I still remember as a college sophomore walking through the campus during that first week of school.
There was no shortage of Greek booths recruiting for rush week; club booths to just be there; clothing and jewelry vendors who would've rather been a mall kiosk; kids (who probably didn't go to school there) with clipboards who were either with Greenpeace or making sure you were registered to vote; and oh yeah, credit card booths.
I only remember one that day and it was CitiCards. They were offering free t-shirts but had ran out of mugs. I would've preferred the mug, but hey, what's another sleep shirt right? Heck, maybe they never even really had mugs to begin with! Hm. Clever.
I don't remember the spiel, but I do remember a lot of smiling on the other party's behalf. Young guy. Dark hair. Bright eyes. A salesy type. Might be making 6 figures by now.
And there I was, a naive girl who thought she had life on a handle and was responsible enough to get a credit card despite her father's warnings. This is the thing, my dad would only say, "Don't get a credit card, it's bad. People get into debt with it. It's bad." And I don't remember my mom ever really talking about it. And that was that. There was never any real full depth discussion about personal finance, credit cards and its workings. It was like telling me, "Don't eat junk food. It's bad. People get fat. It's bad." I ate plenty of junk food, especially as a McDonald's aficionado, but I never gained weight.
I figured, how bad could it be? It can only be as bad as the person using it and clearly, I was responsible enough to have a credit card. I was walking 4.6 miles to and from my Limited Too $8/hour sales associate job everyday, duuuuh. I'll be fine, I thought.
Fast forward a bit, I was in debt for $7000, paid it off. Then got back into it again for $10,000. And that was just on one card. I never had any other cards to deal with. I wasn't fine, I wasn't responsible enough...therefore, I didn't deserve to have another credit card. If that was my situation for just having ONE card, I was afraid of what might happen if I had SEVERAL of them.
And that's why I was so hesitant about doing balance transfers in the first place despite it being one of the most common steps people take to get out of debt.
With a balance transfer, you're basically paying off Credit Card A with Credit Card B. If you're truly serious about paying down your debt, it's a great way to do it. If you're going to do any new spending on it, then, well, kinda defeats the whole point of getting it in the first place, no? So CUT those new cards as soon as you get them in the mail.
If you're going to go for it, then here's what I did.
DON'T PAY A BALANCE TRANSFER FEE
Most cards will transfer balances for the cost of 3-5% of the balance or
$5--whichever is greater, they say. (I laugh aloud every time I see
that by the way). But there are only two offers that I know of that don't charge any kind of balance transfer fee which I've personally used myself:
1. CHASE SLATE: 0% APR for the first 15 months and no balance transfer fee for the first 60 days. So you can potentially, transfer balances several times in the first 60 days without paying for a fee.
2. CAPITAL ONE PLATINUM: 0% APR until January 2015 (8 months) and no balance transfer fee but it's 22.9% APR after that time period and there's a $39 annual fee on this card.
When I had the Capital One Platinum, I didn't have an annual fee, so this might be new. But I would try to waive it actually, doesn't hurt to ask.
WHAT IF I DON'T GET APPROVED?
I have a funny story about this which has made me realize that when a credit card says "NO", it really means, "NO FOR NOW". I got approved for the Chase Slate immediately but only for about $3000. I googled other offers and found Capital One and called in right away.
Me: Hi there! I found your balance transfer offer online for 8 months with 0% APR and no balance transfer fee and would like to apply for it.
Capital One: Great! I would be more than happy to help you with that. Let me get some information from you.
She grabs what she needs from me and a couple minutes later...
Capital One: Unfortunately, you were not approved for this offer. But I can offer you insert terrible balance transfer offer.
Me: Oh. I see. Well, actually, I was interested in the first one because was there no balance transfer fees, do you have anything else similar to that?
Capital One: No, we don't.
Me: Okay then, thanks for your help!
I was bummed out but guess what. A few days later, I get in the mail that I was pre-approved for the SAME offer I had inquired about and was supposedly not approved for. I did this with Discover (except theirs wasn't a no balance transfer fee deal) and same thing. As an experiment, I recently inquired with Citi Cards about a balance transfer offer that they used to offer but no longer do. On the phone they told me that the promotion is over, but in the mail, somehow the promotion was back on again for me. Oh happy days.
If you can't get approved for a "no balance transfer fee" offer, then negotiate the balance transfer fees. ALWAYS ASK! Just like how I ask for discounts wherever I shop, I always ask if I can lower or waive fees altogether. I don't do it in an entitled manner, but more like a curious, inquisitive sort of way.
It's slightly more uneasy than say, reducing your interest rate (see previous blog entry), but it's not not possible.
Most cards will transfer balances for the cost of 3-5% of the balance or $5--whichever is greater, they say. (I laugh aloud every time I see that by the way because are people really transferring over $167?)
Ask if you can get a cap on your fee. Know that there are places that have caps on their fees but the majority I have seen nowadays don't. For example, if there's a cap, they'll charge you 3% of your balance but only up to $75. So technically, your total balance transfer fee can potentially be less than 3%.
If I were to do this, I'd ask the rep:
"I'm planning on doing a balance transfer and was hoping to get a reduced balance transfer fee. The thing is, I want to pay down my balance from my other card. But at the same time, I want to take advantage of the 0% APR promo rate because I need to make a large purchase very soon and will do it on the same card as well."
First of all, let's get something straight here friends: you are NOT making a large purchase on this card. You are simply giving off the idea that you are not just there to sign up for a card to do balance transfers. You are giving them an incentive to lower your balance transfer fee because new spending will offset it.
They are more likely to take a chance on you knowing that you have been paying interest before on another card and that you're just as likely to do it here too with the new spending.
If they say no, ask them:
"I understand. Could you look into setting a maximum cap for the balance transfer fee then? It looks like I would be paying $90 if I were to transfer $3000 and American Express offered to cap it at $75 but they have higher annual fee"
If they say they can't, ask to speak to a supervisor and repeat the dialogue. It's all about persistence. If they simply cannot budge, I'd say hang up, wait a week to see if you receive anything in the mail, and if you don't--call again. If the same situation happens, then just go for the lowest balance transfer fee with no annual fee on the card.
By breaking up my debt with more manageable rates, I was able to pay down the amount faster and so will you. Be confident and good luck!