3 ms·

I don't think there are any savings accounts with >= 3% APY right now. How could it ever be profitable to borrow money at a higher interest rate than you earn

• basch 7y ago
  A balance transfer is a one time fee, not compounded monthly or daily. You pay 3% up front, and then theres no benefit to paying the loan off early, except for holding a lower credit card balance. What I am saying is, is that IF you are taking a balance transfer, to accurately compare it to a traditional, monthly compounded loan, you need to account for the minimum payment differences (the balance transfer will be 5x-10x lower) and then calculate the interest that extra cash not paid back to the loan can net you. I am making a counter argument to the claim that a 3% balance transfer is equal to a 5.5% apr loan, i think its closer to 4.5% if managed wisely. Its closer to 50% higher, not double.
  • rootusrootus 7y ago
    This is why I said "be careful" ;-). Someone who thinks that a balance transfer offer is easy math may not be making the best financial choice. As you point out, managed carefully, that can be mitigated.