Did a balance transfer... please help! Think I did something wrong.

So I needed some cash for a quick investment (not a gamble). Anyways, I have a Chase card and received a BT check offer in the mail, 0% for the first 9 billing cycles (so 9 months?) and I filled it out for almost $10,000 (CL is $10,300) asnd then wrote it to myself and deposited...

Now from what I understood, there is a fee with no cap for the transfer and the gentlemen w/ Chase said I would be paying about $280 on the $3,000... Which I understand.

My question is, every month, do I have to make a minimum maintenance payment? Or in 9 months do I just need to MAKE SURE I have paid chase back the $10,000? From what I understand, or thought I understood, all I have to do is pay before 9 months is up, no payments but I figured I'd let FW clarify as I can't afford to screw this up.

Thanks everyone!

Yes, you usually do need to make a min. payment to avoid default and have your rate go from 0% to 29.99%

The fee should be clearly stated on the BT offer. If the fee is 3% with no cap (which is typical of some Chase offers), a $300 BT fee will be posted at the same time the $10,000 is posted (I don't know where the CSR got $280 from). You will need to pay minimum payments monthly. Typically for Chase, that is 2% of the outstanding balance, which would mean the first payment due would be $206. If you pay just the minimum, your second month's payment will be about $202, and so on ...

DiMAn0684 said: the info on the fee for the balance transfer was with the check; you pay 3% of the amount. You can check with Chase on how they calculate min payment, but my rough guesstimate it that it will be ~$200/mo on $10k balance. So yes, borrowing money from HELOC @ 3% would have been a better idea.

Agreed. OP, in the best case scenario you're paying 3% to borrow money for 9 months, and significantly higher if you don't pay it back by then or, worse yet, miss a payment. On the other hand, your HELOC would have charged you 3% for 12 months, in other words less if you paid it back quicker as you say you intend to. It's hands-down the better option in this case.

Animosity said: It was indeed 9300 Wow, I really wish I didn't do this now, I just wasted $300... I didn't realize I owe $200 a month roughly on the money... For a 21 year old student like myself what a waste of money heh. I just figured this would be a better way then asking the parents for a loan from there home equity, but I didn't realize so costly.

Is there a way I can findout exactly what I owe to end all of this? I'd rather just give Chase there money back now and get out of this before I owe some major monthly minimums.

Can I call them, and ask what it will take to pay back the borrowed 9300$ completely? Or will that sound horrid? ...

I've had it for a week so far... what an instant waste of $300 wow.

The $300 is a sunk cost... the money is now at 0% interest for the next 9 billing cycles. Why not just keep the money and pay the $200 minimum payment each month until the 9th billing cycle, then pay off the remaining at the end? The $200 or so minimum payment goes to paying your $9300 debt, it's not a fee.

Animosity said: It was indeed 9300 Wow, I really wish I didn't do this now, I just wasted $300... I didn't realize I owe $200 a month roughly on the money... For a 21 year old student like myself what a waste of money heh. I just figured this would be a better way then asking the parents for a loan from there home equity, but I didn't realize so costly.You do realize that the monthly payment isnt a cost - it's reducing the balance owed. So when you took $9300 plus $280 BT fee, and pay $200 per month for 9 months, you then will have to pay back $7,780 when the 0% rate expires.

So it's still only costing you $280, you just dont get to keep the full $9300 for the full 9 months. A HELOC at 3% would've been slightly cheaper - costing $23.25 per month or $210 for the 9 month term, saving you all of $70 (of course, the HELOC would've had the option of being for a longer term at that same monthly cost, depending on what you worked out with your parents).

Now that you've taking the balance transfer, the fee is a "sunk cost" - you've paid it regardless of what you decide to do from here on. So to repay the balance and go the HELOC route instead will now cost you $280 plus $23.25 per month in interest - it'd be taking the more expensive option and making it even more expensive.

Just make sure you make the monthly payments on time (even if you need to borrow a smaller amount from your parents to do so), and pay off the BT before the 0% expires.

OP, everyone's correct in saying that 1. the $280 is already spent, 2. the monthly payments are not interest but actually directly reduce your balance, and 3. you now have $9,300 interest free for 9 months as long as you make all payments on-time.

So, if the $9,300 is not tied up in something for the entire 9 months, just make the min payments ON TIME every month and pay the remaining balance in full immediately after the 0% period ends. On the other hand, it sounds to me like the $9,300 may already be tied up for the next 9 months, and you don't have the money to cover the monthly payments with Chase? If this is the case, but your parents are willing to loan you the $9,300 from their HELOC as you seem to suggest, their best bet is to lend you only the min monthly payment for your Chase debt every month, rather than borrowing the full $9,300 up front at 3%.

As an aside, I would say you shouldn't feel too bad about the route you went about this. The difference in interest cost between the 2 sources (HELOC vs. Chase BT checks) isn't as drastic in this case as you probably think. The HELOC would have had some benefits (longer term, no rate adjustment upon late payments), but the fact that you wanted to do this independently of your parents' financing is admirable.

