I’ve Paid For This Twice Already…

Archive for the ‘credit cards’ Category

Earlier this week I got mail from Citicard and they told me that they love me. Well, maybe not in so many words. But we’ve had the card for only a few months and already, they’re raising our limit. I don’t remember what our limit exactly was before, but it is being raised by about $2000.

This is the card we got for the 0% no fee balance transfer offer and now holds our remaining credit card debt. Since receiving the card in August, all we’ve done is transfer ~$5100 to it and then worked at aggressively paying it off ever since. I guess that’s enough for them to decide that we should have even more money to potentially spend. I don’t see the logic in it, but there it is.

Maybe the card didn’t want to give us too high of a limit in the beginning to prevent us from transferring too much in the first place since it was a special no fee 0% offer. But if I transferred more, wouldn’t I be less likely to pay all off in time allotted and so they’d make money in interest on the other end? So shouldn’t they give me all the limit they wanted to up front? I don’t know. I don’t understand this at all and all I can do is laugh, since I’m not going to run out and buy something with my newfound buying power. Although I originally wrote that as “newfound money”, so I guess my old bad habits of how I thought about credit as free money are not *quite* cured.

Maybe they think I will run out and charge a bunch of stuff and lock those charges behind my 0% balance so they can merrily accrue interest while I can’t get at them. But would I seek out such a specific balance transfer offer to take advantage of and then do something silly like that? Not now… but maybe I would have in the past. I hope I wouldn’t have, but I’ve done other silly things that make no sense to me now.

I can’t get inside the heads of the credit card company people, so why do I try?

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So far, my experiences with using the Citicard website and making electronic payments have been positive. I pay, it posts the same day, the next day I log in and the payment shows as posted and my balance is reduced appropriately (love that!). All is well.

Not so with their email notifications. Invariably, about 4-5 days later, I get an email from Citicard stating I have a “pending payment”, dated the date I made the payment. The first time this happened, I got all confused and investigated and confirmed that yes, my payment was *not* pending, it had posted the date I made it, and the email was basically useless. At least it is just an email and not actual paper.

Understand, this is not a notification email after the fact telling me I had made a payment. That I can understand getting days later. This email clearly presents itself as a notification of a *pending* payment. With a date in the past. But written like the payment is going to happen in the future. And not confirming anything has happened with said payment as far as my account is concerned.

What exactly is the use of this? What good does this do me? Exactly…none. Why I am sent this email is a mystery to me. It doesn’t confirm that my payment was accepted. It just tells me I made one…. and long after it has cleared their system, claims it is pending.

Uh…. duh.

What a useless waste of some sort of automated system. If I could find a place to complain I would. But don’t reply to the email… it goes to a mailbox that is not monitored ;).

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Awww… Capital One misses me! I feel so loved… not.

In the mail this week I got a letter from Capital One. For those who are new to the story, my credit card balance used to be at Capital One. After calling them and getting them to lower my interest a tad, I decided enough was enough on the whole paying interest thing and transferred my balance to a Citicard with a no balance transfer fee/0% interest for 12 months offer. I did this in September so I have until September 2008 to pay off the remaining balance (now sitting at UNDER $4000 woowoo) or start accruing interest there.

Well as I said, this week I got a letter from Capital One. They are trying to woo me back with a 0% balance transfer offer of their own. I find this hilarious, because when I originally called them to ask for an interest rate reduction, they claimed they could only go from 10.9% (what I was at) to 9.9%. But now that I took the money away from them, now they can give me 0%. It has a balance transfer fee attached of 2% of the balance (no maximum) but still, that is WAY better than 9.9%.

So… they miss me. Poor Capital One. This both amuses me and makes me a little bit gleeful. And it provides a nice backup plan. Of course, I am NOT going to be transferring anything anywhere right now. I am at 0% for a long while yet. But if Capital One is already sending me offers, they may still be sending me offers in August. If for some reason, I haven’t managed to pay off the credit card debt completely, I may have somewhere else to move it and avoid interest for a small fee. By then the balance will be much smaller so the 2% fee should be minimal.

Hopefully this is all irrelevant and there will be no balance to transfer come next August. But it nice to know I might have options. I really hate interest.

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My statement finally posted for my Capital One card. The current balance (basically the interest accrued before I transferred the balance to the Citicard) was $28.13. Since I have $37.10 in snowflaking money already in my bank account waiting for me to use it, I zapped off a payment of the entire $28.13 immediately. Which means I still have $8.87 left to snowflake to the Citicard.

