What would you do?

Avatar for cl_phocid
iVillage Member
Registered: 03-26-2003
What would you do?
8
Tue, 06-14-2005 - 11:39am

Okay - math question (sort of).


DH and I are working on our targeted cc - it's currently below 7K (yay!), and it's at about 12.5% interest.

All my best,
Danni

iVillage Member
Registered: 03-27-2003
Tue, 06-14-2005 - 12:44pm

I don't know what I'd do. I don't always do what makes the most sense mathematically.

It depends somewhat on the other balances. Are they larger? Smaller? About the same? Will it make you feel like it's taking forever to hit milestones if you start on another balance now? Are you really looking forward to having this one debt completely paid off?

Chances are, by the way, that if you transfer to the 0%, by the time the offer runs out you'll be getting more offers for 0%, and you can just roll the balance over again. That's what I'm doing with our remaining cc balance.

In our case, our highest interest rate is on a credit line. Second highest rate is on a loan from my dad, and smallest is on the cc balance (with a couple personal loans from family at zero percent under that). But instead of paying down the credit line first, which is also the smallest balance at present, we are focused on the loan from my dad. Why? Well, first of all, it used to have a higher rate (he lowered it recently), and that was the reasoning. But the other reason is that I feel honor-bound to pay my dad back as quickly as reasonably possible. And it makes me feel good to know that I'm sending them hefty checks each month. They deserve it. And it makes me feel like they are proud of me, and that makes me feel good too.

So it's not completely logical.

Now, on the other hand, I have started sending a portion of my business profits to the credit line, because it is such a small balance (under 3k), that it can be paid off fairly quickly, and then that's an extra $100 a month to send to my parents. But I continue sending my largest budgeted payment to my parents each month.

I say all of that only to point out that I don't do it all in the most logical, mathematical way possible. I do it in whatever way makes the most sense mathematically AND emotionally for me.

:)

Heather

Avatar for gidgetgirl
iVillage Member
Registered: 03-26-2003
Tue, 06-14-2005 - 1:31pm

For me, it would depend on how quickly I'm knocking down the balance. I have a cc at about the same amount that is on a 0% interest deal until December. Starting in July, I'll be more than doubling my current payment of $160 to a total of $345. Plus in there DH will be getting a $2,500-$3,000 raise (pay out the year's raise in a lump sum for 3 years in a row, this will be the 2nd year). We'll still have about a $3,000 balance on the card by December, but we're counting on rolling it over to another 0% card.

We are targeting by the KIND of debt. We are paying off my car first (by July), then the CC, just because it is a CC, and then the student loans are last. We aren't in full agreement yet whose student loan will be paid off first, but they should be knocked down fairly quickly regardless.

Either way, by moving it over, you pay less interest. I would go for the )% personally as it gives that much more incentive to pay off as much as possible, as least for me. Although I've honestly never had to worry about not being able to surf the balance, but there's always that chance.

Gidget

iVillage Member
Registered: 03-27-2003
Tue, 06-14-2005 - 2:21pm

I think you have to do what makes the most sense for you psychologically so that you stay motivated. We did consolidated several smaller CC debts onto 1 CC at 2.99 for life of the balance and now we focus on paying down a 2nd mortgage but it's still hard for me to wrap my head around it (and it's been 9 months or so) because it just seems like I should be doing CC debt.

Taleyna

iVillage Member
Registered: 09-20-2004
Tue, 06-14-2005 - 3:05pm
Personally, I would move it to the 2.9 and pick a different target. you aren't abandoning ship, the "ship" is your entire debt balance. I tend to stay away from 0% offers unless it is for a year or more..i don't like constantly doing the cc shuffle. I have switched my targets around here and there....it doesn't bother me that much. I do have four cards under a grand each which I am attacking more viciously than my other cards, and it has nothing to do with APR, just the fact that i don't like to have so many open accounts. Good luck with whatever you decide...Heather
iVillage Member
Registered: 05-09-2005
Tue, 06-14-2005 - 8:22pm

Hi Danni,
I'm guessing you are rolling over your largest debt since it is the one you had targeted.
Does that card use up all the "space" available on the card you are rolling it to? If not, you should probably consider rolling over as much of the rest of the credit card debt to the roll over card at the same time. You are guaranteed 2.99% for life of the transfter. If you can only do one rollover, then look and see if you can simply put the new credit card $$ to the limit in your checking account, and pay off the other cards from there.

So, my suggestion, roll over as much as you can to the roll over card -- pay just above the minimum on that until you pay down or manage to roll over the rest of the card debt.

I usually only roll over as much as I can foresee that I can pay to the 0% cards because I am not always confident a new offer will show up before the end of the 0% period.

Good for you for getting a 2.99% for life offer.

Megan

iVillage Member
Registered: 02-19-2004
Tue, 06-14-2005 - 9:31pm
What about transfering your next target debt (the one you will get to have this card is paid) to the new card at 2.99% and let it sit there, while you keep paying on the target card at the higher rate? I guess it depends on if you have any other cards that are close to 12% and where transfering them (instead of the target card) would save you money. I think I might make the most mathematical decision in this case, but I've also been knowing to choose the more psychologically appealing decision instead.

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Avatar for mymartes
iVillage Member
Registered: 03-26-2003
Tue, 06-14-2005 - 10:03pm

Danni,

If you know you can pay it off by december, then transfer it to the 0%. If not....I would transfer it to the 2.99% for the life of the balance. SHHHHHH!!! If you can transfer other c/c balances w/higher interest onto this one, go for it.

MYM

iVillage Member
Registered: 05-19-2004
Wed, 06-15-2005 - 10:49am

Hi Danni!
As long as you are certain you will keep on top of the balance transfer game(which I'm sure you do), I would stay with 0% and then keep switching when it runs out. That is what I did to pay off our ccs for over 6 years. I was determined not to pay them 1 cent more than I charged. I just wrote on my calendar when I HAD to switch again.

2.99% is a good rate, but that's still going to be a lot of money on approx. $7K. It's a great feeling to send in a hunk of money and see the balance go down by that exact amount!!

I would take this offer only if I thought I couldn't get another 0% offer~~~~ but I know I still get tons each week!!!

Keep it up---you're on your way!!!!!! Nicki:)