Hi there,

How is everybody? First, a big thank you to those generous folk who provided replies to my recent posts! I’m still trying to get my finances in better shape, so I was wondering if anybody had advice regarding this situation:

…recently, when chatting with a Chase customer service rep, she notified me that I was eligible for a card on which a 0% APR rate would last until 2014. This got me thinking – I have a couple of outstanding loans from my credit union, both under $10,000, that I am currently paying off. I was wondering if I should transfer the full balance of each of these loans to the 0% APR card, and in turn save some money that previously would have been paid as strictly interest to my credit union? But I’m not sure….here’s some more details:

1.) The first amount that I currently owe is $3,130 at an interest rate of 7.990% on a loan from my local credit union’s “safety” line of credit. Currently, I am paying $80 per month toward paying down this debt.

2.) The second amount that I currently owe is $7,081 at an interest rate of 3.240%, also a loan from my local credit union that was used to purchase my automobile. Currently, I am paying $247 per month toward paying down this debt.

…..here’s more questions about the pros and cons of a potential balance transfer:

1.) Should I be concerned about the impact of the balance transfer on my credit score? As of today, my credit score is pretty solid – as I have been paying any monthly bills on time for years, as well as not picking up any debt.

2.) Aside from the obvious issue of paying my monthly balances off on time and in full, are there any other key concerns that I should have about this process?

Many, many thanks,
RB

1) If the balance transfer puts your credit utilization (revolving debt to credit limit) ratio over 20%, it could have a negative impact on your credit score.

2) The main thing you need to find out is what Chase will charge you for the balance transfer. Most banks charge between 3 and 4% of the transfer balance as a fee. Also, read the fine print in the terms of service agreement. Many of these 0% transfer deals have a clause whereby if you are late or miss a payment, you could be charged interest on the entire balance back to the day you transfered the money to the card...and the interest rate is generally the typical high credit card rates (12%+).

Yes, this is exactly what I was going to say. Whereas I used to see some 0% APR balance transfer offers without the initial fee, nowadays the only ones I ever see have the 3 to 4% fee up front. Also, that's correct that any missteps in repayment on such 0% introductory APR offers can have major interest consequences.

Thank you very kindly to all of those who replied! I feel SO much more informed on the whole process.....this is truly a great help. Peace, RB