My Capital One card… is done. Balance $0.00, which is where it will stay for the foreseeable future. I know I didn’t “pay it off” in the strictest sense since it was a balance transfer, but it is still progress and it still feels good. Let the interest-fee accelerated paydown begin! As soon as I have my ebay profits figured out I’ll be sending off a combined snowflake. But that topic’s for another post….

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So the transfer is done. I’ve moved a little over $5100 from Capital One to a Citicard through a promotional 0% interest for 12 months no transfer fee offer. It’s there, I’ve even made my first snowflake payment to it, and my Capital One balance stands at $0.00. That will change when my next statement posts because I will have some residual interest to pay, but that will be done quickly and the Capital One card will be done for good.

So, what have I done? Did I make the right decision? Would I do it differently if I did it again? And do I have any lasting concerns about making the move? NCN asks all that and more in Day 17 of 33 Days and 33 Ways to Reduce Debt and Increase Savings: Carefully Consider Surfing Credit Card Balances.

First off, I definitely made the right decision overall in surfing my balance to a new place. I was paying first 10.9%, then 9.9% in interest every month and there was no need for me to do that. I had called Capital One to get a rate reduction, which is how it went from 10.9% to 9.9%, but I had much better options at my disposal than that. Moving the debt to lower interest was definitely the right long-term move. I wish I had had the initiative to move it sooner.

There are a few things I would do differently if I did it again. This new card we got with the promotional transfer had an initial promotion that if you bought something with the card in the first 90 days, you’d get Thank You points equaling a $50 gift card. So I did, and I shouldn’t have. Not that anything bad happened, but by the time my payment cleared and a new billing cycle started (there was no way I was locking some little purchase accruing interest behind a huge balance transfer) I’d probably paid close to $50 in interest to Capital One. So basically, I wasted that time and money. I should have foregone the gift card and just transferred my balance right away. The other thing I would have done differently is that I would have done this a while ago. Even if I couldn’t pay it all before the promotional period ran out and I had to pay a balance transfer fee on a much smaller balance to transfer it somewhere else for a better rate (the non-promotional rate on this card is not great), it still would have saved me a *lot* of interest in the long run. But I didn’t. At least I have now.

I do have a few lingering concerns. I am convinced this was a positive move, but I wonder if there was another option that made better long-term financial sense. I had an offer from my Bank of America credit card of a 2.99% interest fixed for life of the balance with a 3% (no cap) transfer fee. Even with the fee, this would have worked out to less money spent overall when looking at all of my debts together, because I could have started just paying the minimum on the credit card debt and focused on paying off my 9% and 7% interest student loan debts. Should I have gone to 2.99% fixed and started aggressively paying off student loan debt instead? It would have worked out to some savings in the long term, but I decided it was more important to me to rid myself of credit card debt first. This 0% offer was the most expedient way to accomplish that. But I still wonder if by making the choice to do it this way, I’m revealing that I still don’t have the best financial sense. I mean, it should be all about the numbers and emotions should stay out of it. But I’m still human.

The other thing I still ponder is if this whole balance transfer move is another case of me counting on future income to solve past problems. If we don’t pay off the card by the date the 0% interest expires, then we revert to a higher interest rate (a variable rate right now at about 13%) than we were at with the Capital One card. I’m counting on our income to stay steady or rise, and our expenses to stay steady or fall, to do that, and it is a risky gamble. However, I’m going into this with my eyes wide open, versus the last time I counted on the future to pay for the present, and I know I have a few options if it doesn’t work out as I’ve planned. At the end of the year, if the balance is low enough, I can just pay the interest until it is paid off, which since the balance will be lower than now, will result in less interest being paid overall. Or if I have a good transfer offer with a minimal fee, I can move the remainder of the balance to one of my other two cards (back to Capital One or over to Bank of America), both of which send me balance transfer offers regularly for very low rates. I also now have an emergency fund to fall back on - not to pay off my credit card, but to cope with life’s little emergencies that may come up to try and derail our progress. So I am feeling much better about this situation than I have in the past. But still I do wonder…. am I becoming smarter about my money or just coming up with more creative ways to mess it up?

Only time will tell. But I think I’m on a good path with this whole balance-surfing thing. I think.

~J

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