Welcome to the forums, congratulations on graduation and the new situation of earning a paycheck.
How much were you thinking would be going to a BT card? Because the payment schedule for the existing student loans should be set on a longer term, correct? Any move of amounts to a credit card, in order to pay within the 0% promo period, would likely be accelerated. I agree this can make sense, on a limited scale, to shift some of your higher interest loans to a 3% or 4% fee 0% loan.
What are the high rates, and balances subject to those high rates? That gives some perspective on what you are looking at.
Regarding using the cards? I've used many BT offers at 80% and 90% or more of the available credit line. This can work, as long as you turn around and start paying heavily, not just paying minimum payments. Banks such as Capital One, BofA, Chase, Discover get used to your payment patterns. Chase Slate or Chase Freedom often have intro BT offers. Citi cards like Simplicity have long term BT 0% rates.
I would suggest considering not just one BT, but getting a card that is likely to have subsequent BT offers after this first one is paid off. Bank of America, for example, I have two basic non-reward cards from them. I used them for large BT offers, paid them down, and started getting new BT offers in early 2014. They now send me BT offers every month for the two cards, as well as for the new Alaska Airlines card, even though they are carrying BT offers still. The strategy here would be to app a BofA card, such as Better Balance Rewards or one of the Cash Rewards cards, move the BT amount to the card, pay it down over some months to zero, then move another tranch from the student loans to the BofA card, perhaps after asking for a CLI after all your good payment history, then lean into that new BT to bring that down to zero. A CLI request to BofA will need a HP to proceed, but after paying down a BT offer, you can ask for a large CL and likely get it, or get a counter offer for some other increase.
With cards such as Capital One, you get an initial BT offer, but I haven't seen any new BT offers on my Capital One card, though others have.
Discover is another one to look into, they should have an introductory BT offer, and if they don't send you subsequent BT offers, you can call to ask, and they usually can provide a BT offer.
As full disclosure, my experience with BT includes having $116k of total open balances in 2009, on several cards from Citi, BofA, Chase and Capital One, then being balance chased, CLD, on Citi, BofA, and Chase, while those balances were being paid down. Thus, it is possible to see adverse action from taking nearly the full amount on a BT offer, of the bank doing a CLD, which can be unnerving to those who have not gone through a dozen CLD like I have. After a while, though, after paying down the BT, my experience has been that the bank gets used to the behavior, and becomes more comfortable with your actions, more accepting of large BT usage. The adverse action cannot be predicted, but what can be predicted is that over time the bank will become comfortable with your ability to pay.
@Anonymous wrote:
That's an interesting point to bring up. Ever since I got my first cc, I've always treated it like cash (a transactor). I use my cards for virtually everything but I PIF well before the due date in order to not pay interest. So the thought of a BT I actually different to me personally since it is a different way of using the cards. But taking the 0% into account, it makes sense in order to save money.
What do you think would happen if you had years of PIF usage, used BT's for a while, then went back to PIF again? Are you labeled again one or the other? Can you be a percentage of each? Does it change over time based on your usage?
NRB525 - do you have any other insight? Any experience with CLI on a new card in order to BT a larger sum?
I would suggest the "Transactor" vs "Revolver" or whatever the labels are, is an interesting discussion, but in this case, probably not the biggest decision point.
For myself? No, I have no experience with asking for CLI on new cards. Back in the day, the new cards all came with large ( and auto CLI later ) credit limits that sometimes went up to $30k on their own, so I never asked for a CLI until just in the last year. I always was gaming the BT to push to the limit the CL, typically more than 90% and rarely under 80%. I think, after establishing a payment history, that led to the auto CL increases that I got. (and the downside of that was, all the CLD balance chasing I went through after the credit crisis. easy come, easy go)
Now, that was back in the day, prior to the credit crisis, so no assurance that it works the same today, but I did get an auto CLI on my BofA card earlier this year. For background, it had a credit limit of $31,100 in 2003, with $26k open at that time. A series of BT on and off, and then after the credit crisis in 2009 CLD and balance chasing to a $12,700 limit in early 2013 which kept my utilization over 90%. Then the CLD stopped.
In October 2014 I did another transfer off, transfer on the card back up to $10,700 so 84% utilization, then paid heavily to bring that down some. BofA gave me an auto CLI in Feb 2015 by $3k so back up to $15,700. This is why I say balance chasing and CLD are just part of the adjustments that a bank makes, based on what they see in the profile, and my experience with BofA is they are very fair about handling those. They never changed the interest rate on this card, which is still 7.9% as a basic purchases rate.
In general, my actions in the past were, when I got a good BT offer, I'd utilize as much as I could, leaving room only for the BT fee, and the expected interest charges, some space for those so it never went over limit. And just to be clear, this is EVERY BT in my history. Once a good rate comes up, I was on it like a duck on a junebug. The permanent low APR rates were the best, of course, and I still have three of those going, but I digress.
Regarding your situation, the difference I see is, you have reasonable rates on those student loan payments. I'm coming at it from a Credit Card interest rate perspective, so indulge me. With the student loans, the advantage is, they are set up with these rates for what, 10 years? With an amortization program for those 10 years, if things got stressful in your budget, you can back down to the required payment rate, and continue to make good progress on the payments. That has significant value, and I would suggest you think very long and hard (and postpone to think a second and third and fourth time) about whether you want to pull any funds off these student loans, into the wild world of credit cards.
Here's the risk: If you pull a significant amount off the student loans into various 0% credit card plans, that may work for a while, but if anything goes sideways in your budget, and there's delays in payment of the full principal, the interest rate that is waiting for you on the expiration of the loans is much worse than the 7ish rates you have now.
Another consideration to not lose sight of: Each dollar you pull off the student loans will charge 3% or 4% up front fee to make that transfer. Only in a few cases do you get a no fee BT to a 0% new card APR, and that's only in a short window. So you can plan on paying up front that 3% or 4% as a cost. If your plan is to pay those amounts very fast, well, you've likely paid as much interest for that short term use of money as you would just leaving the funds on the student loan and paying it faster on the student loan.
With student loans and other term loans with fairly reasonable rates, my suggestion is to just pay them faster in place. You have the option to pay faster, you don't incur any additional transaction costs to get the money off that existing loan and into the "free" loan that isn't really free, and you always have the option to slow down your payment rate, back to the required payment level, with zero consequences for that change. Keep in mind, all the BT that I did were between credit cards, where a promo APR expires and there is a definite, real cost to leaving the funds on the card, and a real savings to move the funds to a new BT offer. You are not in that situation.
If you really really have to get the BT going, then try a small one first, see how it works out. Don't try to ask here and think you have a complete plan to BT 50% of your student loans to three different credit cards, then do it in a sort of spree. Balance Transfers are simple enough, but with this large of funds, and if you are just starting into it, you want to dip a toe in the ocean before trying to swim with the sharks. The only way to really learn about BT, is to do a small one and watch how it works, see where the Gotcha's might be. I've done it dozens of times, so I've got a lot of internalized decisionmaking that I go through. I'd like it if it were easy to convey all that, but text has it's limitations.
Good luck in whatever you decide, but I can't emphasize enough the importance of going slowly with this plan, because of the risks of extra costs involved.