no transfer fee

joe_mnMarch 1, 2011

woohoo. got a credit card offer today and it includes zero interest for 1 yr and no transfer fee. i have not seen that offer for several years now. its discover card and i usually get 1 offer per week. almost threw it out.

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Billl

Be careful with these new promo offers. They can pay off, but only if you use them in specific ways.

Zero percent interest is great. Remember though that the new CC laws require the card holder to post payments to the highest interest debt. If you use this card for anything else, your payments will go to the new charges and not the old balance. That sounds OK at first, but what happens if you aren't paid off by the end of the promotional period? The new law still lets companies jack the rate to whatever they want at the end of a promotion. That means any balance you have at the end of the promo could go to 30% interest or similar.

It is really more critical than ever that you pay off any cards in full before the promo period expires. If you are just paying the minimum payments and continue to use the card, these type of transfers could blow up in your face.

    Bookmark   March 1, 2011 at 11:57AM
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joe_mn

my current interest rate is reasonable. my credit is very good. but no interest for 1 yr is nice. at end of year, i could transfer balance back to current card. fee is 3-4% to do that. still end up saving money on interest for year. yes it is musical chairs but it also saves money. you cannot deny that. since it will be an additional card, i do not plan on charging anything on it. will use my current card for purchases.

    Bookmark   March 3, 2011 at 12:10PM
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Billl

"you cannot deny that. "

I most certainly deny that. It has become VERY common for credit card companies to reduce available credit once balances are paid off or transferred. It is not a safe assumption to say that you will be able to transfer this balance back and just play musical chairs with it. You MAY luck out and be able to get this debt back on a card with a "reasonable" interest rate, but that is far from a sure thing.

The bigger issue is that your plan involves carrying balances for more than a year. If a year of no interest is the breathing room you need to get you off of the debt merrygoround, fantastic. Definitely take advantage of the offer. On the flip side, if you aren't planning to pay this debt off within a year, you are taking on a great deal of risk for a modest reward.

    Bookmark   March 3, 2011 at 1:57PM
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joyfulguy

Hi joe from the land of many lakes,

An important part of the plan is to not add any new purchases on the new card, which you said you plan to follow, as they credit the total amounts of payments to the transferred amount that carries the low interest rate until it's fully paid off. Another important method is to pay off the balance owing on that new card in full before the end of the year, which will avoid any transfer fee to move it back to the original card - or a new one that charges a low or nil fee for a balance transferred.

The best plan? While you're working hard to pay off all of that balance owing on the new card, try not to add any new purchases to the original card during the year that you won't be able to pay off in full before the second billing date, which will mean that you rack up no interest cost.

I like the taste of them apples best.

ole joyful

    Bookmark   March 3, 2011 at 6:16PM
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