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Credit cards - 0% bal trans/ low interest
Please advice badly needed !!

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13 replies to this topic

#1 k-ko

Posted 01 December 2012 - 10:15 PM

Hi all,
Im after some advice please. ive never had a credit card. My DH does and hes let it get out of control.

Im needing to know exactly what 0% balance transfer cc are and are they too good to be true?

Dhs fees are just eating away at any payments he makes so we're getting no where.... what do we do in this situation...

We could try for a low rate cc which will help out considerably, but im wondering if we should start afesh with a 0% balance transfer card so we can get back on track..

would love some advice as im clueless with cc but Im wanting to learn original.gif

#2 jayskette

Posted 01 December 2012 - 10:20 PM

First of all, DO NOT EVER transfer any debts into your name!

Secondly, DO NOT EVER go with one of those debt consolidation offers you see on late night TV!

Thirdly, cards are ONLY for the very disciplined, otherwise as soon as the honeymoon period end you are slugged with even more debt.

Canstar and Infochoice offer great articles.


#3 k-ko

Posted 01 December 2012 - 10:25 PM

thanks Jayskettle, III jump on and have a read.
I have read terrible things about some debt consolidation offers, but im just wondering if there
is any hope with changing of cards etc.

thanks III have a look at your link!

#4 harryboy

Posted 01 December 2012 - 10:25 PM

Agree with PP - only good if you are very disciplined about paying off while the 0% applies.

#5 #YKG

Posted 01 December 2012 - 10:25 PM

TBH I would only ever do the 0% transfer IF I could 100% pay off the balance in full in the allotted time then I would cancel the card and get rid of it all together once paid in full. If I couldn't pay the balance off in full in the time frame I wouldn't do it and call the credit card company to work something out to try and get it down as much as possible. Keep in mind if your DH has made cash withdrawls from his current card that is not included in the 0% interest and will attract interest rates.

I agree with PP do not put it into your name, dont enter into the debt consilidate people as this if more often then not a debt 9 agreement which is the stage before declaring bankrupcy.

#6 jayskette

Posted 01 December 2012 - 10:37 PM

I might give you some examples.

In Uni I recklessly rang up $8000 debt. I had an excellent credit rating otherwise, so I went and got a 1% balance transfer offer for 12 months. I cut up the original and the offered credit cards and paid $1000 over 8 months, and went to the bank to cancel the cards when everything was repaid. The bank kept on asking whether I am sure I want to cancel lol, because I am their worst customer! I did not give them any more than the 1% interest.

The past 6 months were difficult for DH and I, DH was laid off and we had a wedding. We now have 4 credit cards altogether totalling $12K. He has no job while I am earning 70K. I just got a new contracting job that is $160K and I have asked the bank whether I will be eligible for a balance transfer. To do that, I will need to apply in my name (as DH has no income), apply for a gold card with a $15K limit (because credit balance you are transferring has to represent a maximum of 80-90% of the proposed credit limit). As I am now a contractor (aka self employed) I will also need further evidence that this income is sustainable for 12 months, and a guarantee from my employer. I will also be taking some burden of having a possible dent on my credit rating. The bank provisionally approved it, but in the end I decided against it and just pay off as much as I can on the 4 cards. Now that DH has a new job, we will be able to pay everything off in 3 months. Even though that was not "ideal" in the sense of % interest (the cards range from 15-25% interest pa!!) It was the best for us in the long run.

So... balance transfer may not be the best for you at all! It is just like applying for another credit card, and that may not be approved pending on how bad the situation is. You might be better off heavily monitoring DH's spending and just cut the card for example.

#7 LK1

Posted 02 December 2012 - 12:44 AM

The first thing that your DH can do, before applying for anything else, is call his current card, and ask for an interest rate reduction.
I have done it a few times "Hi there, I have been calling other banks about a 0% balance transfer, but was wondering if "X bank" could offer me a lower interest rate before I move lenders?"
I have done this with one bank and had them offer me a 0% balance transfer to another one of their cards, then a lower rate on that card. And they did it all for me, didn't have to change banks, apply for a new card, have a new check on my credit rating.
And he needs to cut that card up and you guys work out a budget.

#8 *lightning

Posted 02 December 2012 - 01:14 AM

You could look into cutting up the card and taking out a personal loan to pay it off. You would have set payments and no credit card.

#9 Guest_Sunnycat_*

Posted 02 December 2012 - 01:23 AM

If you're sh*t with money and think that you might redraw on the amount that you pay off, I would try and get a personal loan to pay it off.

I called the bank for one of my Cc (as wasn't eligible for a personal loan) and they put a 6 month interest free hold on one of my cards. Maybe this is an option for your DH?

#10 TheWanderer

Posted 02 December 2012 - 08:41 AM

Use these offers with caution.  I once used one tô get ahead of a debt I couldn't shift, but unless you understand the details of the fine print you could end up in a far worse situation down the track.