1) Isn't the HELOC tax deductible? If so the real cost of borrowing would be more like 2.1%.
2) The balance transfer isn't neccessarily a sunk cost. If you call the credit card company and talk nice to them you may be able to get them to reverse the balance transfer and take away the fees. I have done this several times.

wiredspider said:

OP seems to say they are a 21 year old college student with a HELOC, but can't figure out the terms of a balance transfer?

No - the 21-year-old's parents have a HELOC:

Animosity said: I just figured this would be a better way then asking the parents for a loan from there home equity

I am wondering too and something tells me this is all going to go horribly wrong.

Since the alternative option is your PARENT's heloc, I think you made the right decision, because dragging down your parents with all of this would be a bad idea.

If and when this goes south, please don't try and borrow the money from your parents to repay it. if you screw up and lose the money, take your lumps and figure out how to pay it back. I just have a strong feeling this whole thing is going to cause trouble for your parents, that they probably don't need.

OP,

Post the link to the 0% BT offer you got from Chase.

Animosity said: Ok so I guess I misunderstood taking the $200 or so a month as interest...

So am I correct in saying, now that I have spent $280, I have $9300 of FREE money for 9 months, as long as I make the monthly minimums on time, as well as pay off the remainder BEFORE the 0% runs out (because if after, I'd be paying a high %).

So if I have $9300 and my monthly is $200 minimum I would have $7500 to pay off in a lump sum before the 0% ran out... If I did so, then the entire BT and use of the money would only have cost the original $280 transfer fee...

Or am I missing something still?

That is pretty much it. Like others though, I predict mass failure for your "quick investment (not a gamble)". I don't care how safe of an investment you think it is, don't invest with money you don't have!!

Are you sure the check written to yourself will not be treated as a cash advance? Last month chase sent me a few letters telling me that any checks written to me or anyone else they don't like will get charged the cash advance interest rate that is higher than the local mafia loan sharks. They also changed the upfront fee to 5%.

Animosity said: IAskStupidQuestions said: Are you sure the check written to yourself will not be treated as a cash advance? Last month chase sent me a few letters telling me that any checks written to me or anyone else they don't like will get charged the cash advance interest rate that is higher than the local mafia loan sharks. They also changed the upfront fee to 5%.

That seems ridiculous if the offers fine print didn't state you couldn't write it to yourself.You forgot something. You are dealing with CHASE.

Animosity said: Okay, so can't I just call tomorrow, explain the situation and give it all back and just bite the $300 transfer fee and be done with this fiasco?

Just wait for the closing statement and make a payment for the entire balance, not just the minimum, done. Now, are you gonna post the link to the offer?

Cheapoking said: OP,

Post the link to the 0% BT offer you got from Chase.

One of my Chase cards has a balance transfer 0% offer online, but they haven't sent any checks. It's not really 0% because it's only for 9 billing cycles and I believe there is a 5% fee (not sure because I can't keep track which cards are still at 3% and which are at 5%).

Animosity said: Okay, so can't I just call tomorrow, explain the situation and give it all back and just bite the $300 transfer fee and be done with this fiasco?Why would you pay if off and eat the fee? If anything, just dump the money in a high yield savings/checking account and earn interest on it - you should be able to earn back a bulk of the fee before paying the balance off 9 months from now.

This is NOT a fiasco just because you didnt understand a key detail; additional kneejerk reactions that you dont understand will only make this more costly to you.

WalStMonky said:
You need to invest in a calculator ...... 9% BT fee? WTH?

280/9300*100=3.01% Perhaps he could get a buy one get one free deal on those calculators...

poordealguy said: Animosity said: Okay, so can't I just call tomorrow, explain the situation and give it all back and just bite the $300 transfer fee and be done with this fiasco?

Why don't you just take the $10,000, park it in an interest bearing account (hopefully something >3-4%), make minimum payments from this account and at the end of the offer, pay the money back?!?

Can someone tell me/OP if having to pay tax on the interest will basically make this not worth it or is the 3% fee deductable?!

OP is a college student who probably doesn't have to pay income tax. For others, I'm sure the "Are BT fees tax deductable?" question is addressed in the AOR threads somewhere. My own 2 cents (probably worth even less than that actually) is that it should be deductable since the interest earned from the BT money counts as income.

In all seriousness, OP - you should really do the analysis/number crunching/whatever you want to call it on your "quick investment". You have not really identified it. After all the veiled and less-than-veiled commments here - are you still sure it makes sense? If so, go for it. If not, eject and consider the (about) $300 small change.

That 3% fee comes out to ~4%APR if you pay it off in the 9 months, which you probably wouldn't have been able to get from a bank anyways. So, to answer your question, let your parents handle your money from now on. We'll all be better off.

Oh and call Chase to make sure you have the last day you need to pay that balance transfer off. 9 months is not the same as 9 billing periods.