RewardExpert.com is an independent website that is supported by advertising. RewardExpert.com may be compensated by credit card issuers whose offers appear on the site. Because we are paid by our advertising partners it may impact placement of products on the site, including the order in which they appear. Not all available credit card issuers or card offers are included on the site.

How to Pay Less then 0.5% APR for a $15,000 Loan in 10 Years

icon-comments 0 Comments

Extinguishing credit card debt is one of the most grueling debt-management processes imaginable. The high rates of interest most credit cards charge can make the process seem never-ending. And it’s demoralizing to see so much of your monthly payment go toward interest and so little go toward paying down the balance.

Worse is if you simply don’t have the kind of money you need every month to make the minimum payments without severely crimping your lifestyle.

But there’s a way you can repay your debt, without relying on the usurious vultures in the debt-consolidation industry.

And best of all … it will cost you a grand total of 3.85% over 10 years, or less than 0.5% annually. We’re going to talk about 0% balance transfer credit cards, of course.

Using 0% Balance Transfer Cards to Eradicate Credit Card Debt

The method here isn’t a trick or a gimmick, and the headline isn’t clickbait.

Rather, the debt-eradication plan is based on the strategic use of credit cards that offer a 0% balance transfer period. By selecting the right cards, and by strategically rolling your debt from one card to another – using the right formula – you can, literally, wipe out your debt paying just a modicum amount of interest, the equivalent of $58 a year.

Once I lay out the plan, you can double-check my research and plug the data into your own spreadsheet and see for yourself that this plan is about as perfect as you can get for repaying your debt as cheaply as possible.

Let me lay out the ground rules so that you understand what’s going on.

The Rules of the Credit-Card Debt Repayment Game

Rule #1. You start with credit cards that impose no annual fee, and that offer 0% balance transfer and $0 balance transfer fee – what I call “0/0/0 cards.” There are not a lot of these, but they absolutely exist. Of those cards, you start with the one that offers the longest 0% balance transfer period, usually 15 to 18 months.

Rule #2. When you’re about 3 months away from that card moving out of its 0% balance transfer period, you apply for the next 0/0/0 card on your list. When that card arrives, and just as the 0% APR period ends on the first card, you transfer whatever balance remains to the 2nd card.

Rule #3. Once you’ve have exhausted all of your 0/0/0 cards, you move on to no-annual-fee cards that offer 0% balance transfers by impose the smallest balance transfer fee. Those fees generally range between 2% and 5%. You start with the card that has the smallest fee, even if it has the shortest 0% APR period.

The reason: The fee is imposed on the balance that you transfer, and the smaller the fee, the smaller your payment.

You want to save the highest balance-transfer fee cards until they’re you’re only choice At that point, your outstanding balance will be much smaller, meaning the fee you pay is less painful.

Rule #4. When the balance-transfer fee shows up on your account statement, you pay it off that month, along with your normal monthly payment.

This will increase your payment for one month, but it also means you will not have a remaining balance at the end of 10 years. (By the way, you can change the 10 years to 7 or 5 or 8, or whatever period you choose and over which you can comfortably repay your debt.)

How to Calculate Your Personal Minimum Monthly Payments

Take your outstanding balance in Month 1 and divided it by the number of months over which you will repay your debt.

For this example, we’re repaying $15,000 in credit card debt over 10 years. So we have $15,000 divided by 120 months … or $125. This is your “personal minimum” and we will come back to that in just a second.

Most credit card companies require a minimum payment of 1% of the outstanding balance, plus the interest payment. Since there’s no interest to worry about, we’re looking at a minimum due of 1% of the balance. In our example, that means $150 in Month One, dropping to $148.50 in Month Two, and so on. Once your minimum due falls below your “personal minimum,” you pay the personal minimum every month until the debt is extinguished (remembering to add the balance transfer fee in the months that it occurs).

Don’t Use Balance Transfer Cards to Pay for Everyday Purchases.

We do not care about travel rewards, bonus miles or cash back. Some of the cards might offer that, but they’re all tied to spending some amount of money on the card to earn the bonus. This strategy is based what I call “debt warehousing” – we’re warehousing our debt on these no-interest cards simply to repay it without any interest payment. We don’t want to add to the debt because that will destroy the payoff schedule.

If you need a new card for spending, or you’re chasing travel miles and cash back, use a different credit card for that.

