Considering a balance transfer should I?

[Anonymous]

I received an offer from Wamu for a 1.87% BT offer till 5/09, which made me leary since Chase just took them over.  It's my highest CL at 4,500 & I have about 400 on it.

I have the following that I am considering:

1. A Cash reward card @ 17% with 350 on it.

2. A Store card @ 20% with 450 on it.

I am in the process of paying them off, the 20% first, then the 17% then the Wamu at 13, & will have it all paid by the end of December.  I am not adding any new amounts in the meantime until they are paid off.

In the fine print it says a 3% BT fee which in my case will be about 25.00.

I am not in a mess, just trying to save some money where I can.  I am concerned that doing any BT might make creditors suspicious of me?  And Chase has never liked me due to a Chap 7 in 2002.

Any thoughts?

Thanks!

Eventually 

[Anonymous]

I would skip it. By my calculations, you might save a dollar or two, you might pay an extra dollar or two. I guess I can't imagine going through the effort of the BT to save myself a dollar, or even $10. I'd rather concentrate on scrounging up a few bucks by skipping Starbucks, or selling a couple of books on Half.com, or whatever.. Forget moving the debt around, just pay it off.  I guess the only way I'd really do it is if I needed to continue using a card. I personally put all my expenses on CCs and pay in full every month so maybe I'd transfer one card to draw a clear line. Card A is for expenses and must be paid off every month completely, no exceptions. Cards B and C can not be used for any reason and I must pay down. Another issue for me personally is that if I knew the debt was at a low interest rate I'd be less likely to penny pinch.

But maybe consolidating it on one card motivates you further. So even if you did pay a few extra dollars in interest it'd be worth it. Just don't slack on paying it down because Wamu @ 13% will still grow since any money you send will likely go to the lower interest rate debt first.. Okay, one last thought, dumping $800 on Wamu will send your util on that card to like ~25% which might cost a couple points in your scores. Maybe it would be balanced out by having fewer cards with balances, though.

So, onto my rough calculations if you want to see how I came to that conclusion..

Let's say you leave all the debt where it is at and pay down $110 principal each month on the first two cards and only pay interest on the last card -

So first month you pay -

$350 @ 17% = $4.96 (considering BT)

$450 @ 20% = $7.50 (considering BT)

$400 @ 13% = $4.33

If you don't move any debt around

$16.79 interest in Oct,

$13.40 in Nov,

$10.83 in Dec..

Total for Oct/Nov/Dec = $41.03 paid in interest

You'll likely pay less than $41 in interest between Oct, Nov, and Dec if you pay off the first two cards by the end of Dec and make only interest payments on Wamu (not likely paying interest only obviously but keeping things simpler)

Let's say you do move the money around -

The first month looks like this -

$350 @ 1.87% = $.55 (which would BT)

$450 @ 1.87% = $.70 (which would BT)

$400 @ 13% = $4.33

Cost for 3 months -

$5.58 + $5.28 + $5.06  = $15.93,

plus transfer fee of $24,

Total for Oct/Nov/Dec = $39.93

And finally, $41.03 - $39.93 = $1.10. Obviously the numbers change depending on how much you pay each month..