05-07-2013 11:39 AM
I'm hoping you guys can give me your best recommendations in my situation. This year on tax day, I owed about $4,000 in taxes to Uncle Sam. Originally, we were going to do a 120-day installment agreement, which would have cost about $80 in penalties and fees. Instead, we decided to put it on our Capital One Venture card, since the fee for making a credit card payment in the full tax amount was $84 (very similar to what it would have cost us to set up the installment plan with the IRS). However, unlike the IRS, we get to collect Venture miles on both the $84 charge, as well as the $4,000 charge for the taxes themselves. Clearly this was the better (cheaper) alternative.
Originally my plan was to pay the Venture off right away using our savings account, since I didn't want to owe interest on the balance as that defeats the purpose of putting it on the card in the first place. However, the next day, I received an offer from my Discover card for a temporary CL increase of up to $3,000 for balance transfers. There is an initial APR of 0% for 12 months, after which the full interest rate applies. Since we had planned to pay it off in 4-months using the original IRS installment plan, paying it off in less than the 12 months will not be a problem.
On paper this sounds like a good deal. Impact to util will be negligible since the increased balance will be offset by the increased CL. And no interest on it for up to 12 months, without having to touch the money in our savings.
I'm posting, because I want to ensure I'm not missing anything here. I've never done a balance transfer before, so is the 0% APR only for an interest rate that would have normally been charged on top of the usual card APR, or does this really mean I can float this charge at ZERO cost for up to 12 months?
And lastly, I currently have 3 cards, only one of which (the Venture) posts a small balance (~$1,000) each month. Posting a balance (whether interest-bearing or not) will activate a dormant card and show that I am carrying a balance on 2 cards. Not sure what impact this will have on my credit score (815 FICO last time I checked), but we're about to buy a car next month, so I'm sensitive to any negative score changes.
05-07-2013 12:11 PM
This is an interesting exercise in balance transferring while trying to minimize fees and maximize points.
Your limited card selection makes your choices very limited unless you consider applying for a new credit card.
If you're sticking with your current lineup, just pay it off from savings. you're paying $84 in fees to the government versus gaining 4k miles on venture which is equivalent to $40 roughly.
Not worht the hassle to save $48 unless you want care to get more creative.
05-07-2013 12:12 PM
I wouldn't even bother with the discover offer. They are trying ot make some quick cash off of you through their balance transfer fee - about 3%. That offer is a non-starter.
05-07-2013 01:01 PM
05-07-2013 03:13 PM
05-07-2013 03:22 PM
05-07-2013 04:49 PM
05-07-2013 05:11 PM - edited 05-07-2013 05:13 PM
do what you feel comfortable with.
05-08-2013 08:15 AM
05-08-2013 08:35 AM
do what you feel comfortable with.
No offense, but that's terrible advice. You don't learn how to manage your personal finances by finding your "comfort zone". You learn by doing what makes better finacial sense for your own situation and goals.
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