"Ram Samudrala" <ram[at]sp1.compbio.washington.edu> wrote
snip
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Wasn't there a transfer fee?

I'm getting credit card solicitations galore for 0% interest for a year or so,
but there's always a stiff transfer fee, like 3% of what one transfers,
attached. I circular file them every time.

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Sure. Take the loan and put in U.S. savings bonds or Treasury Bills and come out
at least around $200 ahead after a year.

I thought that you always had a billing cycle to accept a change in
terms, and that if you rejected the change in terms (including the
APR), then you could close the account and pay off the remaining
balance under the original terms. It happened to me once with Advanta
a long time ago. But I've found credit card companies have gotten more
stricter (I believe they're entitled to do whatever they want and that
we are consumers are entitled to not use them).

On a related note, I have a large amount of debt at 0% all the way
through March 2005 (through credit cards). This effects my score to a
degree (particularly since I moved it all just recently to extend it
further) but I've made a few thousand dollars already investing this
money. I have never made a late payment in my life so my credit score
is on the high end. On the one hand, I feel his is a smart thing to do
(which is why I did it): leveraging what you have to improve your
position. On the other hand, I am not happy with the concept of
monetary debt. I'd be curious to hear other responses if they were in
this position: if you were offered $10K or more in unsecured debt at
0% for one year, would you take it?

--Ram

scott <smurawski[at]meditech.com> wrote:

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In article <41793f02.0312231025.3c84f48b[at]posting.google.com> ,
smurawski[at]meditech.com (scott) writes:

- quote -

Typically your credit report will show both the credit limits and the balances.
If you spread the balance over several cards, creditors who pull your credit
reports will still see the balances.

Do you have a plan to pay down the cards? (I am sorry, but this reads like an
insulting question, but many people really allow themselves to live with
substantial credit card debt for all of their lives.)

Some things you can do are:

0. Where possible, don't use the credit cards. If you must use a credit card
and you have a card with a zero balance, use that card and pay it off in full
when the bill comes--that way at least that card won't be costing you interest
(if it has a grace period) and it is the start on developing a habit of
thinking of a credit card as a "payment method" instead of a "financing
method", i.e., start thinking of it as a debit card that immediately impacts
your spendable cash.

1. Call and ask that your interest rate be lowered. Done.

2. Occasionally apply for a card with a decent balance transfer offer. Keep the
number of applications few, like only a couple every six months. (Too many
"hard inquiries" on your credit report make you look desperate for credit and
correspondingly lowers your credit score and lowers your chances of getting a
decent interest rate on a card.) If there is a balance transfer fee, ask if the
fee can be waived. Then transfer part or all of the balance from the highest
interest rate card to the lower interest rate card, but keep at least some
"breather room" on the card you transfer the balance to (e.g., no more than 90%
of the credit limit) so that when interest is added to the balance, it won't
push the balance over the credit limit, hitting you with both the over-limit
fees and punitive interest rates. (Yes, I have heard of some people being hit
this way.)

3. Don't forget to ask the issuers of your other cards, if you have any with a
zero balance, if they have a balance transfer offer.

4. Never, ever be late with any payments--always pay at least the minimum
amount due by the due dates.

5. If you have a card with a balance with a low rate, do not use that card for
regular purchases, if possible. Most card issuers will force you to pay off the
lowest interest rate balance before starting to make a dent on a higher
interest rate balance (e.g., the balance transfer at 5% or whatever will be
paid off before a 18% balance from new purchases). So using the same card for
both a balance transfer and new purchases will generally result in a stealth
conversion from low-interest debt to high-interest debt, and the card issuers
know this. It is rare, but some cards allow you to designate which balance you
are paying, but that is the exception, not the norm, and usually it involves a
different procedure than just paying the regular bill (e.g., a different
address to send the check).

6. Apply the "snowball method": pick one card as the target (how to pick the
card is discussed in the following paragraphs) and pay as much as you can on
that card, but while paying the minimum amount due on all the other cards. Once
that card is paid off, pick the next card as the target. So, during the entire
process, you will be paying the minimum amount due on all cards with a balance,
except one, and the one card that is the target will be receiving as much money
as possible. Just like the proverbial snowball getting larger as it rolls down
the hill, the payment you are making towards the targeted card will be getting
larger as each card is paid off and thus freeing even more money to pay towards
the next targeted card.

There are several schools of thought for picking the target card:

- Quick victory: if you have a card with a balance you can pay off in a couple
of months, target that card for "snowballing". The quick victory will provide
an emotional boost for persevering on getting the rest of the debt paid off. (I
usually suggest going after the quick victory if there is one.) Note: after a
few months of a zero balance, a paid-off card could be a good place to go to
ask for a competitive balance transfer offer.

