Should I do a Balance Transfer?

[cristina47454]

Help me make sure I'm thinking this through all the way.

I have a Discover card with almost $3000 on it at 19.99%. It is the card that I am currently snowballing. Min payment is $59/mo. It will be paid off by May 2011. They just sent me a BT offer. 0% until Oct 2011, then 16%. There is a 5% transaction fee.

Card #2 on the snowball is Cap One at 17.99%, balance $3500. Min Payment about $95/month.

According to my math the fee would be $175. Only if I'm lucky would Cap One, left where it is, be paid off in 1 yr ($630 in interest).

Since it's 0%, it shouldn't affect my min pay of Discover very much, right? Oh wait, maybe it's calculated as a percentage of the balance...I probably need to figure that part of it out. But as long as I am sending in more than the min payment due, it'll go toward the higher interest rate, right?

So I should do it, right??

[chely7425]

I would probably do the balance transfer... just because then at least you aren't paying all that interest on the second card!!

[nola79]

Yes, definitely do it. Are you putting both balances on the 0% card?

[BetsyS]

I would do it.

[MyTwoAs]

The minimum payment is based on the balance. Some Discover Catd accounts have one percentage for those with more than 20% available credit and a higher percentage for those with less. For example 3% with more avail credit and 4% for less so definitely call.

Is the Cap1 closed? I wouldn't do the BT unless it is. Before that, though, I'd call Cap1 and let them know of your DC offer and see what they can do. If they can match it you'll save the BT fee.

Good luck!

[A&A]

Originally Posted by cristina47454

Help me make sure I'm thinking this through all the way.

I have a Discover card with almost $3000 on it at 19.99%. It is the card that I am currently snowballing. Min payment is $59/mo. It will be paid off by May 2011. They just sent me a BT offer. 0% until Oct 2011, then 16%. There is a 5% transaction fee.

Card #2 on the snowball is Cap One at 17.99%, balance $3500. Min Payment about $95/month.

According to my math the fee would be $175. Only if I'm lucky would Cap One, left where it is, be paid off in 1 yr ($630 in interest).

Since it's 0%, it shouldn't affect my min pay of Discover very much, right? Oh wait, maybe it's calculated as a percentage of the balance...I probably need to figure that part of it out. But as long as I am sending in more than the min payment due, it'll go toward the higher interest rate, right?

So I should do it, right??

So Discover Card sent you a balance transfer offer and you already owe approx. $3000 with them, right?
You need to know that when you send in your payment, they will apply your payment toward your portion of the balance that is at zero percent. So, the balance that is at 19% will be still sitting there, adding interest. You'll have to pay off the transferred $3500 before your payments will go toward the $3000 that is at 19%. (I used to work for them.)

And yes, your min. payment will be a portion of the total balance.

[MyTwoAs]

A&A - Small world, I used to work for Discover Card too - about 15 years ago though.

The CARD Act of 2009 has changed how credit card companies can apply payments above the minimum payment now - anything above the minimum must be applied to the highest interest rate balance first. So if the OP can get her payment up quite a bit she'll be able to take advantage of the 0%, but only if she can send in more than the minimum.

Here's a link with information on the CARD Act for anyone that is interested - http://www.federalreserve.gov/consum...tcardrules.htm

[A&A]

Originally Posted by MyTwoAs

A&A - Small world, I used to work for Discover Card too - about 15 years ago though.

It is a small world!

Thanks for letting me know that things have changed with how payments are applied.

[cristina47454]

Thanks all. I'm going to call tomorrow and see what my min payment will be if I do the transfer (yes, the card currently has almost 3k sitting on it). Mentally, it will be challenging to double the balance on the card since I feel like it's within 6 months of being paid off, but heck! the money that I'm saving on the cap one card interst is nothing to sneeze at.

Doh! Just realized Cap One is in DH's name, while Discover is in my name. Maybe that means I need to use one of the BT checks they sent me, and not do it over the phone?

[chely7425]

Originally Posted by cristina47454

Thanks all. I'm going to call tomorrow and see what my min payment will be if I do the transfer (yes, the card currently has almost 3k sitting on it). Mentally, it will be challenging to double the balance on the card since I feel like it's within 6 months of being paid off, but heck! the money that I'm saving on the cap one card interst is nothing to sneeze at.

Doh! Just realized Cap One is in DH's name, while Discover is in my name. Maybe that means I need to use one of the BT checks they sent me, and not do it over the phone?

You should be able to do it over the phone as long as you have all the card info as well as your husband's info...