GOAL ACHIEVED: NO MORE CREDIT CARD INTEREST
So when we last left our heroine, there was much dithering and swooning over whether or not to stick the heft of the credit card payments into high yield savings while only paying the minimums on the cards themselves. Then the point quickly became moot, since our heroine noticed a hefty non-capped 3% balance transfer fee, and the whole idea was dropped.
(Let’s just drop the third person now, shall we, because I SO can’t carry that off through the whole post.) When I noticed the fee, I went scouring the internet for any 0% no fee balance transfer offers, and came up with a ONE very lonely offer. Every other offer either had the $75 min BT fee, or was not for 12 months - it’s amazing really, as I can remember when we were shredding tons of these offers not so long ago. So after some scouring, I found the Citi Professional card with 0% and no fees for the first 12 months. I went ahead and applied, and promptly forgot about it until I received my shiny new card in the mail with a limit of $15,000 about a week ago.
I promptly put in a balance transfer for our remaining usaa mastercard, and am currently waiting for that to go through (any day now).
When it does, all our credit card debt will be at 0%. Here’s the breakdown, in order of which 0% rate expires first:
citi home rebate mc: $7,278
rate adjusts 12/08
discover: $6,355
rate adjusts 3/09
citi professional mc: 13,230
rate adjusts 4/09
We will be able to pay off each one of these cards before they adjust. I’m very excited to not be paying any more credit card interest!
A few remaining questions we’re going to readdress sometime:
Should we start closing cards as they are paid off?
We have 2 cards that are at a 0 balance now, USAA mastercard, and Citibank American Express. We are not going to close our USAA mc, as it has always been our primary card, has the highest credit limit, and has the longest history. The AMEX however, was opened one year ago? two years ago? (I can’t remember, I probably should check) and I don’t really see us using it ever again. For now, we’re leaving it open, as apart from the usaa card, it’s the card with the next longest history. We don’t even have cards to it, so there’s no danger of a balance running up. The other cards we have open (citi home rebate, citi professional, discover) have even shorter histories and are also questionable on whether we should keep them open or not.
I’m not sure we should even worry about hurting our FICO score. The fact is, we just refinanced our home in February and are not planning on moving for some time, we purchased my husband’s car last year and my car won’t need replacing for a few more years at least (knock on wood) - and when we do replace it, hopefully we will save up and do it with cash. I don’t see any future loans happening in our future, and if that’s the case, who cares if our credit score goes down a bit? As we pay down more cards, then the debt to credit limit ratio would get better and better, even if we hack the total credit limit down by closing a card or two.
All good points to deliberate on.. guess we will see.
Should we go back to the “sock the extra debt money into HY savings” plan?
I am thinking yes. But I have no problem letting things settle down first. We’re smack dab in the middle of birthday season (just our household, 2 over and 2 more to go) and we started the kids’ sports season (evening practices, saturday games) which means I don’t have as much time to loll around in the evenings poring over spreadsheets. I’m content to let the balance transfer go through and revisit this then.
And finally, should we start using our rewards card?
RL has piqued my interest in her comments about their month-to-month spending using a HY checking, putting expenses on a good rewards credit card during the month so the checking balance builds up and earns interest, and then of course paying it off in full each month.
We’ve already decided to start using our USAA rewards card (pretty much 1% cash back) but the HY checking account idea sounds good as well. (Charles Schwab offers a good one, although it’s down to 2.26% interest now.) Not sure we’re ready to change checking accounts, but it is on the table for discussion.
Well that’s it for now.
Any comments on the move and new design would be welcome!
(Yes, I’m vain and am wondering if anyone is out there.)
-99k
Comments
We are out here, 99k! Sounds like a good plan, keep up the good work. We evaluated this option as well when getting out of debt, but ended up just consolidating everything to one credit card. We traded a lower interest rate to have all of our debt in one place. In hindsight, we would have paid less interest by transferring, so I like your idea.
Congrats on have all CC debt at 0%! That’s great, and even better that you will pay them all off before the rates adjust. And I love the new look of the site, and the new URL. :)
I’m going to morph 2 of your thoughts into one for a comment here: I suggest not closing any of your cards for a while (assuming they have no annual fee of course) AND getting a better rewards card. FMF has tons of great posts about the benefits of the AmEx Blue Cash and/or the Chase Freedom Visa. We are now using the AmEx Blue Cash for everything, and hopefully we can get the Chase Freedom in a few months (I didn’t want to apply for them both at once). I now firmly beleive that not using the best rewards card you can get is like throwing free money away. I expect that we will get $500 back this year from our AmEx Blue. If I was using a 1% rewards card, that would be more like $190. So - I say, apply for a good rewards card now (or maybe wait a bit as you just got the new Citi card), then in a few months, maybe a 2nd one, and THEN cancel any unnecessary cards you plan to neve use again. I would just be weary of closing the cards now, because they will have a small dent in your credit scores. Overall, you might want to keep your credit scores up if only for the benefit of being able to switch to better rewards cards now and then. My $0.02.