Ask me (almost) anything!

Close Encounters of the Cheap Kind has a new home at www.CheapEncounters.com!

Is there a personal finance question that you want to know the answer to, but were always afraid to ask? Well, today is your lucky day! Here is my offer to you, my loyal readers: ask me (almost) anything! Just leave your question as a comment to this post, or email your question to me at billyoceanseleven@sbcglobal.net .

Here are a few conditions to keep in mind with this offer:

1. None of the advice I provide constitutes professional advice. If you need professional advice, you shouldn’t be looking on the internet, you should be calling a qualified person in your area. However, if you just want to educate yourself, you’re in the right place.

2. I will answer most personal finance and frugality questions, unless it is something I really know nothing about. I’ll also answer off-topic questions if I find them sufficiently entertaining.

3. It may take me a few days to answer your question, so don’t be surprised if you don’t get an immediate response.

Can YOU handle that promotional credit card rate? Probably not…

Close Encounters of the Cheap Kind has a new home at www.CheapEncounters.com!

Here is an interesting tidbit on how consumers use those teaser balance transfer rates offered by credit card companies. As cited in a study from this Marketwatch article, those who take advantage of these balance transfer rates fall into three nearly equal groups:

• About one-third transfered balances to the new card and paid the balance off during the promotional period without charging any other purchases to the card. As purchases are normally charged a much higher interest rate, charging anything to the card is usually a bad deal.
• About one-third continued to make new purchases on the card each month at the much higher interest rate.
• About one-third had a “eureka” moment between 1-6 months after the balance transfer when they figure out that purchases are charged at a much higher rate. Only then did those folks stop making new purchases on the card.

Always remember that although your balance transfer may be at 0% APR, your purchases probably aren’t. Additionally, your payments go towards the lower promotional balance first, meaning your higher rate purchases will continue to accumulate interest until the balance is paid off. So if you take advantage of a low rate balance transfer offer:

• Keep careful notes of when that promotional rate expires and make sure to pay off the balance before that date
• Don’t make any new purchases on the card. When you get the card, put it in the sock drawer and forget about it.
• Make sure to make your payments on this card on time. If you pay this card late, the default interest rate of 20%+ will likely apply. Also make sure you pay your other cards on time as well, since many cards practice universal default where they can hike your interest rate for paying someone else late, too.