Advice needed, wish to transfer current credit card debt...but how?

Question

Hello,

I aquired a credit card in May 06'. I wanted to build my credit, I had a credit score of 630. Initially I made small purchases and paid everything off on time for the first few months. However, as of September I had some school related fees I charged to my card. Since September I've just been paying the minimum payments and now have just over one thousand dollars on my card. Over one tenth of this is just in interest too. I know for next month's payment I will not be able to pay more than the minimum fee. Can I transfer my current debt to a new card. I've read a bit about 0% transferring fees. Ideally, I'd like to find a card where I could transfer the debt I have with a grace period, no interest, for a couple of months. Is there such a card or am I dreaming? I am new to the world of credit cards and I'd appreciate some insight about my situation. I don't want this debt to get any more out of hand.

Thank you!

Answer 1

It sounds like you're on the top of a very slippery slope. The reason you got the card in the first place was to improve your situation, and it looks like you could be making things a lot worse. School is a predictable expense, and as such should be budgeted for.

The next big predictable expense is Christmas - have you thought what you're going to do to cope with that?

Chances are, if you can't afford a minimum payment credit card, that you'll be tempted to put Christmas on your credit card too, and then you'll be sliding at top speed down that slippery slope.

That's how credit card companies make their money, by making us believe we can afford to spend more than we can repay, and then fleece us on interest rates.

If you get a new card with zero interest and zero transfer fees, then you MUST cut up both cards immediately. In fact, the card you got last May should already be cut up. Then plan your repayments so that the balance will be cleared by the time the interest kicks in.

Your credit score reflects your ability to manage your finances - and it will suffer if you don't sort this out asap.

As for any other expenses, predictable or otherwise, if you can't afford even a minimum repayment, you certainly can't afford any more purchases. Cash only and you'll be fine.

Answer 2

Yes, there are credit card offers like that - look for one that offers you 0% interest with NO BALANCE TRANSFER FEES. That last part is very important - otherwise they'll charge you a fee of 3% of your balance just to do the transfer. For a $1000 balance transfer, that's a $30 fee. If you do transfer your balance, it's very important that you then DESTROY your old card or freeze it in a block of ice in your freezer. Don't close the account, because keeping it open will actually improve your credit score, but DON'T use it. The reason people get in thousands and thousands of dollars in credit card debt is because they get in over their head (like you did) and transfer their balance, thinking that makes everything better (which you're about to do) and then THEY KEEP USING BOTH CARDS. So it's very important that you stop using credit cards and only buy things if you have the cash. If you can't afford school, get a student loan or a second job - do not use credit cards to pay for it. Finally, if you do transfer your balance, DO NOT use that card to make purchases. Here's what they do - they offer you 0% on the balance transfer, but still charge you 15% - 18% for purchases. And it says in the fine print that they pay off the balance transfer FIRST - so if you continue to make purchases, the $1000 balance transfer gets paid off first, and the purchases you're paying 18% on sit on your card accumulating interest for months and sometimes years. It's really a huge scam. They only way you can beat the system is to follow these guidelines:

1. Only do the balance transfer if there are NO balance transfer fees and they're offering a very low (like 0%) interest rate.
2. Pay off the balance during the 0% interest rate window (usually 6 months or a year)
3. Do not use EITHER card for purchases after you've transferred a balance. It will be tempting, but DON'T DO IT.
4. Stop charging your life away - don't buy things you don't have money for.
5. Make sure the credit card has no annual fee (this is most cards, but not all).
6. Pay bills ahead of time - one late payment and they slap a huge interest rate on your whole balance for the life of the balance. If you have other credit cards, ALL OF THEM can slap you with huge interest rates, if you're late on just ONE card. They all talk to each other through credit companies like Experian.

A card I think is good for balance transfers is HSBC - they usually offer a no fee balance transfer with 0% interest for a year. Good luck.

Answer 3

First of all, do you know what is your credit score right now?

As for the ideal cards existance, they do exist but I am afraid that your credit score might be too low for you to be able to get one. Have you received any such offers in the mail? If you haven't, then the chances are that you don't qualify for such offers.

There are cards that have a zero balance transfer fee. They give you some amount of time that is interest free also on the balance transfer.

One piece of advice I can give you is that DO NOT go around looking for cards or try to apply for cards because everytime you apply for a card, a credit score check is run for you AND regardless of whether you actually get the card or not, your credit score gets an "enquiry" and you loose points. So it might turn out that you tried for 10 different cards, you didn't get any of them, AND your credit is now worse than it was.

As for transferring balance, for you I am guessing that whatever card you are able to get, it won't be free. There will be an annual fee on it. There will be a balance transfer fee on it. AND there will be more interest on the already principle and interest you just transferred. So your monthly payment will rise.

What you should do (instead of just not paying or trying to transfer to a new card) is contact the credit card company and talk to them. Tell them that some emergency has happened or for some unforseen circumstances, I won't be able to pay my entire minimum this month. Believe it or not, the credit companies (at least in my experience) are pretty good regarding that. They might offer you some alternative. The reason for that is they would rather get some money out of you then no money at all or loosing you as a customer. They are also afraid that you might just stop paying and now they have a deliquent account on their hands which is worth in pennies now.

Now let us be realistic, if that doesn't work or the solution that is not good enough, then I would recommend some type of a personal loan. If you can get it from familiy or a friend that would be perfect (because they will charge you less interest than any bank I know, if any interest at all). There is no point in getting the money from a bank because that is same story all over again. If a friend or family does agree to loan you some money, then it is up to you to either pay of the whole amount of more than a thousand OR just enough to cover next month's minimum. If you can get the entire amount, that would be perfect.

As for the future, talk to your school's financial aid office. All of the schools I have been to, there is always some sort of a fee payment plan. For example, if you can't pay the entire fee at once, then they agree to split it up into three parts throughout the semester and the interest is much smaller than whatever your credit card has. I would definitely go with that rather than charge everything on my card.

Some general advice:

Like I said, don't go around looking for cards.

Wait for offers to be mailed to you. This tells you that now the credit cards companies think that you are reliable enough.
When you do get an offer in the mail that you like, call them, talk to a person, and ask them specific detailed questions AND only get the card if you are completely satisfied. If something does seem fishy, it IS fishy. Ask them, is there an annual fee? What kind of a financing offer are you guys willing to give me (like no interest for 6/12/18 months or low APR for the first 3/6/9/12/15/18 months)

When you do have this debt off of you, in order to build your credit, never close an account. Do not store it away either. It is true that closing an account lowers your score but inactivity on an open account also lowers your score. So do not put it away or freeze your card in ice. If you do, then make sure to take it out every few months and buy like a piece of candy or gum and then instantly pay it off in pull. You don't even have to wait for the statement.

What I do is that I rotate among my cards. One month I use this one, the next month I use another and so on. And then I only make a purchase if I have enough cash with me or balance in my bank accounts to pay off the full balance. So at a moment's notice, I can pay off all of my debt instantly if needed. If I feel like it, I deliberately pay only the minimum or slightly more in order to raise my credit even further. Mind you, I don't pay interest. I only do that if I am in a no interest period.

Good luck!

Answer 4

Some credit card companies offer free transfers and/or low initial rates to attract new customers.
I get those offers in the mail all the time.
READ all the fine print, then sign up for one that suits your needs.

Answer 5

If you've got a lot of debt you might consider debt consolidation. Try looking at some of the really helpful articles at http://www.hammocksurvivalguide.com/
Look under debt consolidation and debt relief.

Answer 6

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