No. of Recommendations: 1
Here are the questions: There is a $45 charge for the transfer. Do other cards, that you already have - not new ones, do this? Also, all of my payments will be applied to the 0% balance until it is paid off. I can pay nothing to the balance that already exists and it will still accrue interest until I start making payments on it again. This just doesn't sound right to me. Is this normal practice?

With MBNA you're lucky they didn't charge a higher BT fee. Mine is a max of $99 right now, up from $50. Of course, you probably didn't transfer enough to max the fee out.

It is normal for CC's to apply payments to the lowest interest rate first. But I believe most apply payments to all interest charged that month, then the lowest rate payment, then the next lowest rate payment, if the first rate was paid in full.

Your credit card statement closes for the month, and it shows the following:

$7000 at 12.9%
$1500 at 0%
$45 BT fee
$75.78 interest charged on $7000 balance

Let's say you are able to pay $200 to this card this month. I believe your payment would first go to the BT fee, then interest, then the 0% balance. Next month your statement would look like:

$7000 at 12.9%
$1420.78 at 0%
no BT fee (since nothing new was transferred)
$75.78 interest charged on $7000 balance

Each month you will accrue the same amount in interest on the $7000 balance at 12.9% until the 0% is paid in full and you begin paying on the $7000 balance. Each payment you make will first go towards the interest then the 0% balance. The good news is that the interest isn't added into the 12.9% balance while you pay on the 0% balance. If this was the case, the balance at 12.9% would grow while you pay off the 0%. At least your balance will stay the same, not grow.

Once you pay off the HD card, snowball this MBNA card as much as you can so you can pay as little as possible in interest. Since you have the 0% balance on top of a 12.9% balance it is not in your interest to stretch out payments on the 0%. You should pay it off as soon as you can so then you can pay on the $7000.

When I look around for a new card, I would like to transfer the MBNA balance to the new card. I do not think that I will get a card with that amount right away (about $7000). Would it be worth it to transfer whatever amount the new card will allow and just start taking chunks from the MBNA or should I wait until the card is paid off (probably in about 3 years) before getting a new one?

Oh, BTW, MBNA would not lower my interest from 12.99% despite the fact that every 6 months they raise my limit, tell me I don't have to make a payment and offer other stupid incentives and tell me that I have excellent credit.

Depending on your credit history you may not qualify for another low-intro rate card at this time. You may want to wait 6 months before applying for one to let this recent inquiry age out some and effect your credit history less.

Don't let MBNA keep you at 12.99% forever. Call them at least once every other month to ask about lowered rates. In this time, be sure to pay them on time, every time. If you are late once, they are much less likely to lower your rate, and may raise it. When they do finally lower your rate, wait 6 months then call again. (I was told by MBNA that you have to wait 6 months in between getting your rate lowered.)

Good luck! It sounds like this plan should save you money over letting the HD card start charging their 20+%.
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