The Wong Ohana

Now, I have been known to play a game affectionately called Credit Card Bingo in my house. I have a couple of cards that I use strictly for the purpose of moving funds back and forth to get the best rate available. I NEVER charge on these cards. I don’t even keep the card in my purse - its locked up in my file cabinet with the statements. You have to be very controlled, diligent, and a good case of anal retentiveness will come in very handy if you choose to play this game. It is not for the lighthearted, the reckless, or anyone that cannot control themselves where their money or budget is concerned.

I DON’T recommend that anyone do this, but I have found that for myself, in my own personal situation it has served me very well.

Here is how the game is played:

First and Foremost, I keep an Excel Spreadsheet with all my Credit Card information on it. I have Balances, minimum monthly requirement, amount actually paid, interest rate, promotional offers and expiration dates, total indebtedness, etc. all on one sheet.

When I get the mail from the mail box, I don’t sit on the couch, in the back yard, or at the kitchen table to open it - I don’t do it watching TV, or having a conversation with my husband. I go straight to my desk and open up my Excel Sheet, THEN I open the mail. This way, I never forget, and I don’t have to keep track of what has been entered and what hasn’t. Only after I have made my entries, and paid the appropriate bills from my Bill Pay do I file my paperwork and statements - and I keep ALL my paperwork. I have files and files of archives in the garage going back years including the first mortgage papers from the first house I bought and all refinances in between.

When I see a bill from a Credit Card company I open it up at my desk with my Excel Spreadsheet open. The first thing I do is to type in the new balance. I then CHECK THE STATEMENT to make sure that my interest rate is as it should be. If there is any discrepancy, I call the Credit Card Company immediately before doing anything else. Next I check to see what the minimum due is, and what I have marked on my spreadsheet that I paid last month. I also color code the column that I have calculated is in my best interest to pay off first. That is where any extra funds go at the end of the month. I always pay the minimum due, PLUS any interest due, PLUS what I feel I can afford as extra to the principal. This is the best way to get things paid off quickly. If you don’t have a program for paying down your credit cards it can take you up to 40 years if all you are doing is paying what the credit card company decides is your minimum requirements. Why do you think they do it that way? It keeps you paying and owing them forever. And while this may be in the best interest of the credit card company, it most certainly is NOT in your best interest - so I never recommend paying only the minimum posted on your statement! Always pay more, even if its only a dollar. ALWAYS pay more.

Once I’m sure that the interest rate is as it should be, I check my spreadsheet to see when my promotional offer ends. If its 1-2 months out (I never transfer balances unless I get 9 months or longer on a promotional offer. Less than that just isn’t worth the hassle and trouble) I’ll call the Credit Card company and ask if they’ll extend my offer. If they say “No”, I stay NICE and POLITE and ask if I can speak to a Manager. If that doesn’t work, I’ll ask for THAT person’s Manager. If it still doesn’t work, I’ll ask if they can extend it IF I make another balance transfer (there is usually no minimum transfer required, so you can transfer as low as $100 from another card and get your offer extended. I also ensure that there won’t be a balance transfer fee. Even if they only extend if for a couple of months, that’s a good thing. I make a note on my Excel File of the new expiration date, and call them again in a month or two.

When a promotional offer expires, I use another card to transfer the balance to. Always make sure that the offer you are transferring TO is better than what the standard rate will become if the promotional offer expires. If not leave this one alone and wait until you get an offer in the mail.

I find that as soon as one card is paid off, they will start sending offers out, so once you start doing this, you should start receiving regular offers in the mail. Always try to move enough funds to create a zero balance or as close as you can get so that you will pay the remainder off in a month or 2. This will keep the offers coming. Also, try staggering your offers if at all possible. That way you never have to make a dozen calls all in one day, but it does also mean that you will always be calling SOMEONE, so its a kind of double edged blade.

Its always a good idea to keep a card with a zero balance solely for the purpose of moving funds when your promo rate expires. Then if you don’t get an extension, and you have no new offers, you at least have somewhere you can transfer your balance to, because typically your zero balance card will have a lower rate than what your balance will revert to once the promotional offer ends.

I also find that even if they are insistent that they have no new offers that you qualify for - once you take that balance and transfer it to another card, you’ll get a new offer in the mail immediately with a better offer than you were asking for in the first place. Go figure! But it never fails.

As soon as a card is paid off, they are getting nothing from you, so they will do whatever they need to to retain or re-capture your business. So when you move your funds off one card onto another DON’T close down your account. Just pay it down to a zero balance and then wait patiently. It won’t be long before they make you another offer which you can then use to transfer another balance back to them again.

You can keep this game up indefinitely - I’ve been doing it for almost 10 years now, and I only have one card with an interest rate higher than 9%. At present almost all of them are 4% until the balance is paid in full, except for a Discover card that I lucked out on. They were offering a 0% interest rate until the balance is paid in full as long as I make a minimum of ONE purchase each month. What I did was to sign up for their credit card protection program for $2 per month which qualifies me for the program and continued 0% offer. I pay only the minimum on that card, and concentrate on the others in order to get them paid down sooner. That 0% balance is coming down, but I’d rather pay off something that is charging me interest - that one was a no-brainer.

I’ve also noticed recently that all the new offers from Discover now require 2 purchases per month (no minimum amount) so if you are good about following rules, you could buy a candy bar each month, sign up for the credit card protection program and still make out like a bandit! The catch on that one is that the new purchases will be at the normal interest rate, not the 0%, and since Credit Card companies have a policy of always paying off the lowest interest rate first, if you have multiple rates on one card, those purchases will continue to grow each month until that 0% balance is paid in full. That’s why you want to keep the new amount going onto your card as low as possible and less than $2-3 per month if at all possible, otherwise you are negating your 0% rate by racking up a higher balance that is getting charged a regular interest rate.

