need advice - should I do a balance transfer?

[new_earth]

I just got my new Discover It card for $2500 CL, 0% until Sept. 2014 for regular purchases then 20.99%.

For balance transfers, 0% for 14 months of date of transfer if I do it by 10/10/13, then the 20.99%.

I have a balance of $514 on my DCU Visa, which has 15.25% APR (used it for a new keyboard to pay off).

The thing I am wondering, and this is part where I guess I don't understand yet - there is a 3% balance transfer fee from Discover, which would make it an extra $15.

Do you think it is worth it by the time I pay interest on the DCU card? I planned, for the most part to make minimum payments on it or way more when I can. Also doing the transfer might make for better utilization? It would be $514/$1000 as opposed to $514/$2500.

I am also hesitating a bit because there are some classes I plan to take soon and I was going to put the cost on one of my higher CC's, and it will be a few hundred dollars anyway.  Please give feedback, thanks!

Oh, and I noticed that apparently if I do the transfer, I'd be paying $35 per month as opposed to $25 with DCU. So it does change monthly expense as well.

[Anonymous]

Personally, I love a good BT, IF it's going to save me money.

I did a BT from my Barclay Apple card to my Discover card because I purchased a new phone from Verizon and the percentage rate at the time was 22.99%, I knew I wouldn't have that PIF before the due date which meant that I was going be charged interest. For me it was worth it to pay the 3% and be able to carry a balance at 0%.

I suggest you make a budget. Find out how long it's going to take you to pay the balance off with amount you feel you'll pay off each month. And if the interest of that is more than $15 then do the BT and if it isn't don't do the BT.

[oscar_actuary]

Yes, the math says that transfer is worth it.  You''re paying over $6 in interest per month if you are only paying the min, essentially.

I don't disagree with the untilization presumption either.  But for the $$$ savings, I wouldn't even worry about that difference.  It's just a bonus, on top of interest savings.

[new_earth]

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@Anonymous wrote:

Personally, I love a good BT, IF it's going to save me money.

I did a BT from my Barclay Apple card to my Discover card because I purchased a new phone from Verizon and the percentage rate at the time was 22.99%, I knew I wouldn't have that PIF before the due date which meant that I was going be charged interest. For me it was worth it to pay the 3% and be able to carry a balance at 0%.

I suggest you make a budget. Find out how long it's going to take you to pay the balance off with amount you feel you'll pay off each month. And if the interest of that is more than $15 then do the BT and if it isn't don't do the BT.

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that's the part I can't figure out, how much interest I'd end up paying to DCU. I haven't kept balances on any of my cards since i started this so I haven't had to figure it out. LOL. Guess I better learn now! Can anyone help? If say, I paid DCU off in min. payments plus a little more at times, over the course of 14 months instead of Discover. (hypothetically speaking, I think I'd be paying it off sooner than that, I hate balances).

[oscar_actuary]

14 pmts of $40.31, and you end up paying $50.30 of interet on DCU @ 15.25%

[Anonymous]

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@new_earth wrote:

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@Anonymous wrote:

Personally, I love a good BT, IF it's going to save me money.

I did a BT from my Barclay Apple card to my Discover card because I purchased a new phone from Verizon and the percentage rate at the time was 22.99%, I knew I wouldn't have that PIF before the due date which meant that I was going be charged interest. For me it was worth it to pay the 3% and be able to carry a balance at 0%.

I suggest you make a budget. Find out how long it's going to take you to pay the balance off with amount you feel you'll pay off each month. And if the interest of that is more than $15 then do the BT and if it isn't don't do the BT.

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that's the part I can't figure out, how much interest I'd end up paying to DCU. I haven't kept balances on any of my cards since i started this so I haven't had to figure it out. LOL. Guess I better learn now! Can anyone help? If say, I paid DCU off in min. payments plus a little more at times, over the course of 14 months instead of Discover. (hypothetically speaking, I think I'd be paying it off sooner than that, I hate balances).

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Anyone correct me if I'm wrong.

514/25= 20.56 so it would take you 21 months to pay this balance off w/no interest.

514(.1524)= $78.33 in interest

78.33/21= $3.73 in interest a month

So it makes sense to do the BT. Again anyone please correct me if my math or logic is incorrect.

Sorry. I was orginally using the interest of Discover. Corrected for interest of DCU.

[SpiceIslander]

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@Anonymous wrote:

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@Anonymous wrote:

Personally, I love a good BT, IF it's going to save me money.

 And if the interest of that is more than $15 then do the BT and if it isn't don't do the BT.

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I agree with the above statements. The idea of the BT is to save money, not just move debt around. Decide how long you'll have to carry a blaance with DCU (without the BT) and then calculate the savings.

[djc1puno]

Sounds like a good bt to me

[oscar_actuary]

If you have e3xcel you can use the PMT function to get the level payment for the number of months you want, given a balance and interest rate.  Without excel you can do a rough estimate that works well for low rates or short terms

To compute the total interst to be paid

Balance * 0.5 * ( Rate / 12 ) * NumberOfPayments

514 * 0.5 * (0.1525 / 12 ) * 14 = $45.72, roughly $50.30

As you have higher rates or longer time periods, you'll need to introduce a correction factor, something around 1.1 to 1.4 of interst paid.

Then add this total interest to be paid, to the Principle, and divide by the NumberOfPayments (which you decide ahead of time), and that is your monthly payment

(Interest Calculated + Principle)  / NumberOfPayments = Monthly Payment

You can recalc at anytime to reset your situation and start paynig a differnt amout, adjusting the Principle to whatever the current balance is.

[Anonymous]

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@oscar_actuary wrote:

If you have e3xcel you can use the PMT function to get the level payment for the number of months you want, given a balance and interest rate.  Without excel you can do a rough estimate that works well for low rates or short terms

To compute the total interst to be paid

Balance * 0.5 * ( Rate / 12 ) * NumberOfPayments

514 * 0.5 * (0.1525 / 12 ) * 14 = $45.72, roughly $50.30

As you have higher rates or longer time periods, you'll need to introduce a correction factor, something around 1.1 to 1.4 of interst paid.

Then add this total interest to be paid, to the Principle, and divide by the NumberOfPayments (which you decide ahead of time), and that is your monthly payment

(Interest Calculated + Principle)  / NumberOfPayments = Monthly Payment

You can recalc at anytime to reset your situation and start paynig a differnt amout, adjusting the Principle to whatever the current balance is.

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Thanks.