Credit Crunch | The Frugalista

Credit Crunch

by frugalista on March 25, 2008

creditcard Credit Crunch So in the interest of saving money, I did a balance transfer on one of my high interest rate cards. For years, I’ve been miffed at this credit card I’ve had at a big bank. I would have canceled the card, but I’ve had it since college. I cancel that card and I cancel my credit history. If I shut down that card, my credit score would plummet.

Still, I hate the card at the big bank. It’s interest rate was 11.9 percent. I know it’s not the worst but I knew I could do better. After shopping around on sites such as bankrate.com, I found a card that could do a balance transfer and give me a 4.99 percent rate for the life of the balance. Mini-yay. I can’t give myself a high five because debt is debt, low rate, high rate, it’s still money you owe someone.
I did the balance transfer, but I’m a little upset that it had a $99 transfer fee. I tried to fight the fee, but I lost that battle. Since I’ve transfered the money, the big bank has increased my credit limit by $4,000. I really don’t need a higher credit limit, I needed a lower rate. Meh.

I have one other card with a balance but that rate is 2.99 percent. I *heart* that card. It’s with a credit union so I don’t feel like they are "sticking it to me" every chance they get. But still, I look forward to the day when I don’t have ANY balances. I know that day is coming, soon. *thinks positively*

So, what’s your credit card situation? Are you happy with your rates? Do you do balance transfers? Are you one of the good people who don’t carry balances?  I showed you mine, show me yours.

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{ 13 comments… read them below or add one }

savvy March 25, 2008 at 11:59 am

I’m not sure what my interest rates are because I don’t carry balances. Once upon a time (2001, I believe), I used a balance transfer to lower the rate of my car loan (I think it was ~7% back then).
Balance transfers aren’t good or bad, in an of themselves but I’ve seen numerous people do a balance transfer to secure a lower rate only to charge the original card back up. :-|

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Frugalista March 25, 2008 at 12:01 pm

Savvy, I envy that you haven’t carried a balance since 2001! More of us should follow your example.

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Natalie March 25, 2008 at 12:30 pm

Our balances are zero — but our interest rates are horrible! The hubs didn’t really think about credit before he met me — so his is outrageous — 30 percent or something. (it’s also a big bank card and they always charge overages for everything. The only reason we keep it, is that he’s had it for 10 years). Mine are better compared to that — about 13 percent — but not great.
Luckily, we’ve stopped using them. It’s great peace of mind to know that there’s not that extra bill every month!

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Jasmine March 25, 2008 at 2:47 pm

I owe like $200 on my credit card for recent purchases. I limit my uses to dinners or plane tickets. That’s it. And dinners have to be over $50. I have only charged one such dinner on the card this year. So, very happy. Plus, my card has those reward points so every dollar I spend translates into a $20 or $30 gift card to any restaurant or retailer I choose. So, I think that offsets the rate. I don’t even look at the rate because I pay off my credit card every billing cycle.

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Product Junkie Diva March 25, 2008 at 3:20 pm

Hi Frugalista,
I have never done a balance tranfer. I do not carry a balance on my card, as soon as that bill comes in I pay it in full. I feel the way you do I hate knowing that I owe something so I just pay it off.
However, I am ashamed to say that I dont know what my interest rate is…..yikes.
You are doing a great job and your balances will be a thing of the past before you know it.
Product Junkie Diva

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Still Broke March 25, 2008 at 4:23 pm

Dear Frugalista -
Like so many people coming out of college, I was given credit cards (Miss Visa and Mr. MasterCard) and charged away like a lunatic.
Of course, since one taught me the basics of credit and spending, guess what happened? I got stuck with huge interest rates on four cards and mind-boggling monthly minimum payments.
Things were so bad I barely had two food stamps to rub together.
My savior was a credit card consolidation company that brokered lower interest rate deals with my credit card company, and gave me a monthly lump sum to pay off. Three years later, I was debt free — and now only use (and have) an American Express charge card.
For those who have crazy debt on their credit cards, sign up with a debt consolidation service. If not, you will be in the old folks home still paying off those shoes that you bought on sale 30 years ago.
The lesson is: If you cannot afford to pay what you buy in full by the end of the month, you cannot afford it.
Sign up with a debt consolidation service, get a charge card, and cut up your credit cards.

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Charger (Not) March 25, 2008 at 5:06 pm

I have less than $1,000 in credit card debt and use a debit card for many routine grocery store purchases.
I have spent years living frugally and it is a way of life now. Do you really need cable? Gasp. Some people can’t live without it, but I watch a lot of DVDs and free public access television.
Although I love to eat out, I don’t do it often. And I think long and hard about major purchases.
If you’re deep in debt, you can’t build wealth.

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Frugalista March 26, 2008 at 2:01 am

Ok, clearly, the FF readers are pretty fab. Does anyone carry a balance these days? If so, come out and comment. Strength in numbers.:)

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Twiggers March 26, 2008 at 8:19 am

Well, I currently have 40000 in credit card debt. Two months ago it was $66000. Within the next 2 weeks it should be under 40K. Anyhow, my husband and I easily racked up debt buying just useless crap! And I got sucked into a designer purse addiction and spent $21000 in less than a year on purses (much of it on credit). The majority of our current credit is balance transfers with locked in rates ranging from 5.9-8.9%. I have one card I am aggressively paying off (my largest balance of 14K) that has a variable rate of around 10%.
I would also like to say that no one NEEDS a debt consolidation service. It can dramatically hurt your credit score. I am deep in debt, but make pretty good money. We were just pissing it away. Now all of our extra income every month goes to credit cards. We don’t NEED a consolidation service.
My 66K of credit card debt will be eliminated within 18 months…possibly less…shoot already eliminated 26K in 2 1/2 months. After those are paid off we’ll tackle the 71K in student loan debt.

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Frugalista March 26, 2008 at 8:31 am

Yay. Twiggers! So glad to have found you. And you have the right attitude about paying things off. And student loans, hmm, yeah. I shall post on those soon.

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Coco March 26, 2008 at 11:59 am

I carry a balance. I put myself on a plan to pay it off about a year ago, which includes paying off any new charges within 30 days. I’ll be finished by September (around the same time I finish paying off my student loans)
My interest rate is 14% and I earn miles that I use for at least 1 free plane ticket per year.

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SavingDiva March 27, 2008 at 2:51 pm

The key to a good balance transfer offer is to make sure that there isn’t a balance transfer fee (otherwise it just sucks).
Currently I don’t have any carry over balances on my credit cards. I recently paid down all of my credit card debt and NEVER want to look back!

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Moneymonk March 28, 2008 at 4:05 pm

Im proud to say, I do not own a credit card. No worries

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