SO, if you want to think about this a bit, please keep in mind that there are a few rules you MUST follow.

• Never make a purchase on these cards. They are for balance transfer only
• Keep your balances low enough so that if you do run out a promotional offer you can afford the payment with the higher interest rate until a new offer comes in the mail. It shouldn’t take too long once you pay off one of your cards. Which you should be continually doing.
• Never use a transfer offer that requires a balance transfer fee UNLESS the total of the promotional interest rate PLUS the 3% transfer fee is STILL lower than what you are presently paying.
• Never use a transfer offer for a period of time less than 9 months
• Try to hold out for those “until paid in full” offers. These are the treasure you are looking for. In this case it might be worth it to pay for the transfer fee if the promotional offer is low enough. Save these for larger transfers. If you are trying to move $5,000 or more, it is probably going to take you longer than a year to pay if off, so the transfer fee will only affect your first years’ rate. After that, you can calculate on the promotional offer, so if its a 4% or 5% offer, that would be a good rate to lock in until your balance is paid in full
• You must NEVER be late - not even ONCE!! This will negate any promotional offer
• You must NEVER miss a payment - not even ONCE!! This will also negate your promo offer
• You must keep track of when your offers expire and check it every month so you’ll know which one you need to move next
• You must have a Credit Score high enough that will allow you to have 3 cards solely for the purpose of moving funds around. And if you can manage another one that will always have a zero balance that would be good too.
• And you MUST have the ability to do all of this WITHOUT stressing out, or SCREWING UP!

This is a game, but it has very strict rules and like I said above is not for the lighthearted! Be very careful should you think this is something you might attempt. It can have extremely good results if you are good at managing your money, but it can have extremely DIRE EFFECTS if you blow it!

When making a balance transfer - be aware that in the event that you are not transferring an entire balance, but just a portion of it, you will be creating another bill coming in the mail. So while you may be paying less “interest”, your monthly requirement may have gone up because you are now paying 2 credit card payments each month instead of only one.

On the good side of this coin, this will have the effect of paying your total indebtedness quicker because you ARE paying more monthly, but you have to make sure that you can afford this additional payment before making the decision to do the transfer.

Another good piece of advice I can offer is that if you get a 0% offer like I just did for 9-12 months (remember, we don’t want to accept any offers less than 9 months), and there is a 3% transfer fee, in reality, this is NOT a 0% offer, but a 3% offer. Now a 3% offer is pretty good - and should be less than any other card you have (if its not, please contact me IMMEDIATELY and let me know who is charging less than 3% - this is NEED TO KNOW information! hahahhahaha!).

My advice in this situation would be to calculate out exactly how much you can afford to pay per month. For example, you have gone over your bills and realize that you could afford $150 per month maximum added to your budget. I’d take that $150 and multiply it by 9 (for a 9 month offer), or 12 (for a 12 month offer) - you get the idea - and then transfer EXACTLY that much +$150 onto your new card. This will allow you to pay off the balance within your promotional time frame with just $150 left on the card (that you can afford to pay, right?) that will be charged at whatever the new rate will be, which will be nominal because no matter what it is, its only being charged on that $150 balance once. And in reality, it won’t really add exactly $150 to your monthly bills, but a little less, because you will have reduced the “old” card by the amount of your transfer, so the liability on that card has decreased. I do calculate my budget on that full amount, though because I always believe in leaving a little “wiggle room” when it comes to figuring out your budget. This ensures that you have not been overzealous and made things too tight!

SO, Remember not to transfer over more than you can afford to pay as your new minimum payment, and make sure that you STICK to that amount regardless of what is listed on the bill as your payment amount. Its very tempting when that bill comes in to pay only the minimum amount they have listed which will be CONSIDERABLY LESS than the $150 you have allotted, but don’t be suckered into this. If you’ve calculated on $150, then PAY THE $150 each and every month! This ensures that you got the full benefit from this offer and basically moved approx. $1350-$1800 onto as near of a “free loan” situation as you can be.

Actually, the only thing that would be better is if you actually found one with NO balance transfer fee. They are out there, not easy to find, and they come few and far between, but if you get into the habit of reading all the small print on the back of your offers, you may stumble onto one. If you do - - - GRAB it, it may be awhile before you get another one!

Don’t gamble with your Credit, or with your Money. If you are not 150% POSITIVE that you can handle this don’t even attempt it! If you have to read this 2-3 times to understand it, then don’t attempt it! If there is anything here that is even the slightest bit fuzzy or that you have to think over, don’t try it.

And NEVER do something just because someone else said it worked for them.

This has worked for me, but that doesn’t mean it will work for you! I am the kind of person that balances my checkbook every month when the statement comes in, in addition to checking periodically with my online statement. If I am off by .24 cents, I’ll spend hours or days with a calculator and my checkbook until I find out what happened and where my error is. I WILL call the bank if I think the error is on their part. I WILL call the Credit Card Company if I think I can get a better offer, or if I feel they can do better, or if my rate hasn’t changed in a year or more. I have no problem asking for a Manager, and I can maintain my cool and be nice and polite even when I feel like driving a dagger through the heart of their first born child!

I am the person my boss and husband will put on the phone when there is a problem, and they will run and hide, stay out of my way, and offer me treats until my issue is resolved to my satisfaction! But that’s just me!

Please exercise EXTREME CAUTION when handling your financial affairs!

Filed under: Credit Card DOs and DON'Ts, FIX / REPAIR Your Credit, Personal Finances on January 11th, 2008