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Super Contributor
DI
Posts: 5,744
Registered: ‎01-28-2008
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Re: Xferring Installment Loan to 0% APR Citi Card


creditwherecreditisdue wrote:
I already answered your question last night. The calculation in that thread overstated the finance charges you will actually save by making the BT. (I am not going into the details of how or why the saving are overstated, but they are. It is not worth the effort to do a technically correct recalc when the back of the envelope one shows < $100 savings.) Prepaying the loan out of your savings is OK if you really want to. Making the BT is unnecessary and unwise. Don't move debt from secured installment to unsecured revolving - that's very bad business.

I'm going to make the xfer at the end of December.  The savings calculation I came up with was 5 times greater than $100.  I'm dicipline.  It will work out for me.  Thanks all. 

Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: Xferring Installment Loan to 0% APR Citi Card


DI wrote:

creditwherecreditisdue wrote:
I already answered your question last night. The calculation in that thread overstated the finance charges you will actually save by making the BT. (I am not going into the details of how or why the saving are overstated, but they are. It is not worth the effort to do a technically correct recalc when the back of the envelope one shows < $100 savings.) Prepaying the loan out of your savings is OK if you really want to. Making the BT is unnecessary and unwise. Don't move debt from secured installment to unsecured revolving - that's very bad business.

I'm going to make the xfer at the end of DecemberThe savings calculation I came up with was 5 times greater than $100.  I'm diciplineIt will work out for meThanks all


Yes - because the bulk of "your" savings are coming from:

1) prepaying the loan, and

2) prepaying the bulk of the loan with money from your savings.

Nothing prevents you from doing either of these things w/o resorting to making the BT.

 

The actual "savings" achieved on the BT portion is < $100. This is not enough money to justify the risks involved in transferring secured installment debt to unsecured revolving debt.

Super Contributor
DI
Posts: 5,744
Registered: ‎01-28-2008
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Re: Xferring Installment Loan to 0% APR Citi Card

I WILL NOT DO THE BT
Established Contributor
VEEnVEGAS
Posts: 645
Registered: ‎10-24-2007
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Re: Xferring Installment Loan to 0% APR Citi Card


creditwherecreditisdue wrote:
I already answered your question last night. The calculation in that thread overstated the finance charges you will actually save by making the BT. (I am not going into the details of how or why the saving are overstated, but they are. It is not worth the effort to do a technically correct recalc when the back of the envelope one shows < $100 savings.) Prepaying the loan out of your savings is OK if you really want to. Making the BT is unnecessary and unwise. Don't move debt from secured installment to unsecured revolving - that's very bad business.

Just wondering if you can explain this. I understand why it would be bad to move unsecured debt to secured debt .ie: Taking out a home equity loan to pay off credit card bills.  But, I don't get what would be so bad about moving secured debt to unsecured...especially if you have the means to pay it off quickly.  The only thing I can see that might be affected by doing this would be a change in credit score due to an increase in utilization.

 

DI...I still think that if you can save $500 by doing this it makes total financial sense.

Super Contributor
DI
Posts: 5,744
Registered: ‎01-28-2008
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Re: Xferring Installment Loan to 0% APR Citi Card


VEEnVEGAS wrote:

creditwherecreditisdue wrote:
I already answered your question last night. The calculation in that thread overstated the finance charges you will actually save by making the BT. (I am not going into the details of how or why the saving are overstated, but they are. It is not worth the effort to do a technically correct recalc when the back of the envelope one shows < $100 savings.) Prepaying the loan out of your savings is OK if you really want to. Making the BT is unnecessary and unwise. Don't move debt from secured installment to unsecured revolving - that's very bad business.

Just wondering if you can explain this. I understand why it would be bad to move unsecured debt to secured debt .ie: Taking out a home equity loan to pay off credit card bills.  But, I don't get what would be so bad about moving secured debt to unsecured...especially if you have the means to pay it off quickly.  The only thing I can see that might be affected by doing this would be a change in credit score due to an increase in utilization.

 

DI...I still think that if you can save $500 by doing this it makes total financial sense.


Uh oh...now I'm leaning back toward doing a BT after reading your post.     I'm not really concern about a temporary drop in scores since I won't be seeking new credit anytime soon. 

Epic Contributor
Creditaddict
Posts: 22,067
Registered: ‎10-23-2007
0

Re: Xferring Installment Loan to 0% APR Citi Card

the only reason I could think of it to be a bad idea is if you have a lot of other debt, in my experience banks do not even look at my unsecured personal loan but they frown on the credit cards, so if i moved the loan to a credit card yes I would save lots of money on interest but they already think I'm in to much debt so this would just add to it. but you stating 12% util and savings, sounds like a great idea to me! and for the other poster, even if it is only $100 savings, it's not like it's hard to write 1 check for BT, I would do it for even that small of savings
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Super Contributor
DI
Posts: 5,744
Registered: ‎01-28-2008
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Re: Xferring Installment Loan to 0% APR Citi Card

Besides my car loan, the only other debt I have is my student loan.  I have no other credit card debt.  Plus, doing the BT will put utilization on the card for at least six months.  I'm having to show utilization on 11 different cards each month.  The Citi card can be one less card to use for the next 6-9 months.
Established Contributor
Watchmann
Posts: 989
Registered: ‎05-14-2008
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Re: Xferring Installment Loan to 0% APR Citi Card

The strategy isn't so bad, but the reason the big savings are illusory is because the OP is paying a large part of the debt with money she already has.  You don't need to do a BT to use your own money to pay down part of the debt.  The real savings in this caper has to be calculated on the $3,000 remaining debt at the current loan rate vs. $3,000 at the BT rate for 9 months.  Run that cash flow at the effective interest rates and that will give you an answer that is far less than $500.  More like $100 total savings.
Super Contributor
DI
Posts: 5,744
Registered: ‎01-28-2008
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Re: Xferring Installment Loan to 0% APR Citi Card

This is the break down...

 

I pay $582.71 per month.  I have from October 2009 - October 2010 to make the final payment.  Currently, I am paid ahead.  My next payment of $582.71 is due January 30, 2010.  My pay off amount today is:

 

  Payoff Amount: $5,196.30 Good Through Date:

10/17/2009
(An additional finance charge of $1.54 must be added for every day after this date)

 

 

 

 

 

 

Super Contributor
DI
Posts: 5,744
Registered: ‎01-28-2008
0

Re: Xferring Installment Loan to 0% APR Citi Card


Watchmann wrote:
The strategy isn't so bad, but the reason the big savings are illusory is because the OP is paying a large part of the debt with money she already has.  You don't need to do a BT to use your own money to pay down part of the debt.  The real savings in this caper has to be calculated on the $3,000 remaining debt at the current loan rate vs. $3,000 at the BT rate for 9 months.  Run that cash flow at the effective interest rates and that will give you an answer that is far less than $500.  More like $100 total savings.

LOL.   Money he already has.   I'm only using part of my savings because the CL is $4000.  Loan is greater than that, and I do not want to be nearly maxed out on the card. 


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