit because I was a dumb dumb dumb stupid idiot and did not ask any questions as I usually do when I make a large purchase.

I have to stop here because I’m getting pissed off at myself all over again haha. Moral of the story be careful when you finance that TV/Bedroom Set/Engagement ring, or just don’t!

OPPOsaurus WRX > PS9 09/30/2015 at 09:21

0

yea but if you need bread milk and a new engine, you dont have many options if you bank account is $1.25. This is the one and only reason I left my previous job.

OPPOsaurus WRX > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) 09/30/2015 at 09:22

0

yep. when they have a million customers, they dont care if one of two bail on them - Bank of America

Meatcoma > yamahog 09/30/2015 at 09:27

1

This. If you can pay it off in the promotional period is the only way this would work to your benefit. Unless the int rate is significantly lower as well after the promo period.

Camshaft Chris: Skyline/McLaren/Porsche Fanboy > zeontestpilot 09/30/2015 at 09:27

1

It really depends on a few things:

1). Are there any transfer fees?

2). How long will the no-interest period last?

3). What will the interest rate be once the no-interest period is up?

4). Are there any annual fees for having that card?

5). Are there any monthly fees for not using the card?

So really we’d have to know all the details of the offer before we can really give you the best advice on it. But if the card offer is solid, then I say it’d definitely be a good idea if you think you can get it paid off within that no-interest period.

random001 > zeontestpilot 09/30/2015 at 09:33

1

It does. The best bet is to not use it, but there are times. Like, for instance, I had to pay up front for this semesters tuition. I will get reimbursed, so I carry the balance, make the payment, pay it off when I get reimbursed. The key is that every time you make a purchase, you set a goal. Say you have to buy new tires. $800. Pick how long you want that to sit on the CC, say 8 months, so you pay $110 extra on top of the amount you need to pay off the original amount in the 18 months. That’s what I’m doing. So far, so good.

The key is that there’s a plan in place, you have the income to cover it, and you can limit the necessary large purchases to one at a time. Buy it, pay it off, buy the next one, pay it off, etc. If you can’t do that, the better idea is to lock up the cards, stash money away in a savings account, and only use that for big purchases. That’s the best way, but I know not always reasonable.

zeontestpilot > Camshaft Chris: Skyline/McLaren/Porsche Fanboy 09/30/2015 at 10:18

1

Still, you gave me some stuff to look into, so good points.

nermal > zeontestpilot 09/30/2015 at 10:31

1

For balance transfers, you need to read the fine print. Most of them charge a one-time fee to do the transfer, which can be up to 5%. So, on a $10k balance, that’s $500 right up front. Now you should save that over paying 10%+ interest over the next 12 - 18 months.

I’m a fan of either cutting spending to deal with debt. What are some spending habits that you have that can be cut back on? Food and drink is always easy. Instead of going out to eat and spending $50, cook a meal at home for $25. Doing that every weekend will save you $100 / month, which you can put towards your debt. Also, if you do go out, don’t buy drinks. $20 will buy you a bottle of liquor of your choice, or 4 (or less) drinks at a bar or restaurant.

Camshaft Chris: Skyline/McLaren/Porsche Fanboy > zeontestpilot 09/30/2015 at 10:51

1

Glad I could help. I’m going through a bit of a similar situation right now where we’re paying off our current credit card, but just opened up a new one with a whole new plan for our finances. So I’ve done quite a bit of research and studying on how to not get screwed over with a credit card, hahaha. We’re trying to buy my wife a car so that we can have two reliable family cars instead of one reliable car and one car that just gets me to work and back. I’m only 26, so my credit is not established enough to get a decent loan on my own and not get murdered on the interest rate. So we’re going to use the new card for all of our monthly bills, groceries, gas, etc. instead of using cash or debit. And then, at the end of the month, pay off the card in full. That way, it builds our credit, we don’t accrue any interest, and with the card we got, earn rewards points as well.

zeontestpilot > miadaman? yes please 09/30/2015 at 11:00

0

I know....The beginning of this year my car hit 100k miles and was also finally paid off, then everything that could break did. My car went into the shop 5 or 6 times this past year. 3 times in two months. Each time a hefty price tag (to me at least). We got drained quickly. My parents even had to step in cover some of the costs.

It got so bad we got a reliable 2nd car for cheap. Currently the 1st car is sitting in the driveway, with a bad PCM.

Being an adult sucks.

miadaman? yes please > zeontestpilot 09/30/2015 at 11:38

1

Ah yes, I recall reading your posts about that blue Cruiser a while back. As I understand it, because the way credit card interest is calculated, make your payment ASAP. The CC company calculate your daily balance based on your average daily balance and rate (APR/365).

For example, your APR is 20% and your carry over from last month is $3000. If you make payment of $1000 at day 20 of this month, your average daily balance is ($3000*20+$2000*10)/30 = $2666.7. If you pay $1000 on day 1, your average daily balance is ($3000*0+$2000*30)/30 = $2000. Multiple that by daily rate of 0.0548% (20%/365), you save $36.5 of interest payment just this month (not counting its future compounds).

Of course, another route is if you can find a family member/friend that’s willing to loan you the entire payment for some interest. As long as you’re being open about it and are capable of making the payments, I’m certain someone’s willing to help you out for 5% a year. At least it’ll beat the inflation for them.

Disclaimer: I am not a financial adviser.

Biggus Dickus (RevsBro) > zeontestpilot 09/30/2015 at 11:42

0

Yes. If you are interested, they offer genuine advice and have a lot of experience doing it.

WiscoProud > zeontestpilot 09/30/2015 at 12:17

0

My wife and I each used LendingClub.com to get a personal loan to pay off our respective credit card balances. My CC interest was 15.24%, but the loan is 6.99%, which saves me roughly $100 a month in interest. I chose a three year loan, so even if I stop throwing extra cash at it, I'll still be paid off on a set time frame.

zeontestpilot > nermal 09/30/2015 at 12:52

0

Ha, we eat out once every couple of months, not even monthly. All our food my wife makes (which I don’t mind, it’s amazing). We only have homemade tea and water to drink, as neither of us drink alcohol. And coffee, but only in the mornings for me. We shop at cheap stores too, like aldi’s.

Actually, we’re sort of living bare bones now and have been for a while. It’s become the norm here, so I don’t think much of it. For the record, when we started I went kicking and screaming, but I've gotten use to it. As long as I have something that isn't water to drink, I'm happy.