Here is what I did next,

  1. Check my credit score (always, know where you are before you pounce)
  2. Apply for a card with good balance transfer offers (fee should not exceed 2-3% for 0% APR of 1 year)
  3. If you can find another CHASE SLATE equivalent, kuddos to you. I think SLATE has the best deal for balance transfer.
  4. I didn’t see another card like SLATE with FEE-less, 0% balance transfer for 15 months.
  5. So I went for the second best; CHASE FREEDOM card, which charges 2% transaction fee for balance transfer with 0% interest for 12 months. This means, the true annual interest  is 2%, still heck of a lot better than the 6.8% student loan interest.
  6. If this same 15k of principle were still held by my student loan servicer @ 6.8%,  I would have accrued $1020 each year. Even worse, for those who are making IRB payments, where their student loan is going through negative amortization*, the interest accrued each subsequent year is getting exponentially larger!!! 
  7. But with the 2% interest of FREEDOM card, the interest on 15k for 1 year is $450.
  8. Again, this is net guaranteed tax free savings of $1020- $450= $570, or more if loan has negative amortization. 4.8%+ GUARANTEED tax free annual return for this financial move.

So at the end of 2.25 years,

With a few mouse clicks and writing 2 checks,

I have saved $1845+ in interest on 15k of student loan.

If you follow the same principle and move debt with even higher interest rate (some are as outrageous as 9-11%), your savings will be even more.

If you increase the amount of debt flow, IE. let’s say you shift debt around in 3 x the magnitude proposed above(=45k), then you would have enjoy ~6k of tax free savings in 2.25 yrs. 

To recap the flow of my debt is such:

15k @ 6.8% interest with Dept of Education –> 

15k @ 0% interest as balance on my SLATE credit card for 15 months –> 

15k @ 2% interest as balance on my FREEDOM credit card for 12 months

2 transfers over 2.25 years, with  $1845 saved.  Amount of time I spent doing this? Less than 2 hours… I paid no taxes and had the total peace of mind in knowing exactly the minimum financial reward of my effort 🙂

The other amazing added bonus that comes without any effort is: as I carry large balance, and then PAY OFF large balance, credit card companies love me, and offer me more sweet deals, literally begging “to carry my student loan debt.” The credit bureau also loves me and gives me amazing credit score 🙂

If a mom with a young kid and 80+ hr work week, and a tutoring side job can manage this, you can too!

Likely, you’ll be more successful than I am. No one told me how to do this, I figured it out by baby steps, mistakes, and some painful lessons. I hope this can benefit you and set you free from debt sooner than you would have otherwise.

*negative amortization *loan balance is getting larger in spite of payments because payments are too small to even cover interest monthly, let alone starting to reduce principle. Those who are on IBR/PAYE in residency without making extra payments are likely in this situation.

Please comment below if you have any questions.

When 15 months of 0% interest rate run out…
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5 thoughts on “When 15 months of 0% interest rate run out…

  • June 18, 2016 at 10:58 pm

    Does the credit card companies reward you for “paying” the large balances even though you have just transferred the balances? I would think that taking transfers would be a big liability for them and that they’d be adverse to doing it. Why do they offer 0% interest for extended periods if there is nothing in for them…is this just assuming that most people don’t know about transfers and then get stuck with a high interest rate?

    • June 19, 2016 at 5:58 am

      Dear Cyndi, you made wonderful points.

      Yes, when I balance transfer with Chase Slate, they provide 0 fee and 0% APR for 15 months if I balance transfer within 60 days of account opening And they do not give me reward points for this.
      Balance transfer not usually not associated with any rewards, the biggest rewards there is with balance transfer is just 0% or low percent effective interest money.
      My rewards are all associated with purchases. So I make my 1-30% cash back when I make the purchases, and then I transfer before the 0% APR expires to save money. I maximize purchase (negative 2-30 % interest becuase of cash back) and I minimize my transfers (0-1.7% interests rate) if at all possible by prioritizing and directing my cash flow accordingly.

      Also, credit card companies do have have charity or humanity. they are corporations, so Yes, they do not lend 0% or negative interest money for the consumer’s sake. They lend so they could bait and switch. that’s why it’s important that everyone KNOWS and ACTS by “bite and bounce.” take the bait but bounce before the banks switch.

      unfortunately, many people stick around for the 15+% interest rate, either out of not knowing or not acting.
      for instance, my parents were actually paying 30% when I was a college student, they got overwhelmed and just stopped doing anything about it.

      i’m hoping with raising awareness, planning ahead, and borrowing intentionally that everyone who does borrow from credit cards, they absolutely Bite and Bounce.

      thanks for raising such great points.

  • Pingback:What should I do? 350k @ 6% interest rate, 3 more years of training. – Dr. Wise Money

    • March 13, 2016 at 7:56 am

      Just before the 21 months of 0% interest runs on out Citibank Simplicity card, I would have gotten another new credit card with good balance transfer offers. For instance, multiple chase credit cards offers 2% transaction fee for 0% interest rate for 14-15 months. This translates to 1.7% effective annual interest rate (definitely still beats the current student loan rate 7+% & the origination fee of 1-4%). Even better, one could have closed and reopen a Chase Slate card, which is the only credit card that I know will allow balance transfer with NO transaction fees during the first 60 days of account opening and offers 0% APR for 15 months.

      The main principles behind utilizing credit card balance transfers is,
      1. discipline to stay on top of 0% interest expiration date (not hard, only every 15-21 months)
      2. lower interest boosts your speed of paying off debt (greater % is going towards principle with every dollar payment)
      3. ultimately, you will pay off the debt, not the next credit card.
      4. using cc responsibly as such will buy you time and allow you to leverage debt and take advantage of time value of money.

      I hope this answers your question. Feel free to ask more.


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