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Thinking through BT strategy: $199 bal xfer fee or get new card?

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   posted: May. 1, 2008 @ 10:56a
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I'm trying to think through my BT strategy. Feedback would be appreciated.

I'm at the end of a BT cycle, and right now I am down to about $30k in bal xfers on a CL of about $130k. (2 balances outstanding -- One that I need to pay off next month, the other at 1.99% until paid off.)

I'm not quite as aggressive as some of you guys, but I'd like to take another $35-40k or so over the next several months.

I got an interesting offer from capital one this week for an existing card. 18 months of 0% with a $199 bal xfer fee. This is one of my higher limit cards, with a $20k limit. I've never paid that high of a fee, but for 18 months, that's a pretty good deal! My plan is to hold onto that (expires May 30) until I can get some new credit and then take advantage of this deal.

My other option, of course, is to look for 2 new cards with no or lower BT fees.

What do you guys think?

   posted: May. 1, 2008 @ 10:57a

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   posted: May. 1, 2008 @ 11:09a
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Depends where you'll put the $. Run the calculations and decide yourself if it's worth it.
Does not hurt to try negotiating the fee.

   posted: May. 1, 2008 @ 12:11p
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Ok, I applied for the Discover Open Road card. 12 months BT with $75 fee. Once all of that goes through, then I'll take advantage of the CapOne offer.

I'm planning on using the 1 year CD at either countrywide (thank goodness it is FDIC insured) or IndyMac to get 4% or so.

   posted: May. 1, 2008 @ 3:52p
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dandan50 said:I'm trying to think through my BT strategy. Feedback would be appreciated.

...

I got an interesting offer from capital one this week for an existing card. 18 months of 0% with a $199 bal xfer fee. This is one of my higher limit cards, with a $20k limit. I've never paid that high of a fee, but for 18 months, that's a pretty good deal! My plan is to hold onto that (expires May 30) until I can get some new credit and then take advantage of this deal.

What do you guys think?

Just do the math:

$18,000 @ 4% = $720/year * 1.5 years = $1080 (rounded off due to compound interest and min payments that degrade the balance)

$1080 * ~0.7 = $756 (tax)

$756 - $199 = $557 total net profit after taxes (approximately)

Is this worth it for $557 over 18 months? Remember that you can get extra BT cards *also*, strategies aren't mutually exclusive.

   posted: May. 1, 2008 @ 6:52p
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Sparhawk24 said:dandan50 said:I'm trying to think through my BT strategy. Feedback would be appreciated.

...

I got an interesting offer from capital one this week for an existing card. 18 months of 0% with a $199 bal xfer fee. This is one of my higher limit cards, with a $20k limit. I've never paid that high of a fee, but for 18 months, that's a pretty good deal! My plan is to hold onto that (expires May 30) until I can get some new credit and then take advantage of this deal.

What do you guys think?

Just do the math:

$18,000 @ 4% = $720/year * 1.5 years = $1080 (rounded off due to compound interest and min payments that degrade the balance)

$1080 * ~0.7 = $756 (tax)

$756 - $199 = $557 total net profit after taxes (approximately)

Is this worth it for $557 over 18 months? Remember that you can get extra BT cards *also*, strategies aren't mutually exclusive.

Why did you multiply by 70%?

   posted: May. 1, 2008 @ 7:07p
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Interestedonlooker said:Why did you multiply by 70%?

That's the $ kept after taxes- roughly. If you're in Florida, you keep a lot more

   posted: May. 2, 2008 @ 3:07a
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dandan50 said:I got an interesting offer from capital one this week for an existing card. 18 months of 0% with a $199 bal xfer fee. This is one of my higher limit cards, with a $20k limit....

What do you guys think?Three things:

-Check to see if your minimum payments are changing. Most of my longstanding Cap1 accounts change this month from 3% minimum payments to 1% plus finance charges. Over 18 months, the 1% would be a significantly better deal for you, the balance would degrade less than 18% in 18 months, not 40+%.

-See if they'll increase your line size if you take a BT. Can't hurt to call in and ask. Especially when you point out that:

-You need to watch utilization. In this hinky environment, a >90% balance will be especially worrisome in most credit files. I'd certainly keep it REPORTING below that.


FWIW, I think that in the current environment, this is a good offer, and were I you, I'd likely take it.

   posted: May. 2, 2008 @ 7:00a
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I put together a little calculator in excel the other day which factors in the lost revenue from making the minimum payments. Here's what I come out with for a pre-tax return on this deal assuming an initial 80% utilization.

Initial Draw $15,999
Min payment rate 3.00%
savings yield 4.15%
Bal Xfer Fees $199.00
Length of Promotion 18
Net Profit Potential $611.37

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