Balance Transfer

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[Matt tweeted that this forum is empty LOL]

So suppose you stumbled on MS by accident but it can't really work yet for you cuz you're a little in debt. Turns out, techniques similar to MS work for Balance Transfers (BTs).

1. Some credit card offers have low BT fees. Others have 0% intro rates. You would get the latter.

2. Buy gift cards with the 0% intro rate card.

3. Liquidate to Bluebird or similar.

4. (use Bluebird to) Pay the credit card you had all along, that is NOT 0% interest.

 

[tmount]

I'll jump in.

So, another twist is this -- Student loans. You can use a balance transfer check to pay off student loans, and you get ~12-15 months to pay the card off (Warning: DO NOT USE THE CARD -- Put it in a block of ice in the back of the freezer!). I've so far used this tactic to knock out my wife's student loans, some of which were ~6%. You just have to be diligent.

Now lets say interest rates rise and you *don't* have any debt. You can write a check to yourself just as easily. Assuming the interest rates are enough to justify the risk, you could multiply this by however many cards, set automatic payments (because that would really mitigate the benefit), and the interest from the high yield savings account or CD is your profit.

 

[Matt]

Thanks for kicking it off, its a fair segue for the points crowd. I've done some posts on this and ran the numbers and it makes a lot of sense on some levels... but then I also wonder if such gigs distract from the bigger picture of really getting stuck into paying down your debt and increasing Net Worth.

 

[tmount]

I think you can parlay these gigs though; lets say you're paying PMI on your mortgage to the tune of $150 a month. Estimate how close you are to getting "out of PMI", and if its within reason, you could do a balance transfer, pay enough principle down, and pay down that amount over 12-15 months at 0% interest, using that $150. The other side of it is, typically mortgage interest is front loaded, so getting below PMI saves an amount of interest payments too.

 

[Matt]

I think you can parlay these gigs though; lets say you're paying PMI on your mortgage to the tune of $150 a month. Estimate how close you are to getting "out of PMI", and if its within reason, you could do a balance transfer, pay enough principle down, and pay down that amount over 12-15 months at 0% interest, using that $150. The other side of it is, typically mortgage interest is front loaded, so getting below PMI saves an amount of interest payments too.

Totally, and this was my thinking for a while, but now I am wondering if there is a disconnect on a certain level and people don't push forward as seriously with their careers, or starting a real side business, and being in charge of their spending vs getting too wrapped up in earning minor amounts of cash. I truly believe that your first $100,000 is all about earnings, and is accelerated with smart spending, but MS doesn't necessarily help, as it is time consuming and distracting to an extent.

 

[tmount]

So not to diverge from the topic - but I completely see that. I've been trying to do another side business (aside from MS, FBA, and QCV) for 6 months, but haven't gotten there yet. I tend to think its more psychological, but there is an opportunity cost... for me though its more the "if I want to get x new clients, I have to take x days off of work" which directly conflicts with my rather exhaustive travel agenda.

 

[3rddayfan]

I've rolled into a ditch with the credit cards with bonuses. I thought the Arrival was my best friend and I decided to pay a lot of travel expenses with it because the thought was I could cover the charges eventually. The initial bonus after the minimum spend was exhilarating but then trying to keep up the spending to deposit points into the account "bank" for those travel redemptions has now resulted in a list of deficiency. I now have new cards with minimum spend requirements and wonder how I am going to handle the afore mentioned Arrival.

 

[Matt]

I've rolled into a ditch with the credit cards with bonuses. I thought the Arrival was my best friend and I decided to pay a lot of travel expenses with it because the thought was I could cover the charges eventually. The initial bonus after the minimum spend was exhilarating but then trying to keep up the spending to deposit points into the account "bank" for those travel redemptions has now resulted in a list of deficiency. I now have new cards with minimum spend requirements and wonder how I am going to handle the afore mentioned Arrival.

To recap:

Are you saying that you are unable to pay your credit card bill on your Arrival card, and that you also want to meet minimum spend on your other new cards?

 

[3rddayfan]

I wouldn't say that I am unable to pay the Arrival card, at all, but without the 0% rate that I have with the card for a year, I have to carry a balance to keep me from dipping in savings. That would not be fair to my spouse and I feel guilty enough about this already. Thanks for asking, though.

I am learning the AMEX Card for Target for the minimum spend on the latest Arrival card. The difference is after the minimum spend, I will use the card sparingly, no plan to do excess travel, letting the unused CL keep the credit score at a stable level. Because the new Arrival does not even have a promotional 0%, the balance will be paid in full every month for the three months of minimum spend.

Just talking about it, seems to be giving me a better viewpoint. Thanks for the chat.

 

[Matt]

I wouldn't say that I am unable to pay the Arrival card, at all, but without the 0% rate that I have with the card for a year, I have to carry a balance to keep me from dipping in savings. That would not be fair to my spouse and I feel guilty enough about this already. Thanks for asking, though.

I am learning the AMEX Card for Target for the minimum spend on the latest Arrival card. The difference is after the minimum spend, I will use the card sparingly, no plan to do excess travel, letting the unused CL keep the credit score at a stable level. Because the new Arrival does not even have a promotional 0%, the balance will be paid in full every month for the three months of minimum spend.

Just talking about it, seems to be giving me a better viewpoint. Thanks for the chat.

If you are unable to pay off your balance in full I'd suggest this may not be something you should get involved with- or if you do want to then scale it down until it reaches a level you can manage.

There is no guilt here. If you can't pay things off you are spending too much money and should adjust that - there is no purpose in getting a free flight if you end up in debt to do so.

There is no shame in being in debt either, many people are- it should be embraced and the goal should be to get out if it ASAP.

I think you need to explore your budgeting a little rather than explore Amex for Target or other such things, it's a lot more important to your well being overall.

 

[Alex1432]

Please heed Matt's advice. You should always have extra to make sure balance is paid in full when playing this game. Sometimes mistakes happen and you need to have that cushion to pay the bill. Any interest you pay negates any cash back you may receive

 

[freebee]

I wouldn't say that I am unable to pay the Arrival card, at all, but without the 0% rate that I have with the card for a year, I have to carry a balance to keep me from dipping in savings. That would not be fair to my spouse and I feel guilty enough about this already. Thanks for asking, though.

I am learning the AMEX Card for Target for the minimum spend on the latest Arrival card. The difference is after the minimum spend, I will use the card sparingly, no plan to do excess travel, letting the unused CL keep the credit score at a stable level. Because the new Arrival does not even have a promotional 0%, the balance will be paid in full every month for the three months of minimum spend.

Just talking about it, seems to be giving me a better viewpoint. Thanks for the chat.

You would not be fair to yourself or your spouse, if the interest on the Arrival is higher than what you earn on your savings, assuming the savings are liquid assets. So, it may make sense to pay off Arrival with the savings (make sure you leave some savings for emergencies. Get rid of the guilt by discussing it with the spouse. Also, use this as a lesson learnt and as others have advised, donot play this game outside your means.

 

[InstinctX]

Are there any negative impacts to credit score if you have 2 CC's with overpayments when statement closes?

 

[freebee]

Are there any negative impacts to credit score if you have 2 CC's with overpayments when statement closes?[/QUO
While I think only someone who works for a Credit bureau would be qualified to answer with 100% certainity, I would not imagine anything negative, but would think it would be a positive, since it would reduce your overall credit utilisation ratio.