by Tricia
As I mentioned the other day, I paid an additional $500 to our debt and our credit card debt (which includes my Prosper Loan and my IRS debt). That brings the current total to $20,602. It’s too early to speculate on how the rest of this month is going to go, but I hope to be able to send even more money towards our debt.
I haven’t looked into trying to obtain a 0% balance transfer card yet. It bothers me that most of our debt is at a 9.9% interest rate right now, but I still have a nagging feeling to not think about balance transfers right now. I wonder if it’s because one of my cards with a zero balance will offer a good deal.
They sure have been trying to get my business back!
Two cards so far have increased my credit limit. It didn’t even take a month before they did that. Unbelievable. At least now I have the upper hand and I am not going to charge more because I was given a higher credit limit. I’ve learned that lesson the hard way.
What would be awesome would be if we could get the total back under $20,000 by the end of this month. I think I’ll give it a shot even though it will be a long shot. It doesn’t hurt to try, because chances are good that we’ll pay off more than if we didn’t give it a shot at all.
Good luck with your goal!
I was in your place about 17 months ago, but I have about 3 more months before I am completely rid of my original $20,000 in credit card debt. I don’t envy your position, but as long as you keep debt reduction as a goal, you’ll be fine.
Good Luck Tricia – I’m sure you’ll pull it off!
Good luck. Very interesting to read about how you deal with dept. I am from Sweden and the entire financial sweden talks about american dept and your creditcards. Thanks for sharing!
Good luck 🙂 I am always encouraged by your optimism.
Trish — I’m just going to throw my hat in the ring and suggest you take the 0% APR. It’s good to trust our intuition, but hard math makes sense too (and lets remember, we had our intuitions with us when we got in credit card trouble!). I would do a little credit shuffle and use that extra $2,000 a year you would save to pay down your debt. Remember, part of the reason your getting the 0% APR is because you’ve done such a good job paying your cards down. Take advantage of it! If you decide to go for the APR, use one of the credit card sites that sorts through the offers. I did, and I got a Bank of America card with a 0% balance transfer fee (instead of the 3% most cards offer.) Good luck!
Trish,
Great work so far… Go for the 0% 🙂 Though I generally hate seeing someone pay debt with debt, saving 9% on that much could be a significant chunk of change.
A.J.
http://www.thenewself.com
If you have more than one credit card, you can do what I did: call each of them, find out what the balance transfer rate is, and then transfer. I went from 15.64% to 1%. The 1% ends at the end of January, and then I’ll transfer back to the other card *which told me they “always” have a balance transfer rate special of 5.9% or less.* I’ve found that you just have to ask, because these rates aren’t often highly advertised. The only other things to be aware of are:
1. that you may get a charge of $90 or so to make the transfer. However, while I was originally put out at that fee, I realized it was less than what I was paying in interest each month on my 15.64% credit card, so I realized it was actually quite a good investment. Now, my monthly interest is under $10/month.
2. transfer your balance to a card WITHOUT ANY BALANCE. This is v important, as payments only go to the lowest interest balance first. So, if you have $1000 at 9.9%, and $25000 at 1%, the $1000 balance will continually earn and compound interest until the 25k balance is paid off in full. This is sneaky, and they won’t necessarily tell you this upfront, so be aware.
3. depending on how your credit rating is, you may not want to apply for a new card and get that ping on your credit report. Instead, do as I did and just play the cards off against each other. I have two cards, and when the 1% runs out, I’m transferring to the other, which “always” has a 5.9% or lower balance transfer rate.
Otherwise, taken an hour or two to talk to your credit card companies, or do some research online, is very, very beneficial. If you want to “earn” more money, pay the minimum on your credit card (with the super-low APY), save the money you would have used for the credit card (and earn ~5% in an internet savings account), then use that money plus the interest to put on the credit card when the introductory rate on the balance transfer ends. If you have a savings account/401k/IRA/investment of whatever, and you can earn more on that than you pay in interest on the card, then it’s smart to pay less on your debt so that you can earn more on whatever investment you have.
That sounds great! Never give up…
Steve Herman
Gotta’ politely disagree with Shana with respect to the 5.9 balance transfers. Balance transfers mostly only work for 6 months, so if you take her advice, in one year you will have transfered twice, paying 3% APR both time, as well as the 5.9% APR. I know the transfers have a cap on the amount they’ll charge for the transfer, but disregarding that for a moment, you’ve got 11.9% racked up over two transfers (3% + 3% + 5.9% = 11.9%).
Starving Artist: Where are you getting the 3% APR from?? Your calculations are odd and incorrect.
While some balance transfer fees are 3%, that’s a 3% FEE, not an ongoing, monthly interest charge.
I just did a quick online search for cheap balance transfers, and found at least two major credit cards (Chase and Citibank) with 0% APR (9 and 12 month terms), and a 3.9% (Discover, until 2010).
So, for example, if one took the Chase 9-month 0% APR, with a 3%/$50 transfer fee cap, that is a very, very good deal. And that does not equal 3% APR paid for the entire term. Rather, that equals $50 for transfer (assuming someone is transferring enough to reach that cap), plus absolutely nothing in interest. So, $50 for 9 months on a large balance is quite a deal.
Hi Tricia,
I’m in the same boat as you – paying off over $13,000 of consumer debt. In less than two months, however, I’ve paid off over $2200, so it’s keeping me motivated. My remaining $11,000+ debt is spread over 10 credit cards 🙁 With APRs ranging from 9.99% to 29.99% – Obviously I’m snowballing payments on my highest interest rate currently.
I am now paying all of my bills on time (I was never habitually late, just a couple of times when I lost track of things, but I know it hurt my credit score) and I have just started to pay a few dollars above the minimum, as well as decreasing my overall debt to credit ration. In doing so, I hope that I can eventually get a 0% transfer offer. I have been able to get 4 of my interest rates lowered in the past 2 months, but it’s sad to know that a 9.99% APR makes me happy!
I hope to be debt free by next summer. Good luck with your journey as well!
If you care to follow mine, please visit my new blog: http://payingforplaying.blogspot.com/
I am in the same boat–$23,000 in credit card debt. I am finally serious about taking drastic measures to pay it off, and your blog has inspired me. Best of luck!
I totally agree. I have been passionate about debt and finances for 5 years now!
Steve Herman
www.financialadvantages.com/blog