let's say you have $1500 worth of purchases on your mastercard. then, you transfer $1000 from another CC onto that mastercard to consolidate. if the minimum payment is $100, but you pay $300 a month, what percentage of the payment goes towards the purchases and how much goes to the transfer?
All payments apply to the lower APR first, so if you are paying the same rate on both balances, the CC company does not distinguish between the balances. Be careful though, if you received a balance transfer offer with 0% APR, you will basically have to pay that $1000 off first while the $1500 continues to compound on your regular APR.
I don't know the answer to your question, as it depends on the term of your credit card company, but I do have this to offer: you owe the following: Card A - $1000, 18% interest, you're paying little by little, but the finance charge keeps accumulating. Card B - $500, 15% interest, same as above. When you get an offer for Card C with 0% interest on balance transfers for a whole year, open up card C account, transfer both balances, close Card A and Card B (don't even take their offers when you call them). Pay $120/mo or close to that, and you'll be done (1440)... if not: Pray that you get an offer for a Card D with another 0% interest offer on balances. Transfer what's left of Card C, close Card C, and pay Card D off. You're done.
thanks. that's what i was wondering as my transfer interest rate is less than my purchases. i guess it's exactly as zoork said, the percentage that makes them the most money.
This reminds me of an article I read in WSJ this weekend. Personally, I think this is not a good idea. How to Cash In On 0% Offers For Credit Cards By JANE J. KIM June 23, 2007; Page B1 Here's one trick for profiting from introductory credit-card offers -- but there are risks. The increasingly popular strategy involves applying for a slew of credit cards that charge 0% interest on balance transfers, then parking those borrowed funds in high-yield online savings accounts, which often pay 5% or more. Then, just before the cards' introductory period expires, typically in 12 months, you pay off the loans and pocket the interest earned. One practitioner, Ira Stoller of Butler, N.J., figures he makes about $1,300 to $1,400 a year this way. "It's not a get-rich-quick scheme, but it sure does pay for vacations," says the 71-year-old salesman. The idea is to rapidly apply for the cards over a period of just hours, before the multiple applications have had a chance to damage your credit score. That way, if your credit is good to begin with, the card issuers are more likely to approve your applications and grant you the maximum credit lines, which can run from thousands to tens of thousands of dollars per card. The strategy has the nickname "app-o-rama" on personal-finance Web sites such as FatWallet.com and CardRatings.com because of the frenzied pace of applying for cards that some people employ. Card companies say only a small number of their cardholders play this game. Nevertheless, they're taking steps to make it tougher. Some card issuers have reduced their offers of interest-free balance transfers to six months from 12 months or have tacked on bigger fees to transfer balances. Previously, such fees were often waived or limited to 3% of balances, with a cap of $50 to $75. But recently, Bank of America and Chase eliminated their transfer-fee caps on more of their offers, while Citibank raised its maximum fee on some offers to $250. "We've been aware of the phenomenon," says a spokesman for Citibank, a unit of Citigroup Inc. A spokeswoman for Bank of America Corp. says the interest-rate trick was "not at all part of the decision to go to uncapped balance transfers." Competition among card issuers for new customers is so intense that companies can't afford to do away with the generous offers altogether. American Express Co., Citibank, J.P. Morgan Chase & Co. and Bank of America, for example, say they still offer no-fee, 0% balance transfers to selected customers. But there are risks. For one, your credit score will take a hit once the multiple card applications are reported to credit bureaus. Although your score will mostly recover once you've repaid the loans, you should avoid the strategy if you're planning soon to take out a big loan. Other pitfalls: Since you are required during the introductory period to make minimum monthly payments, missing one could cause you to lose interest-free status, wiping out much of your gains. And if you use the wrong offer, such as one that triggers cash-advance rates, you'll be socked with higher rates and fees. Flipping credit-card balances can turn a tidy profit, but there are big risks. Here's what to consider: • Look for no-fee balance transfer offers. • Watch out for offers that will trigger higher cash-advance rates. • Avoid this strategy if you carry any credit-card debt or have poor credit. http://online.wsj.com/article/SB118...?KEYWORDS=credit+card&COLLECTION=wsjie/6month
i wouldnt close the cards that you transferred the balances from though. Just don't use them and keep them there. That way you will have 0 balance on a $5000 limit or whatever. Your debt / debt limit will be lower compared to you if you closed the cards. www.bankrate.com
