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Posted: 7/21/2002 7:56:15 AM EDT
Today, I received a letter from my credit card company offering me the ability to transfer any balance up to $15.5K and pay only 2.9% interest until the balance is paid off. There is [b]NO[/b] 6 month, or one year expiration on this rate, and there is no fee to transfer. They even included preprinted checks so that I can payoff my other debts easily. I have never carried any balance on a credit card, so I have no revolving credit balances to transfer. The only debt I have is my mortgage and vehicle loans. The interest I pay on my mortgage is tax deductible, but the 5.9% interest on my truck is not. Currently I'm considering transferring the entire payoff amount on my truck to my credit card, and take advantage of this offer. Does anyone know of any compelling reason NOT to pay off my truck and transfer the balance to this credit card? I have no intention of lowering the amount I am currently paying each month, but it would seem that I could pay off my truck faster because it would have less interest. Is this not correct?
Link Posted: 7/21/2002 8:01:53 AM EDT
[Last Edit: 7/21/2002 8:02:14 AM EDT by anti-gov-tinfoil-man]
if it sounds too good to be true . . . check the fine print
Link Posted: 7/21/2002 8:02:11 AM EDT
Sounds like smart money management to me. That's why I pay extra on the pickup (6% interest) every month, and NOTHING extra on the ol lady's car (0%). Do it
Link Posted: 7/21/2002 8:03:10 AM EDT
If one payment arrives one day late your interest rate will change to the cards higher rate. THISISME
Link Posted: 7/21/2002 8:06:07 AM EDT
It sounds good to me, doesn't have all the transfer fees, they promise not to pull a bait-and-switch. Keep all the terms and keep vigilant if they try to try to screw you. People sue them for going back on these promises all the time.
Link Posted: 7/21/2002 8:07:21 AM EDT
I don't think I would do it, as the savings wouldn't be that great, and there may be some catch hidden in the fine print somewhere. Like if the low apr only applies to balance transfers fromm other credit cards, and the checks they sent constitute a cash advance at a much higher interest rate, or something like that. Read the fine print carefully!
Link Posted: 7/21/2002 8:08:38 AM EDT
Originally Posted By THISISME: If one payment arrives one day late your interest rate will change to the cards higher rate. THISISME
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I'v never been late in my life, and all my payments are done electronically so that I am credited the same day I make the payment. Also, I can schedule these payments so that they are automatic, but since I get paid on the same days each month, I usually just make a payment on each payday.
Link Posted: 7/21/2002 8:10:55 AM EDT
Originally Posted By MadMatt: I don't think I would do it, as the savings wouldn't be that great, and there may be some catch hidden in the fine print somewhere. Like if the low apr only applies to balance transfers fromm other credit cards, and the checks they sent constitute a cash advance at a much higher interest rate, or something like that. Read the fine print carefully!
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I've checked it several times. There is NO restrictions on where I spend the money. I can even write the checks to CASH and deposit the $$ into my personal account. As far as I can tell, I could easily save a few grand over the life of my truck loan by doing it this way.
Link Posted: 7/21/2002 8:12:01 AM EDT
Originally Posted By threefiftynone: Sounds like smart money management to me. That's why I pay extra on the pickup (6% interest) every month, and NOTHING extra on the ol lady's car (0%). Do it
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It seems smart to me too. I just don't want to overlook something end up in an unfavorable position compared to where I was previously.
Link Posted: 7/21/2002 8:17:23 AM EDT
Joe_Blacke Given your payment patterns; If I were you I would take them up on their offer though a call to customer service might be in order to make sure paying off the auto qualifies for the low interest rate. THISISME
Link Posted: 7/21/2002 8:25:43 AM EDT
Originally Posted By THISISME: Joe_Blacke Given your payment patterns; If I were you I would take them up on their offer though a call to customer service might be in order to make sure paying off the auto qualifies for the low interest rate. THISISME
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Drew, I've checked. There is NO restriction to where I spend the money, except the following: -I cannot exceed my available credit. -I cannot transfer balances to this account from another credit card that has been issued by this bank. THAT IS IT! Their quote on the letter is, "you can even deposit your Personalized Check into your bank account and use the cash for anything you choose." As far as I can see, if I use this option, they have no idea that I'm paying off my truck loan. Of course, it says that if I default I may be subjected to their current rate for balance transfers. I'm not worried about that, though. Right now, I just can't see any reason why I shouldn't do this.
Link Posted: 7/21/2002 9:09:52 AM EDT
I see no reason you shouldn't do it either. But you might want to run some numbers on a home equity loan if you have the equity available. They can be had now for 4-4.5% and the int. is deductable. And of course (true with either the card or the H.E. loan, you can always pay more towards principal. Note: Triple your prin. payment each month on a 30 year mortgage and you will pay off in roughly 7 years and save a ton of int. Ex-banker...(opens wallet) that's where the business card used to be.
Link Posted: 7/21/2002 9:09:59 AM EDT
To be 100% safe, you could get the money to pay off the truck loan and put it in a 3 month CD or money market account. Then pay off the truck loan in a couple months if things go as planned. If any problem surfaces, pay the money back to the credit card account and cancel it.
Link Posted: 7/21/2002 9:15:19 AM EDT
Originally Posted By MilkMan: I see no reason you shouldn't do it either. But you might want to run some numbers on a home equity loan if you have the equity available. They can be had now for 4-4.5% and the int. is deductable. And of course (true with either the card or the H.E. loan, you can always pay more towards principal. Note: Triple your prin. payment each month on a 30 year mortgage and you will pay off in roughly 7 years and save a ton of int. Ex-banker...(opens wallet) that's where the business card used to be.
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Right now I don't have the equity available, otherwise I would have gone this route to buy the truck in the first place. It kills me though, because my bank is really good about waiving nearly all the loan fees.
Link Posted: 7/21/2002 9:17:34 AM EDT
Originally Posted By MadMatt: To be 100% safe, you could get the money to pay off the truck loan and put it in a 3 month CD or money market account. Then pay off the truck loan in a couple months if things go as planned. If any problem surfaces, pay the money back to the credit card account and cancel it.
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The problem with this is that I would have to pay both the loan payment and the credit card payment while the money was sitting in a CD. Both the loan and credit card would be incurring interest and also double the monthly payment I would have to make for a few month.
Link Posted: 7/21/2002 9:23:46 AM EDT
Sounds good to me. You would lower your interest rate by 200 basis points on your car. On a $10000 loan that would mean a savings of $200 per year. Maybe more depending on how interest is compounded. Daily compounding would be around $225 annually. I had a friend of mine that did this with Capital One. They gave him checks just like they did you. He wrote it out to his finance company and viola, cut his interest rate in half. Cut his monthly payment by a 1/3. MadMatt, has a good point also about parking the money first and seeing what happens the whole deal.
Link Posted: 7/21/2002 9:28:36 AM EDT
Originally Posted By Joe_Blacke:
Originally Posted By MadMatt: To be 100% safe, you could get the money to pay off the truck loan and put it in a 3 month CD or money market account. Then pay off the truck loan in a couple months if things go as planned. If any problem surfaces, pay the money back to the credit card account and cancel it.
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The problem with this is that I would have to pay both the loan payment and the credit card payment while the money was sitting in a CD. Both the loan and credit card would be incurring interest and also double the monthly payment I would have to make for a few month.
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Hold back enough cash to make the first three months payments. Deposit the rest in an account that will earn interest. I'm just thinking this way would be a cheap insurance policy against getting screwed by the credit card company. If the deal is as good as it sounds, you still do great. If not, you lose almost nothing.
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