“Dear Steve,
I am $9000 in debt on Discover. 1/2 of the balance is at 13% and the other half is at 0% for 1 year. The problem is how they disburse the pymts. The min pymt of $200 goes to the 0% balance. Then i need to pay any interest charges and anything extra then goes to the 13% balance. I transferred the balance at 0% from another card.
Was this a wise move? Or should i look for another card with a better interest rate?
Also, i downloaded the spread sheet from Eliminate your debt like a pro. Keep getting a dialogue box that says ” there are frozen pages on this spread sheet. you may not be able to see all of the data. Please request another copy without frozen pages.” Is this a problem? Thanks for your assistance
Stacey”
Dear Stacey,
I’m not sure why the spreadsheet was giving you that error but I saved it again and hopefully fixed it.
Under the CARD Act of 2009, creditors are supposed to apply all monthly payments above the minimum payment to the part of the debt with the highest interest rate balance. It sounds that is what Discover is doing.
As long as you make only the minimum payment and let that 13% balance sit there it will continue to build interest and you may wind up owing more than you expect.
The issue is unless you found a card that would accept the entire balance as a transfer you might just be transferring off the 0% balance and not the more expensive 13% balance.
A balance transfer makes sense when you can substantially or completely eliminate your debt within the introductory period. Any time you wind up paying only the minimum payment it will not eliminate your balance and before you know it the introductory rate period will have expired and your interest rate will shoot up.
Depending on how your credit is you might want to look at an unsecured debt consolidation loan through LendingClub.com. If you have excellent credit the overall rate may be lower and that will allow you to dig yourself out of debt.
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Thank you. Will let you know what i figure out.
Stacey
Thank you. Will let you know what i figure out.
Stacey