WHICH SCENARIO IS BETTER

[Takunda1]

Current apr 11.240% card has $0 balance.

Current offer: Balance transfer rate of 5.99% for the life of the transfer with an uncapped 3% fee on the transfer. I have the checks already.

Thing is I want to make a purchase for $2500, will pay it off in exactly 4 months. I can use the balance transfer checks to make the purchase.

Which option will save money if any.

Thanks

[Watchmann]

---

@Takunda1 wrote:

Current apr 11.240% card has $0 balance.

Current offer: Balance transfer rate of 5.99% for the life of the transfer with an uncapped 3% fee on the transfer. I have the checks already.

Thing is I want to make a purchase for $2500, will pay it off in exactly 4 months. I can use the balance transfer checks to make the purchase.

Which option will save money if any.

Thanks

---

Roughly, the BT would be slighly cheaper..  If you buy it with the CC you'll pay about 3.75% in interest over 4 months.  (1/3 of 11.24%).  A balance transfer will cost you 3% fee + 2% (1/3 of 5.99%) for a total of 5%.  1 1/4% difference on $2,500 is $31.25, hardly a kings ransom.  Probably less scrutiny by the CCC if you just use the card rather than the checks.  Numbers would vary a bit if you paid money along the way.

See if merchant will knock off a few percent if you pay cash from the BT.  That way the BT will clearly be less expensive.

Message Edited by Watchmann on 05-23-2009 03:10 PM

[Takunda1]

---

@Watchmann wrote:

---

@Takunda1 wrote:

Current apr 11.240% card has $0 balance.

Current offer: Balance transfer rate of 5.99% for the life of the transfer with an uncapped 3% fee on the transfer. I have the checks already.

Thing is I want to make a purchase for $2500, will pay it off in exactly 4 months. I can use the balance transfer checks to make the purchase.

Which option will save money if any.

Thanks

---

Roughly, the BT would be slighly cheaper..  If you buy it with the CC you'll pay about 3.75% in interest over 4 months.  (1/3 of 11.24%).  A balance transfer will cost you 3% fee + 2% (1/3 of 5.99%) for a total of 5%.  1 1/4% difference on $2,500 is $31.25, hardly a kings ransom.  Probably less scrutiny by the CCC if you just use the card rather than the checks.  Numbers would vary a bit if you paid money along the way.

See if merchant will knock off a few percent if you pay cash from the BT.  That way the BT will clearly be less expensive.

Message Edited by Watchmann on 05-23-2009 03:10 PM

---

Great math Watchmann, I'll be sure to ask about that discount if I use the BT . Thanks again.

[Anonymous]

The math is right but the statement is wrong, the Credit Card would be cheaper based on your current interest rate (mostly cause the total interest will only be .75% or so more than that initial fee that you are going to pay on the whole amount and then you have interest on top of that (which is more than .75%))

The credit card is cheaper.

[Watchmann]

---

@Anonymous wrote:

The math is right but the statement is wrong, the Credit Card would be cheaper based on your current interest rate (mostly cause the total interest will only be .75% or so more than that initial fee that you are going to pay on the whole amount and then you have interest on top of that (which is more than .75%))

The credit card is cheaper.

---

Yep, you are correct.  I stand corrected.  I shouldn't have done the math in my head.  The BT way will cost you $2,625.80 after 4 months and the CC will cost you $2,595, a difference of $31.80 in favor of the card.  This assumes NO payments are made during the 4 months which is not correct, you'll pay at least the minimum each month.  But the CC is the cheaper way to go.