@medicgrrl wrote:
I'm not understanding why you would want to do that vs just paying down the other card and then transferring the remaining. It's the same thing.
@hsspres wrote:But then when the transfer posts, you would be over your limit and could incur a penalty for doing so, and they may want your minimum due to include the amount over the limit when the statement cuts.
EDIT: I don't know how to 'multi quote' on this forum and I have screwed it up, so I have made my replies large/bold/different color to differentiate from the quotes.
Perhaps my explanation was not clear enough, as it is not the same thing as paying down the other card and transferring the remaining, nor would it put the card over the limit, ever (not to say that it is a good idea, because I have actually decided against it after SouthJamacia's post).
To explain this better, for this example, forget about where the balance transfer is coming from (as I have plenty of cards with no cash advance fees, on which I can easily create any artifical balance that I want, to then transfer to another card, if I wanted to). So, having taken the source of the other card's balance out of the example, let's assume that I have an offer for no-fee 5% APR up to 1 year balance transfer, and I want to borrow 'as much as I can' at that rate (I don't know if I am going to have the balance on there 2 weeks or for the full year term). The amount 'as much as I can' for a balance transfer is traditionally defined by my credit limit; however, if I overpay the card, so that it has a negative balance, then I can transfer that much more than my credit limit, because it pays it down to $0 balance before it starts going against the credit limit. So, if I overpaid by $10k before doing the balance transfer, I could potentially borrow $27k at the 5% rate, instead of being limited to the credit limit at $17k.
Borrowing $27k at 5% rate is not the same thing as paying down a different card and only borrowing $17k.
You may not understand 'why I would want to do something like that,' because I haven't explained why. I only asked for data regarding first-hand experiences.
@NRB525 wrote:...
I think you could get this to work, however that means either you have been paying into PenFed for many months while building up high interest credit card balances, or you won the lottery, and might as well have deposited that payment to pay off that high rate card directly, not paying a credit card to negative.
I'm not sure what logic was used to deduce that 'either/or,' but neither of those cases are accurate.
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Credit forums are an interesting place. I am the type that, when it comes to trying to get assistance from the crowd, I am usually looking for simple hard data and first-hand experiences, from which I will come to my own conclusions about 'yes or no' on what I was thinking. More often than not with the credit forums, instead of directly answering the question, you get people (on like a 4:1 ratio) trying to read between the lines, trying to assume motive and trying to assume the 'why' behind it, passing judgement based on their assumptions, rather than simply reporting hard data or experiences about the question that is actually being asked.
I guess I will conceded that that judgement is good sometimes, as I am sure sometimes this tendency leads to others making wiser financial decisions than they were originally going to make. Just an interesting observation, I guess.
For some insight into my particular situation, for the 'why assumers,' I will explain a little bit. I have over $220k of completely no-fee cash advance lines/cards. I am using some of that to temporarily (could be one week, could be one year) fund some business expenses, which is well worth the interest on the money borrowed.
More detailed explanation from a different thread of mine ( http://ficoforums.myfico.com/t5/Credit-Cards/Under-99k-Income-Largest-Total-Credit-Limit-and-Single-... ):
@maddox74 wrote:I didn't think that I was near as bad as some of the hardcore's on here (who game credit just for the game, which I am not), but I guess I'll explain myself if it makes you feel better
I know that I already have more than I could/should use. However, if you look at the cards that I got, I have focused on cards (for the most part) that have decent rates and no cash advance/balance transfer fees. In my line of business, it is helpful to have the capability to have significant liquid funds available, even if I don't use them regularly.
For example, right now I am near 0-3% utilization (I just maintain the use of the cards to maintain the credit scores), but I am cosidering using my available credit/lines for a short term to purchase a handful of cars. The cars will eventually be sold on a relatively short timeframe (2months to 2 years max), and I would rather use some of my available lines of credit, rather than getting a handful of additional car loans that might be paid off as soon as 2 months out. To do this, I am considering a 0% balance transfer for 12 months offer that I just got via email for my NFCU GoREWARDS (which I just applied for CLI to $50k, but I doubt I'll get that, considering I already have ~$90k of unsecured credit with them). Say, hypothetically, that my CLI is approved for $40k on that card, and that I take them up on the balance transfer offer for 12 months. By having my crazy high total credit limit (that total credit limit achieved in part by maximizing my other cards, like the Amex), I would then still be only around 13% total utilitization, in spite of having a $40k 'free loan' out for a full year.
Anywho, the only downside I can see with high credit lines (for people who aren't tempted to irresponsibly use more credit than they can afford to) is that it can possibly reflect negatively if/when I might need an important future loan for myself (like another mortgage). Outside of that consideration (too much credit reflecting poorly on future loans), I am not as averse to disproportionately large credit limits as you seem to be. To each their own
___________This. There are no better BT offers than 'no-fee 5% APR' in my existing portfolio of cards, that I haven't already taken advantage of (I already have $25k 0% for 1 year BT on one of my NFCU cards). And I am not looking to add any cards just for promos. My other Penfed cards, under this same promo, have 0% APR fro 12 months, but have 3% BT fee. Like NRB525 said, in my situtaion, where I may pay it off completely in a month, I would rather have the 5% rate with one month's of interest, rather than a full 3% fee to borrow the money for possibly only a month.
@NRB525 wrote:
@CommanderLexa wrote:Somewhat unrelated - there are a lot better BT offers than 5% APR for 12 months (even though it has no BT fee).
It depends how quickly you are paying the transferred balance.
Half a percent per month on a rapidly declining balance can be less cost than paying 3% up front on the full BT.
In the end, I have decided against trying to overpay and then BT greater than the limit, as SouthJamaica's post made me realize that $10k at 5% for a couple of months is not worth risking my relationship with Penfed, especially when I have their $50k maximum total cards' limit, $25k LOC, and pre-approval for car loan at their lowest APR. I am going to keep it simple and stick with my $15k BT balance on a $17k limit card.
The kind of free money you are proposing has a cost in the form of having to juggle all the bits, move the funds around vs just getting loans secured by the individual cars.
The risk factor in your plan is that your unsecured credit card outstanding balances jump up suddenly, and cause alarm with your existing unsecured cards. AMEX has been known to provide easy CLI on a set timeframe, but they also take quick action to reduce available credit when they feel their risk has increased suddently. I would not go into this assuming your utilization will remain low. CLD has a way of increasing utilization calculations.
One of the reasons you get a wide range of responses for what you think is a simple question, is that in many cases we get "simple questions" that on further explanation by the poster, it turns out the situation was something different. Your original post, for example, did not mention anything about moving funds around for buying multiple cars. In the absence of "buy a car on a credit card", my two proposed scenarios, are actually the two scenarios, excluding buying cars with other transfers.
