balance transfers

[Matryx]

I got a PC Mastercard with a balance right now. I've had this card for almost a year now. They are offering me a 1.9% for balance transfer for 4 months. It's not great but I could use it right now.

I was wondering if I transfer my balance from other credit cards to this one what would happen? Would I be paying the default interest rate since I already have a balance or would I be paying 1.9% for the balance I transfered and the default interest from my PC Mastercard balance.

[sauga79]

It's a bad situation if you want to balance transfer a large lumpsum onto a credit card with a pre-existing balance.


The way it works is that your pre-existing balance will be ding'd at the usual crazy high annual interest rate.

The balance that you transfer will be ding'd at the sweet promotional/introductory offer of a low interest rate.

To you, the end credit card user, it's just one balance.





The trap is that people tend to consoladate all their debts and transfer their balances on that credit card.

Now the math of is that every payment you make after you do this massive transfer will be used to pay the amount that you balance transfered. The previous amount that was already there on the credit card will continue to accrue at the usual crazy high annual interest rate. Once you paid off the amount that you balanced transfered, your original pre-existing credit card balance would have alot more interest on it than you last remembered.

This is a lose-win situation where you lose cause you think your saving your losses while the credit card company wins more profit by finding a way for you to carry a balance longer than you have to.

If you want to optimize your 1.9% strategy, clear your credit card of any balance so that when you cosoladate, you will pay the lowest interest rate overall.

[Matryx]

thanks for the input.

Yeah I guess I'll have to pay of the balance first. I didn't think about how the payments will go towards the balance transfer fist.

Well I'm not really moving big balances. Actually probably less than 1,000.