A Factory Working, College Grad Getting Out of Debt

A Raindrop – 0% APR for 12 Months

I made a decision in the month of October when the credit union that I have my auto loan sent me a letter.  It was a card for 0% APR for a 12 month period.  After looking at some of the interest rates of my other cards, I knew I had to do something that a lot of people consider drastic.  I accepted the card and began transferring some of my balances to it.

Now, a lot of you are probably thinking that I’m desperate.  You bet I am.  I am unemployed, I needed to stall, and I was just starting to feel like I was able to float in the water in which I jumped.  However, that was NOT the line of thought that I was having when I accepted this.  I saw that 0% interest for twelve months was a great idea for me.  It meant that I would be able to transfer two, perhaps three of my card balances THAT HAVE HUGE APR RATES to this new card and say sayonara to them.  And when the twelve months was over, the APR would only be 12%.

So that is exactly what I did.  I kissed my Best Buy Store card (27.9% APR) and my Capital One Credit Card (21.9% APR) goodbye and made sure it was final.

bye bye credit cards

Yup, they are bye bye.  (To be honest, that’s just a picture someone else took, I forgot to do the same when I cut mine up). While I was also transferring funds, I transferred about a third of my Chase card to this as well.  This was to make sure that wouldn’t just be making interest payments on the the Chase card, I could actually make a dent in that one too.  Needless to say, I know this might hurt the credit report right now, but it was probably the best choice and decision that I made.  Hindsight being 20/20, I did not know I would be without a job, but man am I glad I was thinking of the future for me even at the beginning of my get out of debt decision.

The only con:  My credit report might be hurt for this.  But honestly, I’m already so much in debt, missing a payment is more of a problem in my eyes, and being unemployed, that might have happened.  So it’s a minor blip.

The benefits: I have eliminated two high APR credit cards.  I have a more reliable source of credit (my credit union won’t be going anywhere), and I can now begin to knock out even more of my debt just by paying minimum monthly payments on it every month.  No interest made, just debt going away.  Now yes there were some fees for it, but those fees are minimal compared to the accrued interest that would be charged every month until these cards were gone.

All I can say is I’m happy with my decision and honestly think it was probably the most sound for me at this time.

Have you ever transferred a credit card balance to a new card?  How did that work for you?  Got any tips?

Count those raindrops!

DecMeadow.

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5 responses

  1. Sounds like a reasonable move. I haven’t done the balance transfers myself, but going from 27% to 0% for awhile is a good way to make some serious traction. I *think* many balance transfer offers have a stipulation where if the entire balance isn’t paid in full by the end of the 12m period, you have to retroactively pay some interest. I think. It’s worth verifying that just to know where you’re at.

    How much money did this move save? And such?

    Also, a post like this should be submitted to the Carnival of Personal Finance or a similar carnival 😉

    December 5, 2012 at 11:01 am

    • Kacie –

      I computed just one of the cards, the 27.7% with it’s balance… And just by paying the minimum payment every month, it would take me 138 months and I would end up paying $1,734.81 in interest!!! Holy cow!

      I haven’t heard of the Carnival of Personal Finance or any carnival for that matter.. what that be?

      December 5, 2012 at 9:20 pm

  2. Back at the end of 2010 the Hubby and I were finally fed up with our credit card debt and transferred some of our balances to two 0% interest cards. We had the 0% for 15 months on those and were able to pay them off completely before the promotion even ended. There’s no way we could have paid all that debt off if a giant chunk of our payments had been going to pay interest on our old cards.

    We’ve continued to work on paying off additional credit card debt since then (all have 0% interest from store promotions). By the end of this month or January we should be completely credit card debt free!

    So I think you made a very wise move… obviously a small ding to your credit report is minor compared to paying loads of interest or making late payments.

    December 5, 2012 at 11:43 am

    • Thanks! I think in a year I’ll be redoing this again and transferring more balances to another 0% APR card again just to be able to actually dedicate myself to the actual debt.

      Congratulations on your own accomplishment! I have student loans coming around the corner and I’m trying to get as much of these BIG interest items out of the way before I have to see a small chunk of my money going to student loans too.

      December 5, 2012 at 9:23 pm

  3. Pingback: 2012 Breakdown Quarterly/Annual Report « Rainy Day Savin'

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