What Credit Cards I Used to Get 0.5% APR

The example I’m about to show is based on credit card offers that are available as of today (May 2019). Credit card offers change all the time, so the exact plan of attack below will likely be different as the offers change over the months and years.

So, each time a card is about to exit its 0% APR period, you will have to check this updated list of best balance transfer credit cards offers to find the next card to replace it – again, following the rules set out above.

Like I said, our example is a consumer with $15,000 in credit-card debt she wants to repay over 10 years.

With the crop of credit cards currently available (and assuming the offers were static for the next decade), this is a truncated view of what our consumer’s decade of repayment looks like:

Credit CardMonthsFeeOpening BalanceMonthly PaymentEnding Balance
Amex EveryDay1-150$15,000$129.01$12,900.88
Chase Slate16-300$12,900.88$129.01$11,017.53
Navy Federal Credit Union Platinum31-420$11,017.53$129.01$9,517.53
Aspire Platinum Rewards43-480$9,157.53$129.01$8,767.53
Barclays Ring Mastercard49-63$175.35$8,767.53$129.01$6,892.53
US Bank Visa Platinum64-83$206.78$6,892.53$129.01$4,392.53
BankAmericard84-101$131.78$4,392.53$129.01$2,142.53
Wells Fargo Platinum Visa102-119$64.28$2,142.53$129.01-

Our consumer used eight different cards (all reflecting current offers today, though that could certainly change) to methodically extinguish the $15,000 balance. Along the way, she paid a grand total of $578 in balance transfer fees (and no annual credit card fees) while completely avoiding interest payments.

Had our consumer relied on a personal loan with a 10% APR, which is the current going rate, monthly payments over the same 10 years would have been nearly $200, and the cumulative payoff would have exceeded $23,780.

So, with our debt-warehousing strategy based on 0/0/0 cards, we have effectively reduced monthly financial pain and we’ve saved of more than $8,000 interest payments.

The Wrap Up

Credit cards make it easy to accumulate debt, almost as tough it’s a game. Whip out your plastic to pay for a purchase and you never feel the same kind of financial sting you so when you part with actually cash. It’s financial psychology the credit card companies use to their advantage.

So, turn the tables. Use the credit card companies’ offers to your advantage.

By structuring a repayment plan built around debt-warehousing, and using as many 0/0/0 cards as you can find (and then using 0% APR balance transfer cards with the lowest balance transfer fees you can find) you can realistically fashion a strategy to repay your credit-card debt at an effective interest rate of less than 0.5%.

Editorial Disclosure: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

UGC Disclosure: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

American Express Balance Transfer Offers: Are They Really Good?

0 Comments
American Express Balance Transfer Offers: Are They Really Good?

If you’re reading this, chances are you have too much debt on one or more high-interest-rate credit cards and you’re looking to consolidate all or some of that debt onto a credit card with no balance transfer fee from American Express or another credit card with no balance transfer fee.

Here’s what you need to know about an American Express balance transfer.

This Article Will Cover

What Options Do I Have For An American Express Balance Transfer?

American Express currently offers just one credit card with no balance transfer fee and a 0% introductory interest rate.

Amex EveryDay: $0 balance transfer fee. 0% on purchases and balance transfers for 15 months, but balance transfer must be requested in the first 60 days. 10,000 membership rewards points after spending $1,000 in first 3 months. 2x points on up to $6,000 in spending at supermarkets; 1% on everything else. No annual fee.

Beyond that, Amex offers three additional credit cards with a 0% introductory interest rate on balance transfers, though you will pay a fee, usually $5 or 3% of the amount of balance you transfer.

Blue Cash Everyday: 0% on purchases and balance transfers for 15 months. $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months. 3% cash back at U.S. supermarkets, up to $6,000 per year in purchases (then 1%). 2% cash back at U.S. gas stations & select U.S. department stores. 1% cash back on other purchases . No annual fee.

American Express Blue Business: 0% on purchases and balance transfers for 15 months. 2x points for every dollar spent on up to $50,000 in purchases per year. 1x point for every dollar spent on purchases thereafter. No annual fee.

Amex EveryDay Preferred: 0% on purchases and balance transfers for 12 months. 15,000 membership points after spending $1,000 in the first 3 months. 3% cash back on spending at supermarkets; 2% at gas stations; 1% on everything else. Annual Fee $95.

