Managing Credit/Debt

Used CC Balance Transfer to Pay Down Student Loan

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I went ahead and used the balance transfer from my credit card to pay down my Grad Plus student loan.  The amount of the transfer was $4900 plus a $75 balance transfer fee.  Since my interest rate will be over four points lower on the credit card I should easily make up the balance transfer fee.  If my math is correct after seven months I’ll come out ahead. The credit card rate is for life and I have other higher interest debt so I’ll be paying only the minimum or slightly above the minimum payment on the card balance. Once I graduate and my income is more certain I’m going to look into paying down more of my student debt in this manner.

One of my goals this year was not to incur any debt other than student loan debt.  Since this is just student loan debt transferred to my credit card I feel it is within my goal.

February Credit Score

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My February credit score is 787 which is my highest ever.  It was 770 last month and 782 the month before that.  I’m not sure what is causing the fluctuation.  It will likely be going down next month because I plan to transfer $4,900 of my 8.5% Grad Plus loan to my credit card that is offering me a 3.99% for life rate.  My overall debt won’t increase but my credit utilization percentage will go up causing a reduction in my credit score.

January Savings/Debt Repayment Percentage

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My savings/debt repayment percentage for January was only 3.7%.  That is quite a drop from the previous months percentage of 55%.  The drop was because I didn’t make any debt payment and made only the minimum $50 contribution to my IRA.  Until I receive my student loan money I’m not going to make any debt payments or extra contributions to my IRA.  This is to make sure I have plenty of money on hand for living expenses and any unexpected expenses.  Once I have my student loan money I plan on paying down my private student loan and maxing out my 2007 IRA contribution.

My Credit Cards Paid Me Last Year

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Last year for the first time ever my credit cards made me money instead of costing me money. I received a $150 bonus for signing up for a Sony card and then another $25 bonus for charging $100 on it. I also cashed out $20 cash back from my Discover card. I earned an additional $13 cash back from Discover and $60 cash back from Chase that I haven’t yet cashed out.

I also engaged in some credit card arbitrage. This was roughly a break even endeavor since I decided to end it early and use the money to pay off debt. If you consider the savings on paying off the debt than I came out slightly ahead.

I paid a total of $1 in credit card interest for the year. This was due to forgetting about the 0% interest rate on my Chase Freedom card ending.

The reason I made my money from my credit cards last year is that I was disciplined in using them. I didn’t charge anything on them but purchases I would have made anyway that I knew I could completely pay off before interest accrued. Credit cards can be a good tool if you are disciplined in using them.

December Savings/Debt Repayment Percentage

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My savings/debt repayment percentage for December was 55%.  I paid $1095.23 towards my student loans and contributed $350 to my IRA.  This was out of a total income of $2617.84.  I did carry some savings into the month which went towards paying my student loan but I also received a paycheck on the last day of the month which was too late to use the proceeds towards paying debt or an IRA contribution.  Therefore I think it is pretty accurate to say that my savings/debt repayment percentage was 55% of my income.  This is the last month I’ll keep track of the percentage for a few months because I won’t have much income while I’m in school.