More Numbers: 2.99% fixed or 0% for 12 months?
I used the snowball calculator linked on the right to do some more calculations on what is the best way to go to reduce my debt.
I have a balance transfer offer from my Bank of America card for 2.99% fixed for the life of the balance (with a 3% of the transferred amount balance transfer fee, no upper cap on the fee). I have also applied for a Citibank card that has a 0% for 12 months balance transfer offer from the time of the transfer, no balance transfer fee. But the interest goes up to 12.4% after the 0% runs out, or maybe more, because it is a variable rate.
Right now my credit card debt is sitting on a Capital One card with (now) 9.9% interest. So I wanted to figure out which option looks the best for reducing the debt the fastest and paying the least interest.
I am going to use $300 payment per month and $5500 balance for all calculations. By the time I do anything, the balance will probably be $5500 (or maybe lower), and I have been paying more than $300 a month the past few months, but I don’t know if I will be able to always keep that up.
Option 1: Leave on Capital One card. With this option, I will pay $438 in interest and have it paid off in 20 months.
Option 2: Transfer to 2.99% Bank of America card. I would pay a $165 BT fee (rolled into the balance), and then $131 in interest and have it paid off in 20 months. So a total of $296 and the same time frame as the Capital One card.
Option 3: transfer to Citibank with the 0% for 12 months interest and then 12.4 thereafter. I would pay $56 in interest and have it paid off in 19 months.
So, clearly, the 0% offer is the best option. If that doesn’t work out though (I don’t get approved for the card or I get approved but for a really small limit), the 2.99% offer is the way to go. Even with the balance transfer fee (which vexes me) it is still over $100 less than just staying the course with the Capital One card.
And if I can reduce my balance even more over the next month or so or be able to pay more towards the balance every month, it becomes even better.
Maybe with my newfound “leaving my comfort zone” attitude I can ask Bank of America to waive or reduce the balance transfer fee if it comes to that…..
~J
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July 26th, 2007 at 3:37 pm
That was a really nifty tool. I’ve played with the one on bankrate, but like the snowball one much better. And our credit card debts are almost exactly the same!
July 27th, 2007 at 1:50 pm
I enjoy playing with it. I come up with all sorts of crazy scenarios
Down with interest! lol
April 4th, 2008 at 9:01 am
Just wondering where you got the offer for the 2/99% transfer from Bank of America. I have not been able to find it on line and when I call Bank of America they know nothing about it.You can email me at RDGibsonLS@aol.com
April 4th, 2008 at 9:58 am
When I called to activate my new card (not a new account, mine was just about to expire) that is what they offered me while I was waiting for the “activation” to go through.