Understand exactly how the bank makes money from them and make sure you don't trigger any of these clauses. For example, many have funny rules about which blocks of money attract the 0% rate and which will attract the higher one. Often this is is explained in ways that seem quite benign but reality carry quite a punch.

With the card I used, it was explained that the promo rate only applied to the balance transfer and any subsequent purchases would be at about 22%. It also went on to say that any payments apply to the block of money with the lowest interest rate first.  On the surface this doesn't seem that important but it is actually critical.   Say I transfered 10k on to the new card at 0%, I then went to buy a shirt for $100 with that card... With the leftover credit limit. When I make a payment, I will not pay off the $100  (which will be at a high rate) until the 10k is paid off in full. So from almost day 1 I start paying a high interest rate, which puts me behind the 8 ball from the get go.

These products can work in your favour but understand exactly how the bank makes money on the product you go fo before you start using it.

Edited by TheWanderer, 02 December 2012 - 08:42 AM.

#11 Coffeegirl

Posted 02 December 2012 - 09:01 AM

QUOTE (*lightning @ 02/12/2012, 02:14 AM) <{POST_SNAPBACK}>
You could look into cutting up the card and taking out a personal loan to pay it off. You would have set payments and no credit card.

Unfortunately most of these loans are at pretty high interest rates themselves and the OP ,ay nit be better off.

We just did a combination of low interest cards and a re-mortgage to clear a lot of CC debt.

It stemmed back to our first mortgage on this house and the bank screwing up their figures to the tune of $25,000.  This was discovered on the day of settlement.    We ended up with them having to issue us a $25,000 CC to put the balance of our mortgage on.  It was nuts!

We also had two other cards and a store card.    We struggled along, paying off what we could when we could, but weren't getting anywhere.  So we transferred the other two cards onto a low balance card.  Cut ALL those cards up and paid it off within the interest free period.  The we started to attack the big one.

We had switched lenders by now to ANZ and the personal banker we had was fantastic.  She worked out that if we topped up our mortgage to cover the store card and the big CC, then paid those payments back into the mortgage on top of the regular mortgage payments, we would a) pay less interest over the period of the mortgage and pay it off 6 years earlier.  

TheWanderer is right.  There are lots of catches to the low balance rates, so make sure you read the fine print.

#12 k-ko

Posted 02 December 2012 - 09:34 AM

Thanks for the replies. and sharing your experiences. III go back over and have a better read again so I have more understanding.

DH is no longer using the cc, im now managing the money and he has a set amount each week in his savings account for his expenses. The cc are gone and we dont intend to use them again. So we will just basically be paying them off, there will be nothing brought on them or cash withdrawals.

If for example we got a 0% balance transfer cards for 12 months we could pay off a big chunk of the debt but after that 12 months I know the rates goes back up to 20ish%.

The other option as others have said is we take out a loan to cover the cc then just pay monthly repayments ..... still paying fairly high interest, but no late fees, interest on interest etc ....

Can someone please explain, if for example we transfer 18k onto a 0% balance card, in 12months pay off 10k.... with the 8k remaining - will we be charged just the monthly interest rate. When do late fees arise? Are they when you cant pay off the amount in full or dont pay off the monthly repayment?
Note: we wont be using the card for ANY purchases - JUST paying it off.

Thanks for explaining, ive read over the banks fees policies but I need it explained in laymans original.gif

Thanks again

#13 k-ko

Posted 02 December 2012 - 09:36 AM

I think asking for a lower rate is a good idea too!! thanks LK1

#14 MintyBiscuit

Posted 02 December 2012 - 09:55 AM

QUOTE (k-ko @ 02/12/2012, 10:34 AM) <{POST_SNAPBACK}>
Can someone please explain, if for example we transfer 18k onto a 0% balance card, in 12months pay off 10k.... with the 8k remaining - will we be charged just the monthly interest rate. When do late fees arise? Are they when you cant pay off the amount in full or dont pay off the monthly repayment?
Note: we wont be using the card for ANY purchases - JUST paying it off.

Thanks for explaining, ive read over the banks fees policies but I need it explained in laymans original.gif

Thanks again

It will depend on the bank, but all of the ones I've encountered don't charge late fees as long as you're always paying the minimum monthly repayment. Unless there is a clause saying you must pay the balance transfer amount in full by the end of the twelve months, it's very unlikely they would charge you late fees. Don't forget, the end of that 6-12 month 0% period is when the banks make their money, so they want you to take longer to repay, not less time.

We transferred my $15k card to a 1.9% for 12 months a while back, because we knew we'd be able to pay it off in that timeframe. At the time 0% cards were only available for six months, then back up to a 20% rate, and we couldn't do it in six months. Don't forget to factor in annual fees - a lot of these 0% cards have big annual fees, so while you save on interest you might end up breaking even depending on the amount of debt you have to repay.

Definitely approach your bank and say you've been shopping around, because you never know what they'll offer. Do your research on them first too - if your current card is a rewards scheme or something, they might have a lower interest, lower fee one available, and as with a PP they may offer to transfer you to that with an interest free period.

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