May 27, 2010, 5:00 am

I Need Temporary Financing; 1.99% APR Credit Card to The Rescue

by: The Financial Blogger    Category: Pay off your Debts
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As you may already know, I am moving in about 3 weeks. I already know that there will be cash flow chaos the upcoming month. I need to pay for moving, the notary (lawyer), I need to pay taxes and, to top it all off: I decided that I will pay back the loan from my parents right away. This is why I will apply for a Canadian 1.99% APR balance transfer credit card.
 
I have owed this money for the past 4 and a half years and I really don’t feel like waiting until the end of November to pay them back (especially since I recently bought another car). Even though the original agreement was to pay back the loan this fall, I just want to get rid of the debt and again feel free to spend my money as I want.
 
However, I don’t think I will have the money to do all this… I am currently spending a lot of money on several items (new car, my wife’s birthday, my friend’s wedding, and another wedding in the near future, my new house, etc. just to name a few). So I will need extra financing for a few months. I don’t really know for how long, but I know that I’ll be getting a nice bonus at the end of the year so I will leverage that certainty.
 

What kind of options do you have when you are looking for short term financing?

 
You can always rely on a line of credit or a personal loan. My problem is that no bank will lend me money in the short-term right now. How can I make a 6 figure income and yet I can’t get financing? That’s it; TFB is too stupid and spent all his money. This is why he can’t get financing. Sorry folks, it’s more complicated than that: it’s because there is a lot of money I make yet can’t prove.
 
My online company is paying for several expenses and my bonus can’t really be taken into consideration (even though it totals 40 to 50% of my annual income!). They claim that I may not be making this much every year so they can only base their decision on my base salary… reality sucks!
 
So if I can’t get money from the evil banks (and I don’t want to borrow from family or friends since I want to get rid of this type of debt anyways!), I have no other choice but to consider a low apr balance transfer credit card. The main advantage when applying for a credit card is that they qualify you based on your income and your credit bureau (both of which are pretty good in my circumstances) and not on your ability to pay 😉
 
This is why I ran through internet listings to look for the lowest interest rate on balance transfer credit cards. I was disappointed at first, having not found any credit card offering a 0% intro rate for balance transfer for Canadians. Therefore, the best rate I found was 1.99% on all cash advances and balance transfers.
 
There are a few issuers of those generous balance transfer credit cards. Among them, there is MBNA, a well known credit card company (known for their appetite for risk).
 
This is actually why I decided to apply to one of their 1.99% balance transfer credit cards (The MBNA Platinum credit card); because they are most likely to lend me more money than other credit card issuers ;-).
 
So here’s my choice of credit card:

 
 
I have applied for 3 main reasons:

  1. They offer the 1.99% rate on balance transfer
  2.  

  3. They are more likely going to offer a great credit card limit
  4.  

  5. The Platinum credit card doesn’t have fees!
  6.  

 
I have applied today, so we will see how long it takes and how much of a credit card limit they will be willing to grant me. I’ll keep you posted!

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Comments

by: 2Hirondelles | May 27th, 2010 (7:21 am)

MBNA will also inundate you with junk mail. We learned that when my child, a student employed part-time at the time, had one.

Interesting, thx for the heads-up! if it ever happen, I’ll tell you!

I didn’t ask to be contacted by email… hopefully I won’t receive anything from them!

Your financial institution probably relies on your pay cheque to make all the decisions. I was not happy with that either because of the bonuses I had I my work (just like you but not in that range). I had the bank agree to average my last 3 T4s which shows a much higher income than the pay itself. That was around the time I bought my first place. You could give that a go. I suspect it’s not to get a bigger house but to get a loan or line of credit temporarily to deal with paying back your parents.

@ Passive Income Earner,

In order to consider your bonus (variable income) banks usually accept 2 to 3 years of proof and make an average. The probleme is that I only have one year to show (and they don’t want to count the current year even if my bonus will be bigger).

But anyway, the 1.99% card should be enough to cover for my parents loan and I’ll have 10 months to pay it back while I have planed to do it by the end of this year.

Be cautious of MBNA and their terms. Setup a payment plan and stick to it or they’ll revert your 1.99% to their 18% or whatever. I use it all the time transferring around balances to cheap intro rates. I’ve been doing it for years, and it’s great. But the last time I swear I had until August, and just last month they hit me with full interest. I usually don’t screw these things up as I set it all up in my PDA and microsoft money etc. so I’m assuming MBNA screwed me.

Pete

Is there also a “set up fee”? I have an MBNA credit card, and I remember one time I was looking and there was a fee of 100 bps to set it up. Granted, if you’re looking at 12 months then it’s a drop in the bucket. But if you are looking at a few months it can be significant.

by: The Financial Blogger | May 27th, 2010 (1:25 pm)

@ Pete,
I’ll take a look over the terms. thx for the heads-up!
I remember reading something about the payment plan. I’ll set it high enough to make sure to pay it down quickly.

@ Trevor,
I didn’t hear about any fees so far… I’ll keep you posted on my experience… still waiting to know if I’m accepted or not…

I have an MBNA credit card that is 1.99% until paid in full (a deal which sadly no longer exists). So far I’ve had no complaints, except for a recent notice which ups the minimum payment from the previous “interest plus $10” to “1% of the balance plus $10.” It’s not a problem for me as I’m already paying more than either of those options. However it could be a real shock for someone who might go from a minimum payment of $35 per month to $170 per month or more. My theory is that the company is forcing borrowers to pay off their cards faster because it’s too expensive to loan us money at only 1.99%!

There is a fee on the balances transfers 1% maybe or min of $25 can’t remember exactly. It making a lot of smaller balance transfer generally easier to just cash advance the entire amount you need.

I smell an affiliate link! Shame on you for not disclosing it.

See Ellen Roseman’s webpage for a good article on the recent MBNA changes to minimum payment requirements. Be careful!

by: The Financial Blogger | May 28th, 2010 (8:51 pm)

@ No communism,

My bad, I should have disclose it but I think it was quite obvious.

However, the story is true, I’m getting my card next week!