consolidating

About a month ago I got a balance transfer offer in the mail from my bank. You know one of those letters that normally say " transfer your balance and get low low interest for the first however many months, while we quietly charge you a transfer fee equal to 3% of the amount transferred blah blah blah." Yeah, one of those ones. This one was different though. This one said the magic little words I've been waiting for "No Balance Transfer Fees". Yesssss.

I swiftly took advantage of this offer. I transferred $3000 of my $4600 remaining balance to my bank credit card with an ultra low interest rate. Over the next 3 months as I pay off my full balance I will save about $200 in interest. It doesn't sound like much, but if my payoff timeline had been longer, say 9 months, I could have saved much much more. I was also the victim of unfortunate timing (or possibly a perfect timing if you are my credit card company). The balance transfer payment was coincidentally applied just one day after my November statement had arrived. I see you Bloomingdale's.

Anyway, if you have some high-interest debt you are looking to consolidate through means of a balance transfer or lower interest loan here are some things you might want to consider:

Are their fees involved?

Check the fine print of any offer that is transferring a balance from one credit card to another. The fee is often either a static amount or a % of the amount you are transferring. Also, when you call to speak to someone, always double-check. You can't be too sure.

Are the fees worth paying?

Sometimes they are. If you are paying 24.5% interest and can transfer your balance to a 0% card, it might be worth it. Do the math first before you assume before counting the offer out.

What is the rate after the intro rate expires?

If you can't pay-off the debt before the rate expires, at least make sure the rate you will be paying afterwards in lower then what you are paying now. Although, I highly recommend trying to pay off the debt before the intro rate expires.

What's the time-line?

If you choose to go the route of a low-interest personal loan to consolidate credit card debt consider the length of time you are spreading it out over. If you think you can pay you debt off in 3 years, don't spread your payment out longer then that for the lower monthly premium. The longer you pay, the more interest you pay.

This concludes my 3 post series on interest, promise.

PS. want this ring.