Postponing the payment
Ξ February 14th, 2008 | → | ∇ Debt Payments |
Right now I have two things in the works.
The first is that I intend to take a 1.99% cash advance on the BofA Visa card to pay off my student loans. This will save me money in interest over the course of the payoff, and it will ensure that Sallie Mae stays off my back. In addition, it will move the $850/mo that I am currently paying Sallie Mae over to may debt snowball, less the new BofA payment.
The second thing that I intend is to use my income tax refund to drastically pay down the Air Conditioner finance. The income tax check is due on the 19th, and payday is on the 21st. Between the two of them, I can knock $5k off the AC.
But then I started thinking….
If I transfer the Sallie Mae onto the Visa, the outstanding Visa Balance of somewhere around $2000 will still be there, and because of the overall low interest rate (1.99%) on the transfer, I would want to hold that debt until toward the end of my debt payoff. But that would mean that I would be paying the 18% interest on the $2000 the whole time.
Wouldn’t it be better to use the income tax check to pay off the BofA account and then when I transfer the money from BofA to Sallie Mae, use a “convenience” check to simply take it in cash, and add $2000 back onto the amount to pay on the AC? This would have the net effect of transferring $2k from the AC to the Visa without any additional transfer fees. In effect, this would be the same as if I were to have called BofA and they agreed to lower the interest rate on the outstanding balance down to 1.99%.
The only difference is that the student loans will be getting another payment on the 21st, so the balance would have dropped somewhat and I wouldn’t be able to use that payment on my debt snowball for that payday (in a sense). The AC people would still be getting $5k and the student loans will be transferred. The balance on the Visa would not have gone up any higher than if I were to simply pay it off today. The only real longterm difference is the interest rate on the outstanding balance.
Damn, I’m good.
on February 14th, 2008 at 1:45 pm
Reading the logistics kinda made my head hurt…
on February 18th, 2008 at 1:27 pm
Make sure you don’t write that BofA check too soon. Once you pay off the original balance it may take another month before the finance charges come off. And if you write that check before then they may get you. I’ve seen it happen. But other than that it sounds great!
on February 18th, 2008 at 10:32 pm
Great….now I need a drink!