Balance transfer madness

I recently transferred two balances from 29.9% rates to 3.9% for the life of the balance transfer. It was totally worth the 150.00 transfer fee. I wanted to see it work in the numbers though so I looked for a way to explain it.... Two bloggers mevsdebt and gradmoneymatters gave me the bones to work this out.



Target Card #1


Balance: $5000
Promotional APR: 3.99%
Transfer Fee: 150.00
Offer end Date: Fixed for life of balance transfer
Standard APR 18.24%
Default APR: 29.99%

So I wanted to do the calculations to determine that transferring a balance $5000.00 was a good choice.

If you only paid the minimum, it would take you 6001 months, and cost you $9,356,167,615,686,400.00 in interest. Information I have never seen before. Thats lovely. Is that even real money?

2nd try with better numbers......

@ current rate of interest 29.9%. It'll take you 618 months (that's over 51 years) to pay back $5,000 if you only pay the required minimum of 3.00%. Over that period of time, you'll pay an additional $18,906.61 in interest.

If you could afford to pay an extra $10 a month towards your credit card debt, it would mean you'd repay it in 223 months (just over 18 years) and you'd save yourself $8,514.01 in interest. In fact, if you could afford an extra $25 a month, you'd repay it in 128 months (just over 10 years), and save $12,303.06.
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@ 3.99 It'll take you 233 months (that's over 19 years) to pay back $5,000 if you only pay the required minimum of 2.00%. Over that period of time, you'll pay an additional $947.62 in interest.

If you could afford to pay an extra $10 a month towards your credit card debt, it would mean you'd repay it in 129 months (just over 10 years) and you'd save yourself $238.20 in interest. In fact, if you could afford an extra $25 a month, you'd repay it in 87 months (just over 7 years), and save $406.29.


hmmmm 51 years vs 19 years. Yep it was a good choice. Of course I will not be doing the min balance forever I intend to step it up! over the life of the card the savings was $18906.61 - 947.62 = 17958.99 - that is 1/2 of a down payment on a $400.000 house. Now why on earth would I want to give the bank that much of my money? The answer is I don't.

Right now my balance on the #1 Target card (first card to pay off) is $12049.90. I will pay down $3000 when my mom sends me some cash. I will pay down another $1000.00 when I get the tax refund. Which leaves me with a balance of $8049.90. My goal is to have it paid off by the June 2009. I am going to get a second job. I will pay off my debt. I cant live this way. I want to own a home of my own. For the first time in my life I do believe it will happen. I have known for a while that this card was bad for me to have but making changes is much harder then saying you will make a change. I can do this though. I am determined.

Long term goal: I have 5 credit cards. I want to be out of debt in 5 years. I can do it. If I keep paying off $1000.00 on debt. I will be able to achieve debt free eventually. I thought it would be easier and I am realizing its not going to be that easy. It is going to be time consuming but I can do it.

The calculator I used is here.... http://www.whatsthecost.com/creditCard.aspx



UPDATE: I added the credit card to my side bar. This will be my focus for paying off this year.


I am not a financial professional. If you are looking for financial advise you should seek it elsewhere. If you would like to join me on the journey, walk with me for a while and be my friend......