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Author: Upswingg Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308568  
Subject: Balance transfer "game" Date: 4/17/2012 6:08 PM
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I guess this is a long post now.

I'm gradually paying down a lot of credit card debt. I've been very virtuous so far this year. Let's hope I can keep it up!

Here is my situation:

I have a credit card with a dual balance. $4,900 at 16.99% and $5,250 at 1.99% until 09/2013. I have about $9,000 of "room" on the card, i.e. available credit. They won't decrease the 16.99% rate (of course). I got yet another BT check in the mail from them. This time it's 1.99% until 04/2014 with a 3% BT fee. I know that I can pay $500 per month over the minimum, so even barring disaster I won't be paying this off for at least another couple of years. Paying less in interest would make a big difference though!

The thing is, the BT check says that I can deposit cash into my checking account and it will be treated as a balance transfer. So is there anything stopping me from writing myself a balance transfer check for $4,900, then turning around and paying $4,900 back onto the card? As I understand it, credit card companies are now required to put extra payments above the minimum payment toward the balance with the highest APR. (This didn't used to be so.)

Does this sound like a good idea? Am I missing anything? I am concerned that my credit score could take a hit.

My other thought is that with both of the APRs the same, the CC company could still trick me by applying extra payments to the balance with the *later* promotional expiration date. So I might be paying extra money on the $4,900 balance while the $5,250 balance just sits there and goes back to the 16.99% (variable) interest rate on 09/2013. Is this a conspiracy?

Thanks!

Upswingg
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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305025 of 308568
Subject: Re: Balance transfer "game" Date: 4/17/2012 8:28 PM
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Not a long post at all. I should know. :-)

This is an interesting question because I've not heard of anyone doing this before, but off the top of my head I cannot think of why it won't work. Of course, it's going to cost you an extra $147, so factor that into the equation. I don't know how the credit card company would treat two promotional balances with the same interest rate - you are correct that the law speaks to paying off the higher rate first, but not to your situation.

However, I don't see how this would affect your credit score. Your debt to credit ratio will see no net change (other than the $147 fee) and the act of using a Balance Transfer does not factor into the credit score formula.

Let's examine the worst case scenario, that they do try to stick it to you. You have 17 months until the first promotional offer expires. At $500/month, it will take you 11 months to pay off the first $5250, and in the remaining six months, you should be able to trim the remaining balance by about $3000, leaving you with a balance of $2047 (the $4900 plus the BT fee). You would also have 17 months to make additional payments to cover that plus the 1.99% interest charged.

Fuskie
Who would like to think that the balance with the promotional rate expiring first would be the higher priority, but would not put it past a bank to try and take advantage of a loophole...

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Author: 401kinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305040 of 308568
Subject: Re: Balance transfer "game" Date: 4/20/2012 7:17 AM
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If you watch the credit unions where you live sometimes they put promotional fixed rate personal loans available. In Phoenix at SunWest Federal Credit Union they sometimes run 7.9% fixed rate in October to December. Another option they let you do is do a share secure loan against your cds at a rate a few percentage point above your cd rate.

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Author: Upswingg Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305064 of 308568
Subject: Re: Balance transfer "game" Date: 4/26/2012 4:07 PM
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Another option they let you do is do a share secure loan against your cds at a rate a few percentage point above your cd rate.

What CD, 401kinvestor?? If I had extra money to invest I would put it toward my cards! ;)

OK, I initiated the balance transfer into my checking account. I didn't even have to write a real check. I was able to do it online. I'm going to send it right back to the credit card after the $$$ hits my checking account!

Upswingg

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Author: 401kinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305065 of 308568
Subject: Re: Balance transfer "game" Date: 4/27/2012 12:25 AM
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I borrowed a year ago when I need tires for my Nissan against a cd and paid the loan off biweekly at 3.12% for a year and basically had the cc companys sending me offers to transfer the balance back at a lower rate. The loan paid off so I can borrow again if I need it. I still earned interest on the cd while paying off the loan.

I checked my fico score and now is at 821.

7 days till payday.

7 days till I get the car balance under $830.00

2 business days and if I have no errors I brought the number to 7 for the month.

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Author: alstroemeria Big gold star, 5000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305066 of 308568
Subject: Re: Balance transfer "game" Date: 4/27/2012 7:57 AM
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I checked my fico score and now is at 821.

That is impressive for anyone, but especially for someone in debt and living so close to the bone. It goes to show that it isn't so much debt that lowers one's score, but not paying it down timely, as agreed.

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Author: 401kinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 305092 of 308568
Subject: Re: Balance transfer "game" Date: 5/1/2012 12:28 AM
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I just noticed SunWest Federal Credit Union is now running the 7.9% fixed rate loans again til 06/02/12.

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