Usually when those blank checks come in the mail I just shred them without taking a second look. But last week, yes, you guessed it, I took a second look.
Bank of America wants to do a balance transfer for me, and they’ll charge me 0% interest until April 2013 and will charge me 4% transaction fee. I was thinking about going for it, and ran a few calculations. We would save about $250 over the next 9 months if I took them up on their offer. [$311 to transfer $7784 at 4% transaction fee, plus $70/month finance charge savings for eight months = $560 ... $560 -$311 =$249].
But I wanted to wait until the weekend to read the fine print. Boy, am I ever glad I waited.
In the meantime, Chase sent an offer that was much more attractive. 0% interest for one full year and they will only charge 1% transaction fee. Awesome.
So now it looks like we could save $762 over the next 12 months. [$77.84 to transfer $7784 at 1% transaction fee, plus $70/month finance charge savings for 12 months = $840 -$78 =$762].
I read the fine print, and even called to make sure I was understanding everything correctly. It looked good, sounded good, and I decided to go ahead and follow through with the balance transfer. Something else that is going to be really great is that I’m combining three accounts into one, so now I’ll just have to make one payment. That will mean some shuffling of when bills are paid since previously I was making those payments at different times in the month. I may end up making two payments but at least they will be going to the same place instead of three different accounts.
Here are our current credit cards right now:
- Bank of America $3278.40
- Chase $2094.58
- Wells Fargo $4506.33
Grand Total $9879.31
Last month we paid these amounts in finance charges:
- Bank of America $25.60
- Chase $16.35
- Wells Fargo $44.51
Grand Total $86.46
I anticipate the Slate VISA to remain around $16, but since the other two will go down to 0% interest, so we will save about $70 in interest each month.
Here is the minimum amounts due on each card:
- Bank of America $56
- Chase $37
- Wells Fargo $82
The amount I’ve been paying each month:
- Bank of America $136
- Chase $80
- Wells Fargo $180
The credit limit on the Chase card is $15,500. Right now it is at $2094.58, but after the transfers it will go up to 9879.31. That card will be 65% full, that’s okay. I hear it’s best to keep 20% available on the card because then you don’t look so desperate/bad off financially.
The last time I did a balance transfer, it was a huge ordeal. I applied for several credit cards in one day so as not to ding my credit score too badly, and amongst those was one for 0% interest. I was only approved for $4000 though, and I’d hoped to be approved for $10,000. The balance transfer was also 0% interest for only the first balance transfer. At any rate it was quite a long and lengthy process which took several weeks to be completely done and over with.
This was simple though. I did one balance transfer online, and the other one wrote a check and deposited it at Wells Fargo.
So the current amount owed is: $9879.31. Let’s just say $9880.
The balance transfers are going to cost $77.84 (1%), so that makes the total $9957.84. Over the next 12 months I plan to pay at least $400. The finance charges will be $16 on the remaining amount owed on that card (and will go down slowly each month). In ball park figures, without getting too persnickety here’s what I’m hoping for:
$9957.84 + $192 finance charges ($16 x 12) over the next year = $10149.84
12 payments at $400 = $4800
We should be at $5349.84 by August 2013. That would be awesome.
Have you ever done a balance transfer?