Does this sound like a good idea?

iVillage Member
Registered: 06-18-2004
Does this sound like a good idea?
4
Sat, 07-23-2005 - 9:44pm

Okay,DH and I have balances on two cc's (one visa and Best buy) The Best Buy is at 0% until April. The visa is at 8%. Would it make sense to pay 1/2 of what I pay every month to visa to Best Buy. I know BB is at 0% but, we don't use the bb card. Every time I get anything paid on Visa, DH and I seem to charge it right back up. If I did this, bb would be paid off in Dec and Visa would be paid off in March. It would just flip flop when I have the cards paid off. BB would have been paid off in Mar and Visa in November. But, DH especially can't seem to quit charging on the Visa and I thought that if he didn't have that much room on the Visa, he wouldn't charge it up. He gets adverse to charging when we are any where near the limit.

Any advice?

Kellie

iVillage Member
Registered: 02-19-2004
Sat, 07-23-2005 - 10:08pm

I think you should sit down and explain that to keep him from using the visa, your thinking of paying a lot more in interest by paying off the best buy first, and explain that his behavior is costing you money.

Either way, what you are going to do when the visa does get paid off. You'll still have the same problem with him charging.

It might be better to talk and make a rule like neigher of you can charge on the visa without talking to the other first. Also make sure you both have enough in the budget for things you need and plan to be spending on. Also, maybe consider getting a new card with a much lower limit, like $200 and that whatever gets charged has to be paid off each month out of that persons spending allowance. That would make him responsible for paying off anything he charges, and it would keep the debt balance from growing (at least cap it at $200).

Photobucket

iVillage Member
Registered: 09-07-2003
Sat, 07-23-2005 - 11:37pm

Kellie ~
What sort of things are being charged on the Visa? Like, are you still having to charge basic things because your income isn't high enough to cover normal bills...or are you charging lil things, like CDs, or meals out, gas (ok, a tank of gas IS getting to be a Major purchase. . ) etc?

I'm thinking..if you are able to look at your expenditures and think "if we didnt have room on the CC, then we wouldn't be charging these things" -- then rather than limit the available credit by sacrificing Interest charges...it might be wiser to work at the root of the problem. What are you using your card FOR...and would it be possible to lower those expenditures..or simply pay cash/debit?

Initially, I thought "why not take the "extra payments" that you were thinking of moving from Visa to Best Buy and get some money into savings..so that there is no reason to use a CC at all?" That's really the only way you'll ever get it paid off completely. . .stop using it. (or, as the previous poster mentioned, and get a 3rd card that you'll pay off every month...though in 9 cases out of 10, a debit card would work for that AND save you the monthly stamp! :) )

But.. then I got to thinking....and here's my question....After April, when BB is NOT at 0%, what percentage WILL it be at? Chances are, if its not COMPLETELY paid off, you'll be charged BACK interest for the full amount.. . .so I would DEFINITELY check into that, and if that's the case, then YES pay that off before April. :) Nothing like getting your statement in May and finding out you've had a year's worth of 29% interest tacked onto your total! (for the initial purchase, mind you, NOT just the remaining balance)

If that's NOT the case, then I would think about cutting up the Visa so you cant USE it or hide it off in a drawer, whatever...and continuing to pay primarily at that card. Even though 8% isnt a HUGE amount of interest....imagine if you had that 8% in the bank. Earning 3 or 4% FOR you in a savings account, instead of For the CC company.

For example... If your Visa has a $5,000 limit on it, you are paying about $33.33 every month, JUST in interest. Or...$400 a year.

So, say you have room on your Visa, so you've charged a $30 meal on it. You COULD have paid cash for the meal, but chose to charge cause you didnt have Cash handy, or hadnt balanced your checkbook so felt safer using the CC. Or, if you COULDNT have paid cash, you could have eaten Cheaper.... OK.... Using some really really Really simplified math... $30 is .6% of your $5000 bill. Meaning...by putting it on your card, the cost of that meal, just cost you an extra $2.40 this year in interest. (.006x400).

