Credit Card Question

samruba · #1 (**permalink**) 06-10-2010, 09:15 AM

Hi, I currently have a credit card with a balance of around 8000, credit limit of 16000, current APR of 14%. I have a balance transfer option via CITI that allows me to take advantage of 0% interest on this card thru March of next year. With the Balance transfer option, CITI allows me to take a "Extra Cash" option. I have called them and asked them and they said this extra cash would be just like a balance transfer, the same rules apply. Would it make sense for me to take extra cash and pay this same card using that money. CITI told me when a card has two different APRs on there to decide which card they apply the money to is like this: They take your minimum balance and apply that first to the lower APR and then the higher APR, anything you pay over your minimum balance goes first to your higher APR balance and the reminder goes to the lower APR. If I am understanding this correctly, doing this would save me lots of interest charges. Anyone have any experience doing this?

C9Consulting · #2 (**permalink**) 06-10-2010, 07:29 PM

So you want to take out $8k to pay off the $8k in debt because your balance transfer option allows you to take out "extra cash" at 0% interest until next year?

That makes complete logical sense to me, I would just run it by whoever does your finances. I have found that when people try to game the system, it rarely works. Did you know that in the meantime your interest on the $8k account will still be growing interest daily? CITI will apply the cash that you are going to pull out, to interest first and then principal (or vice versa; either way you will not get rid of full balance). So you will still have a balance of more than $8k. And I'm willing to bet that if you don't pay all $8k off come March of next year...there will be large consequences.

All in all, if you think you can pay off $8k in a year, I would go for it. But make sure that everything is exactly how you think it is. I would hate for you to do it, only to find out that you have it off worse than you do now.

janna · #3 (**permalink**) 06-13-2010, 03:14 PM

Is there a fee for the balance transfer (either on the old or the new card?) If this fee (or a combination of the two fees) is high, it might outweigh the amount saved in interest.

LennieLondon · #4 (**permalink**) 06-30-2010, 01:39 AM

Small card that authorizes the person named on it to charge goods or services to his or her account. It differs from a debit card, with which money is automatically deducted from the bank account of the cardholder to pay for the goods or services.

jonathanpaul · #5 (**permalink**) 03-29-2011, 09:26 AM

Quote:

Originally Posted by LennieLondon

Small card that authorizes the person named on it to charge goods or services to his or her account. It differs from a debit card, with which money is automatically deducted from the bank account of the cardholder to pay for the goods or services.

Hi Lennie,

So, you mean that if i will apply for a debit card, i should do have a bank account? Is there a limit of how much balance i can use with my debit card or it will depend how much money i have in my account?

littleroc02us · #6 (**permalink**) 05-24-2011, 10:07 AM

So, when do you actually get to paying the bill and not switch money around? If your truly interested in reducing debt it is o.k. to do a balance transfer to a lower interest rate, but then you need to set a timeline to eliminating the debt.

ShivaniKuliyal · #7 (**permalink**) 06-20-2011, 12:30 PM

Helpful thread !

loans2compare · #8 (**permalink**) 06-28-2011, 09:22 AM

With a debit card you can only spend what you have in your bank account..

http://www.loans2compare.com

johnsymons · #9 (**permalink**) 07-28-2011, 05:02 AM

Hello there,

Very true, if you have the option to do it like this you must. Afterall you have god credit limit of $8k so bank must offer you such offers.

It's a nice post and yes it has helped me in gaining some knowledge

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