A Question on Balance Tranfers?

Question

Currently I have a 624.00 balance on my capital one card, with and apr of 20/55%. I got an offer for a GM Flexible Earning Card. Which offers a 0% apr on balance transfers fixed through december 2007. Now I'm considering applying for this card and transfering the balance so I can cut the apr, I'm paying on my cap one? Can you explain how it work and does it seem like a good idea?

Out of the 624, 200 is mine the rest is my mom's, helping her pay some bills. She wants me to apply for this card, so that she can have one for an emergency if anything comes up. Because the current card I have is $2500 and I don't know what the GM will be.

So should I get this card to get the balace tran and be able to pay off the cap one card faster. It also would help with getting a car in the near future, what are your thoughts?

Answer 1

I agree with what David posted

When doing a balance transfer (BT), you may have to pay a BT fee. Do not charge anything to the card until you have paid the BT off.

I would also suggest that if you plan on letting your mom use the card that you put her on as an authorized user only. That way if she happens to go overboard in her spending, putting you in a bind, you can easily have her removed. It is impossible to remove a joint user without paying off the balance and closing the card.

As for helping you get car in the future, as long as you keep your cards in good standing and the utilization low (preferably under 30%) it should help you in getting a good interest rate on a car loan.

Cap One won't be much help since they only report the high limit and not a persons full credit limit - but I wouldn't close it especially if you had it for awhile.

Answer 2

There are many catches to these kinds of offers. Some might require that you make additional periodic purchases. Others might reserve the right to change the offer without notice. And if you are late or go over your account limit, the universal default clause might kick in and you will face an APR of 30%.

Make sure you read all the terms and conditions of the offer to see if it really is zero APR until December. Then figure out what the rate you be if you don't pay off the card by the end of the offer.

If the offer is legimate and you can pay off your debt by December, it would be a wise financial move.

I wouldn't allow your mother to join you on the account. It would be better if she gets her own credit cards.

Answer 3

Although the first responder makes legit points, I say go ahead. Take advtantage of the low APR for balance transfers, but ask them (GM) about their fine print. The reason I add this cautionary comment is: Let's say you transfer the $640.00 and then spend another $1000.00 thinking you are in the clear with 0% APR until December. I know from working for AMEX that the introductory 0% rate applies ONLY to the balance transfer, and your purchases remain at 19.99% or whatever the starting rate is.

Ask them about something called "Payment Hierarchy" which basically is as follows: You have a $1000.00 balance comprised of $640 of balance transfers and $360 ofhpurchases. You send in a payment of $300.00, since you think you have 0% APR. Your $300.00 gets applied to the balance transfer first (becuase it is at a lower interest rate), meaning you get dinged for 19.99% interest on the $360 of purchases, plus the remaining $340 of balance transfer (which at 0% is still $0.00).

Also check about their leniency policies. If you make one payment one day late, will you lose your promotion and pay regular interest on your balance transfer? Is there some leeway to this?

I am not saying applying for a new card and taking advantage of the new rate is a bad idea - just know what questions to ask before applying.

Good luck.

Answer 4

No. do not apply for anymore cards. Your mother should apply for her own card if she needs it. Pay off your card, and then you will not need to worry about the interest rate. You would do better to pay off your current card and call them and ask them to lower your interest rate. Each additional card you apply for will make it harder to get a good rate.