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Author: aja91 Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308481  
Subject: Re: Transferring credit card debt Date: 6/17/2001 8:26 AM
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I've heard that you shouldn't keep moving your credit card debt to new credit cards with lower interest rates because you'll keep increasing your available credit. All that available credit increases your possibility for debt.

But I was wondering if I moved my credit card debt from one of my higher-interest cards to a lower-interest card if that would affect my credit report. Since I already have both credit cards, I wouldn't be increasing my available credit. Transferring the debt would show up on my credit report, but it wouldn't look bad, right?



Ideally, you transfer the entire balance from the high interest card to the low interest card. At that point, you have no need to keep the high interest card. Cancel it, and throw the card in a blender. That will keep your amount of available credit low. I'm not sure the impact the number of cards opened and closed in a short period of time has on your credit report. There have been links posted recently that show how your credit score is calculated I believe, and that should answer your question.


The higher interest card has a rate of 15%, and the lower interest card has a rate of 10%. Would I save much by transferring the debt? Should I just leave it alone so I won't I have to worry about all the little rules regarding transfers? Both cards have similar balances right now. I was considering moving the debt when I got rid of a little more debt on my lower-interest card. But, then again, I guess it wouldn't really make much of a difference if I just kept paying more toward my higher-interest debt anyway (via the "snowball method"). What would everyone else do?


Depends on how you define "much". For each $100 you transfer, you'd save about $5 per year (roughly $10 in interest instead of $15). If you transfered, say, $5000, that's about $250 per year in interest charges, which is $250 more of your money that goes toward reducing your balance.

The most important thing, even if you decide not to do the transfer, is to stay focused on maximizing the amount you pay towards this debt each month!

What would I do? I'd transfer the whole balance of the high rate card to the low rate card. Then I'd cancel the high rate card. Then I'd aggressively pay the whole thing off. Find ways to cut some of your routine expenses or luxury items, at least temporarily, to get rid of this thing quickly. Got a bonus coming due at work? Pay a large percentage of that toward the debt. Keep your eyes open for "teaser" rates like 1.9% for the life of the transfer -- they do show up. If you can get rate like that, you'd save $13.10 per $100 transferred, rather than $5. On the fictitious transfer of $5000, you'd save about $650 in interest.
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