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Pros and Cons to balance transfers

inutown
Regular Contributor

Pros and Cons to balance transfers

I've got a question regarding a balance transfer:

 

I currently have 3 Cap1 cards:

#1 Capital One Platinum with $49 annual fee and I'm currently being charged $11.30/mo as an interest charge. 563/600

#2 Captail One Platinum with NO annual fee and NO interest. 32/500

#3Capital One Quick Silver One with $49 annual fee and no interest for the first year. 0/500

 

Would it be smart to transfer some, if not all of my balance from #1 to #2? What are the pros and cons of doing a balance transfer? Would it eliminate my interest charges? 

 

Thank you! I'm sort of a dummy when it comes to credit because I'm still learning.

 


Message 1 of 7
6 REPLIES 6
CH-7-Rebuilding
Valued Contributor

Re: Pros and Cons to balance transfers

Tne annual fees aren't really relevant to the interest you are paying.  You either think those cards are worth a fee or not.

 

You can't balance transfer balances between cards from the same issuer, however.  So Cap 1 cards would have to BT to a different lender offering 0%.

 

But you are always better off paying 0% interest!   You do have to take into account the typical 3% balance transfer fees.

Message 2 of 7
RobertEG
Legendary Contributor

Re: Pros and Cons to balance transfers

Bottom line is that they are banking on statistics that show they will make more $ by doing a BT than not.

Certainly, that is not true in all cases, but on the average, it is true.

Thus, you must do something abnormal to "beat" the BT game.

 

First, the up-front BT fee of 3-4% immediately represents approx two months of normal "interest."

Thus, a 12-month introductory period at 0% APR is actually only about a 10 month period, factoring in the BT fee.

 

Their real "gamble" is that they are relying upon you not repaying the entire amount of the BT within the introductory period, thus resulting in more debt on your account after the introductory period has expired than would have been the case without the BT.  That remainging balance then reverts to their normal APR.  Of course, they want that debt to have been initialkly accrued with another creditor, and not simply move their own debt  deck chairs, so they dont permit BTs between their own cards.

Statitistics show that is not a gamble on their part, as consumers on the average dont repay within the period.  You can win if you are abnornal.

 

From the consumer's perspecitive, if they dont repay within the introductory period, then a consideration becomes whether the  APR on the card from which the BT is being done is lower or higher than the APR on the BT csrd once the introductory period is over......

 

 

Message 3 of 7
inutown
Regular Contributor

Re: Pros and Cons to balance transfers

Thank you both very much! Obviously I knew nothing. Smiley Very Happy

 

What's nice about my Platinum card is that it is a 0% balance transfer fee, so that would help in the event if I ever needed to use it. After reading both of your posts I don't think it's a route I will be taking, however.

 

Thank you again!


Message 4 of 7
NormanFH
Super Contributor

Re: Pros and Cons to balance transfers


@inutown wrote:

Thank you both very much! Obviously I knew nothing. Smiley Very Happy

 

What's nice about my Platinum card is that it is a 0% balance transfer fee, so that would help in the event if I ever needed to use it. After reading both of your posts I don't think it's a route I will be taking, however.

 

Thank you again!


Log into your accounts and if you do an online chat you can get those Platinum cards upgraded to reward status.

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Message 5 of 7
inutown
Regular Contributor

Re: Pros and Cons to balance transfers


@NormanFH wrote:

@inutown wrote:

Thank you both very much! Obviously I knew nothing. Smiley Very Happy

 

What's nice about my Platinum card is that it is a 0% balance transfer fee, so that would help in the event if I ever needed to use it. After reading both of your posts I don't think it's a route I will be taking, however.

 

Thank you again!


Log into your accounts and if you do an online chat you can get those Platinum cards upgraded to reward status.


The oldest line (highest balance) is already in reward status. The second platinum is under a month old, do you think I can still upgrade it to rewards?


Message 6 of 7
NRB525
Super Contributor

Re: Pros and Cons to balance transfers


@inutown wrote:

I've got a question regarding a balance transfer:

 

I currently have 3 Cap1 cards:

#1 Capital One Platinum with $49 annual fee and I'm currently being charged $11.30/mo as an interest charge. 563/600

#2 Captail One Platinum with NO annual fee and NO interest. 32/500

#3Capital One Quick Silver One with $49 annual fee and no interest for the first year. 0/500

 

Would it be smart to transfer some, if not all of my balance from #1 to #2? What are the pros and cons of doing a balance transfer? Would it eliminate my interest charges? 

 

Thank you! I'm sort of a dummy when it comes to credit because I'm still learning.

 


With a $500 balance, you should be able to spend your way into a virtual BT.

Put all new spend on the 0% cards, so they start accumulating balances. As you add these charges to card 2 or 3, pay that amount in cash on card 1, since you should be in PIF mode anyway.

Make minimum payments on cards 2 and 3 until card 1 is paid to zero.

 

At the conclusion, all carried balances should be on 0% cards only.

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