Sorry, i'm an analytical mind! :) And im going thru the SAME things right now, so its easy to get the lil wheels in my head spinning.

The POINT....my recommendation would be, to cut up the Visa. Keep your payments where they are now. Use a debit card or cash, and maybe even, for one month..keep track.... Dinner...$30...ok, that's $2.40 that you'll either ADD to your CC payment that month (so now you're paying on principle and not interest and you can really see a dent being made in your debt), OR, $2.40 you'll deposit into a savings account so that you HAVE cash when you need it.

If you follow that thru..say, the $2.40 into a savings account...at 3% interest...you'll make a Whooping 7 cents over the year. hehe. But...if you're like me and you charge gas, because its easier...that right there is 4 $30 purchases a month/vehicle. OK....if i did that JUST with my gas...$2.40 into savings for every $30 I debit instead of charge..I'd have $115 at the end of the year, plus interest. AND that would be $1440 NOT charged onto a CC. -- something i would Definitely notice when my monthly statements started going consistently DOWN.

Hmm..dunno if all that makes sense, sorry.

Basically, i think, as long as you are Paying on your CCs, you're on the right track...meaning, it doesnt *really* matter if you're paying more on BB or Visa, or you combine them both onto one, or WhatEVER...Some "experts" tell you to always focus on the highest interest rate, some to focus on the lowest balance, some im sure would say "yes, get rid of the BB because you can cut that up and never use it again!" So, you and your DH need to look at ALL the variables and figure out which option is best for you getting it ALL paid off, soonest. If that means keeping the Visa near the limit for now, for whatever your particular circumstances are, then do so until the BB is paid off. But definitely Definitely consider the costs both of continuing to charge, and of letting even that 8% interest sit there.

Hope that helps. :)

~ Teresa
(Who has loads and loads of CC debt at a MUCH higher interest rate, so please don't think im being preachy about not using the CC! I'll pay over $5000 this year in interest alone. Eek!! )

Teresa
http://www.affordingpickles.blogspot.com

iVillage Member
Registered: 05-30-2003
Sat, 07-23-2005 - 11:40pm

Throwing my 2 cents into the mix...

Are you planning on keeping the Best Buy card once you pay it off?

I know that you're racking up the Visa interest the longer you take to repay it. But, if it's a problem, and it sounds like it is, you have to find a way to shuffle things so that it doesn't get used. So-

If this were me, and yep, now that I think about it, it certainly COULD be me, LOL...

I would pay the minimums on each card until I built up a buffer of whatever amount tended to be charged on the Visa. Then, I'd go after the Best Buy with any and all extra money that showed up,while paying the minimum on the Visa. After it was gone, I'd close the account. I've noticed that store cards tend to have a higher interest rate attached to them. Then, after NOT USING that Visa in the meantime, I'd snowball the Best Buy payment over to them and get it gone. And closed.

Now, mathematically, I do realize that this way makes absolutely no sense, and that I'm paying more in interest than I need to. I also know that breaking the habit of using a credit card is HARD! I'd rather see that store card paid, especially when you know that EVERY dollar you send them is bringing the balance down immediately, and that a Best Buy card can't be used like a Visa.

Another thing to think about is to call the Visa place and ask them to lower your limit (after you've paid it down some). If your DH is adverse to using it when it's near the limit, then this should work, although you will have to let him know that the limit has been lowered.

So, there you are-my 2 whole cents!

Lisa

iVillage Member
Registered: 08-19-2003
Sun, 07-24-2005 - 10:17am

I would only pay the minimum on the best buy card & pay everything you can to VISA. In order to get out of cc debt, you have to stop carrying & using the cards. The balance will continue to climb until you stop using them.

An easy way to get your husband to stop using the card is go in his wallet & cut it up. If that does not work call Visa & tell them it was stolen. He will be sufficiently embarrased the next time he goes to use it and he just may figure out that you are not using cc's anymore.

I know I am cruel, and honestly I have done both to my husband, and he is finally starting to get that debt is a bad thing.

Shannon

Shannon


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