I have $1,000 arriving in my mailbox hopefully early next week.
I was thinking of depositing it all in my hi-yield OSA (pays 1.3% annually)... one little problem. Also have a credit card bill for about $1,000. It's at 0% APR until March '10, so originally I was going to let it ride, but one night I was stuck without any cash and needed some in a bind.
Took out a credit card cash advance, so now I have $41.50 getting charged at a brutal 25% APR. I would have to pay off the entire $1k balance to wipe that cash advance out.
Let the card ride and just make minimums until the 0% APR expires, or pay it off now to get rid of the cash advance crap?
And don't carry your AOR cards in your wallet...sock drawer them during the 0% period to prevent making interest-bearing charges like that...
wotus
Member
posted: Nov. 23, 2009 @ 3:30p
naas, thanks. Yup, realize it's a very small difference, but from a strategy/psychology standpoint seemed like a good question since it is sort of a straightforward case of pay the card vs. put it in the online savings acct.
Either way, I don't want to spend this check. Thought maybe it would be more fulfilling to lock that money up in my OSA and watch it earn interest, but guess it's better to just pay off the card.
I wonder, when you pay it off in full, if it will take effect even though new purchases are being put on the card the same day? Customer service was vague about this. They said "don't worry, in January the new law takes effect and payments will go to highest interest portion first." But it's not January yet.
wotus said: naas, thanks. Yup, realize it's a very small difference, but from a strategy/psychology standpoint seemed like a good question since it is sort of a straightforward case of pay the card vs. put it in the online savings acct.
Either way, I don't want to spend this check. Thought maybe it would be more fulfilling to lock that money up in my OSA and watch it earn interest, but guess it's better to just pay off the card.Do you have more of a cash cushion, so that you wont need to take another cash advance on your credit card? The $40 balance is going to cost you about $4.50 in interest until March. The $1k deposited in a savings account will earn about $5.00 during that same time. So you arent going to gain or loose anything by paying it off early. But, as long as you trust yourself to not spend the money, it's always best to have $1k in the bank rather than a paid off credit card as your only access to cash.
wotus
Member
posted: Nov. 23, 2009 @ 4:02p
True. I'll just put the money in the bank then and pay off the whole thing in March before 0% overall APR expires.
$4.50 going to AMEX sucks, I was hoping to give them nothing, but that's still a bit less than I would pay for a non-bank ATM transaction on my check card in a dire situation so it's OK I suppose.
Yes, have some money so won't need to cash advance again
aviationwiz
Happy Member
posted: Nov. 24, 2009 @ 12:58a
While having money in the bank is always good, are you one of the types of people that might see that in there and think "I can spend $1000!" - even though you can't? I know a lot of people like that... if you can see yourself doing that - pay it off.
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