thinking about snowflaking

iVillage Member
Registered: 12-31-2005
thinking about snowflaking
4
Tue, 02-28-2006 - 12:49pm

Hi kinda of new here but having been lurking for weeks. Just thinking if I should start snowflaking my cc bills. I have the following

Home Depot balance of 439.00 with 21% interest
Discover balance of 1717.68 with 18.24% interest
Bank of America balance of 5316.35 with 9.9% interest
Chase balance of 5430.25 with 8.9% interest

I pay the minium plus 10.00 on all of them except the HD card. Always pay over by atleast 25.oo. So with the snowflaking I would pay just the mimium on Discover and B of A and Chase and put all the extra into the HD card then when HD gets paid of then that plus the extra everymonth would move to the Discover card. Thinking when HD is paid off that we will close that card out. My credit score as of last month was 739. I have never had any late payments during the life of this cards. I would really like to get paid off but what I pay is all I can afford now. Just asking this would be my snowflake plan. I am open to any ideas. Thanks PS Just have to add that I did also have another HD card that I ended up putting big xmas gift on for DH but that was paid off and closed last month. Last thing I need is 2 Home Depot cards .

over 40 and tired

iVillage Member
Registered: 01-25-2006
Tue, 02-28-2006 - 1:09pm

Hi Over40! Welcome!

Yes, that would be the general plan of snowflaking because you want to get rid of those high interest rates. Since you have good payment history, you might want to investigate with BOA &/or Chase what they might be willing to do for you on a balance transfer. I don't know what your available credit is on either or both of them but the goal would be to lower the interest rate as far as possible for the life of the balance (seems like I am seeing offers for life of balance in the area of 3.99-5.99%) since you don't have tons of money above the mins to snowflake and it would be even better if you can get it all onto one card. If you can get one without a BT fee, that would be great but if you could get a $50 or $75 fee to transfer the other 3 onto one (I just did this and they waived all but one $75 fee of the 3 they could've charged me) you would still be quickly money ahead. Another alternative if they won't waive all but one of the fees is to have them put the total balance transfer amount into your checking account and pay the bills yourself (therefore only one BT fee).

If the BT plan doesn't work or you don't want to do that, you might call and see if you can negotiate with the cards individually for a lower rate. Particularly the Discover card because they have a ton of promotions all the time for existing and new customers that they can help you wade through.

You don't necessarily want to close all the accounts that you clear the balances out of. This can lower your balance to available credit ratio and that can lower your credit score. You can still chop them up if you want but don't close them until you get your balance down substantially or eliminated. Depending on the credit limit on the HD card, that one might be ok to cancel.

Peg

PS) One other component of snowflaking you didn't mention was as the minimum payments start going down, you don't decrease what you are paying. You just add that difference to your snowflake. HTH!




Edited 2/28/2006 1:12 pm ET by p7eggyc
iVillage Member
Registered: 12-31-2005
Tue, 02-28-2006 - 4:38pm
thanks for the ideas I think my Home Depot card has a 1500 limit and the B of A and the Chase both have limits of 15000 on them.

over 40 and tired

iVillage Member
Registered: 03-27-2003
Tue, 02-28-2006 - 5:37pm

I agree that should be your plan of attack. Good luck with the snowflaking. You might check out Quicken.com or other debt calculators that can show you how long it will take to pay that off.

Taleyna

iVillage Member
Registered: 01-25-2006
Tue, 02-28-2006 - 6:18pm

Yikes! Oh, gosh, one important caveat I forgot to mention. You do not want to BT onto a card with a balance at a higher interest rate if they won't match the BT rate on the existing balance. Most cards apply all payments to the lowest rate balances first and the higher interest balances just keep churning out the interest. I still might do this on the HD balance because it won't be long until you pay it off but you still want to keep this in mind and possibly apply one of the online calculators to figure out what that decision might cost you. In this case, you might want to move everything to one card and then that entire balance over to the empty card. Or I used my HELOC (but only because I already had the HELOC, I wouldn't open one to do this) to do it. I paid the existing balance off with the HELOC and then used the BT offer to pay off the HELOC and the other balances I wanted to transfer to that card. You might also just consider opening another account to move all of it to but that's a bit of a can of worms for some folks that are trying to go the other direction.

Peg