- Most hated card: if you have a card issuer that is particularly difficult to
work with (e.g., quick to apply fees, charges "credit protection" fees even
after declining it, alls you every other week to sell you something you don't
want), it may be good to target that card so you can get them out of your hair.

- Least expensive over the life of the aggregate debt: target the card with the
highest APR. On a per-dollar basis, the card with the highest APR is usually
the card costing you the most, so eliminating it will produce the most "bang
for the buck". It is also the way to get the aggregate debt paid off the
quickest.

I would recommend targeting a card that can be paid off within a month or two
for the psychological boost, and then working on the cards with the highest APR
for the best savings.

7. Do not be quick to cancel the cards with zero balances or lower the credit
limits unless you will be charging the cards back up. Besides being a potential
source of competitive balance transfer offers, zero-balance cards help keep
your credit balance to credit limit ratio lower. A couple threasholds I have
seen is 50% and 35% for the ratio of aggregate balance to aggregate credit
limits--keep it below 35% if you can.

The problem with a "shotgun" approach, paying more than the minimums to all
cards, is that one doesn't see dramatic progress like one would see if
targeting a single card, so the apparently slow progress would end up being
discouraging.

Even with snowballing, it does help to have positive reinforcement between
victories. An analytical way would be to keep a sheet with the aggregate debt
recorded each month, so you can see the balance going down most months. A graph
with the balance is a more visual way. A kenetic way would be to construct a
paper chain, with each link representing $500 of debt, and the last link
representing $1. $14,000 would be 29 links: $1, $500, $1000, $1500, ... $13500,
$14000. Then as the aggregate total drops below a particular link, tear that
link off the chain. The last, $1 link would be where you have finally achieved
freedom from credit card debt. The idea of the paper chain is that you will
have milestones that would provide encouragement as you pass each one. (In
Ancient Roman, each milestone was a thousand paces closer to the desired city.)
Just like different people have different learning styles, different people
respond differently to various types of milestones--a running monthly total, a
graph, or a paper chain--so it is likely that one or two of these suggestions
doesn't appeal to you, but may appeal to another reader of this newsgroup.

And, yes, it is a well-known practice for credit card issuers to raise the
rates and wait for people to call to ask the rates to be lowed back down--even
if 80% of the card holders call and their rates get rolled back, that still
leaves 20% of the card holders to pay more interest (profits) to the card
issuer. I haven't heard of the "looking at this debt as a long term loan,
rather than a credit card debt" excuse to raise rates, but I have heard of a
very slow payback as an excuse, so this doesn't sound implausable to me.

Mark A. Young

"scott" <smurawski[at]meditech.com> wrote in message
news:41793f02.0312231025.3c84f48b[at]posting.google.com...
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I've heard that some of the new balance transfer come-ons have little
clauses that say that if you don't make purchases at least once a month, you
lose the low-interest rate on the balance transfer part. This is because
the interest rate on the purchases is still at the higher rate and when you
make a payment, the payment is applied to the lower-interest balance and not
the new purchases.

Also, if you've tranferred a lot of debt over to the card, they may view you
as a bigger credit risk because a lot of people are moving debt around these
days trying to use all the "0% interest for XX months" deals. It may have
affected your credit rating and they do pull those periodically and use them
to rate you as a risk for loss.

Leigh

"scott" <smurawski[at]meditech.com> wrote in message
news:41793f02.0312231025.3c84f48b[at]posting.google.com...
- quote -

Yes - happens all the time. Banks raise rates on individuals, to see if
they can gouge you a bit more. Some migrate, some can't - and they know who
can't before they gouge. Calling them, as you did, is often the only
defense.

If you've carried the same level of debt, without paying it down, then it
is, in fact, a long term loan, so the bank has justification for their
charges. The key is not to get into this situation. There are free programs
on the net which will show you how long it will take to pay it off, if
you're making minimum payments. Scary stuff.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

This may be off topic. I have about 14K US on a credit card, and I've
paid the bill meticulously, and they recently raised my APR
considerably. When I called, the man said that they were looking at
this debt as a long term loan, rather than a credit card debt, and
that's why they raised it.

He did put it back down, almost to where it was, but I've never heard
of such a thing.

It would seem that there may be an advantage to spreading that over a
few different credit cards, rather than have it on the one. I've made
no purchases on that account, ever. It's from balance transfers from
other cards being consolidated to pay it down with a better rate.

Ever heard of this?

Thanks.

Scott