Is An American Express Balance Transfer A Good Choice?

The real question to ask is: Do I want an American Express card?

Amex tends to be a bit more selective than other credit cards, which generally means you likely need a credit score of at least 700 to qualify. Moreover, Amex tends to carry a bit more prestige, if that’s important to you.

Is An American Express Balance Transfer A Good Choice?

Also know that Amex typically won’t allow you to transfer more than $7,500, or 75% of whatever credit limit Amex offers you. So, if you’re looking to transfer more, you will likely need a high-credit-limit credit card or more than one balance transfer card.

You also cannot transfer debt from an existing American Express card onto a new Amex card. You can only transfer debt from credit cards issued by other companies, such as Visa, Mastercard and the like.

Finally, if you miss a monthly payment, you could lose your introductory rate, which means your remaining balance will be subject to your card’s prevailing interest rate.

What Other No Balance Transfer Fee Credit Cards Should I Consider?

If Amex prestige isn’t important to you, then there are other credit cards with no balance transfer fee to consider. Two of the better ones are:

Chase Slate: $0 balance transfer fee, within 60 days of opening account. 0% rate on purchases and balance transfer for 15 months. Not a rewards card. No annual fee.

Capital One Quicksilver Cash Rewards: 0% rate on balance transfer and purchases for 15 months. $150 cash bonus after spending $500 in the first 3 months, and an unlimited 1.5% cash back on every purchase. No annual fee, and no foreign transaction fees.

HSBC Cash Rewards: 0% rate on balance transfer and purchases for 15 months. $0 cash bonus after spending $10,000 in the first 12 months. 1.5% cash back on every purchase, plus a 10% anniversary cash back bonus on all cash rewards earned during the year. No annual fee, no foreign transaction fees.

Citi Double Cash® Card: 0% Intro APR on Balance Transfers for 18 months. Earn cash back twice. Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. No annual fee.

How Does A Balance Transfer Work?

Before you transfer the balance from one or more credit cards onto a new credit card, there are some things you need to be aware of.

Is There A Limit On Balance Transfers?

Typically, yes.

Amex, as noted previously, usually will limit a balance to $7,500 or 75% of the credit limit you are given. Chase Slate limits balance transfers to $15,000.

To find the limit for the balance transfer credit card you’re considering, check the “terms and conditions.”

What is the Best Credit Card for Balance Transfers?

Most of the previously mentioned that carry no balance transfer fee.

So, that would be the Amex EveryDay card or Chase Slate. If you’re going to transfer a balance, it makes sense to pay no fee as opposed to 3% or 5% of the balance you’re transferring, which is what most credit cards charge.

Just be aware that the Amex balance transfer offer is a temporary promotion that could go away at any time.

What Kind of Debt Can I Transfer?

Only credit-card debt. You cannot transfer debt from any other type of loan.

Is My Balance Transfer Amount Eligible For Cash Back Or Miles?

Nope. Don’t even ask your credit card company.

How Does A Balance Transfer Work?

You will receive the sign up bonus if you meet whatever spending requirements are necessary, and you’ll earn rewards on all the spending you do on the card, but the balance you transfer is not eligible for any miles or cash back rewards.

How Long Does A Balance Transfer Take?

It depends on the credit card company. It might take seven days. It might take a month.

You should request all your balance transfers at the same time, assuming you are transferring balances from more than one credit card, and assuming those combined balances are within the credit limit you’ve been given on the new balance-transfer credit card.

Make A Plan To Pay Off Your Debt

This is the most important point. Pay off the debt you transfer within the introductory period.

If you simply make the minimum monthly payments, you will obviously benefit from the 0% interest rate, but if you haven’t paid off your balance – or haven’t paid it down substantially – you will suddenly be hit with prevailing interest rates on the remainder of your balance. Those rates are usually in the high teens to low-20% range, and that can mean sizeable monthly interest charges, depending on how much debt remains on your card after the introductory rate ends.

The Wrap Up

If you’re looking to transfer the balance of one or more credit cards onto a new credit card, then absolutely go for a credit card with no balance transfer fee. Depending on how much debt you’re transferring, a no balance transfer fee can save you hundreds of dollars.

But we want to know: What’s more important to you – credit cards with no balance transfer fee, or a card that offers a low balance transfer interest rate for a longer period of time, say 3 years or longer?

Let us know in the comments below.

Show Full Article
0