Credit Tips: Providian Balance Transfer Rate Special

Posted On: August 1, 2006

Author: usmsci
Posted: Mon Jul 31, 2006 10:00 am
Post subject: Providian BT rate special

i got a message from Providian when i logged in this morning that gives me a BT of 4.99% until March 2007. Wanted to let anyone know in case you have a Providian and havent logged in in a while. i think i am goin gto move some money from my HELOC over there since i am paying prime+ on that account. i only have a $1500 CL on my Prov. card but i am also moving about $10K to other special 0% BT’s too so this extra $1500 will help out even more.

should i do it?

Author: hdporter
Posted: Mon Jul 31, 2006 9:15 pm
Post subject:

This isn’t likely a good deal if you’re looking at a BT fee of 3%, which is the case with the transfers I’ve been offered on my account.

The BT rate is good for 8 mo. at most. That makes the fee translate to a 4.5% annualized charge, and the effective rate for a transfer that’s repaid in Mar 2007 becomes 9.5%. If you should repay any portion of the BT in advance of March then the effective rate is even higher.

BT fees are the fly in the ointment for most transfer opportunities. People rarely calculate that if they actively repay the transfer, the effective cost of the transfer fee rises even higher.

- Harry

Author: usmsci
Posted: Mon Jul 31, 2006 9:40 pm
Post subject: Providian Balance Transfer Rate Special

hdporter wrote:
This isn’t likely a good deal if you’re looking at a BT fee of 3%, which is the case with the transfers I’ve been offered on my account.

The BT rate is good for 8 mo. at most. That makes the fee translate to a 4.5% annualized charge, and the effective rate for a transfer that’s repaid in Mar 2007 becomes 9.5%. If you should repay any portion of the BT in advance of March then the effective rate is even higher.

BT fees are the fly in the ointment for most transfer opportunities. People rarely calculate that if they actively repay the transfer, the effective cost of the transfer fee rises even higher.

- Harry

well it is a 3% fee but from now til March 2007 i can still save money. Prime is about to go to 8.5% and right now i am paying prime+3.5%. yes thats more than average but i got a deal on the HELOC for the 110% of the value of my home and no closing costs and 4.99 intro. thats 12.0% versus 4.99%. ive already written a little C++ program to calculate it and even with the 3% fee i will save a good bit of money.,.more than enough to offset the BT fee.

Author: hdporter
Posted: Tue Aug 01, 2006 7:53 am
Post subject: Providian Balance Transfer Rate Special

Cool … provided that you properly annualize the BT fee to arrive at an effective rate, calculate that rate based upon the average balance outstanding and not simply the amount transferred, consider the non-deductablility of CC int vs. possible deduct of HELOC, and finally account for the fact that come March you’re going to be looking to transfer any remaining balance elsewhere and may incur yet another BT fee.

I’m not being argumentative here … just outlining the considerations for a BT promo rate that’s valid for less than a year. I’m pleased this is a good opportunity for you.