0% interest about to expire - pay off with emergency fund?

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Hi all,

I wrote a little bit about this in my first journal post, but here’s the situation:

I’ve got $2167 on a Citi credit card that I transferred for the 0% interest 18 months ago. That 0% is about to become 24% (laughs forever) and I am wondering if I should take the $1,724 and some change that I have in an emergency fund and throw that towards the card, and pay the difference from my checking.

At this point my debt feels like an emergency. Any suggestions?

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If you use up 100% of your emergency fund and ~$400 from your checking:

  • How long will it take for you build up a one month emergency fund again? (i.e. how much can you save from each month and/or paycheck of income, and how much do you spend in an average month?)
  • How much will be left in your checking account?
  • What is your chance of getting another 0% offer extended with balance transfer?
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  1. I think maybe three months? What I spend in an average month is in the process of changing drastically, due to the fact that I’m living with my parents during the coronavirus movement restrictions and that I’ll be making big lifestyle changes once I’m back in NYC.
  2. About $1100, which $1000 of which would immediately go into the joint checking account my sister and I share for the apartment expenses which we’re still paying while we’re here
  3. Probably?
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@anomalily I don’t know if I replied to you correctly!

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I can definitely help with replying to posts! To reply to a post, click on the gray arrow at the bottom of that post. If you click on the blue arrow that says “reply” at the bottom of the thread, it just replies to the whole thread and not to a specific post.

I feel less qualified to weigh in on people’s financial decisions, but I’m concerned that if you throw your entire emergency fund at the credit card transfer, you might end up having an emergency expense come up before you have a chance to rebuild the fund.

I saw in your other post that you’re planning to go through your expenses. That’s an important part of the equation too.

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This is a big thing. If you can get another 0% balance transfer, I would keep the emergency fund (especially right now, when everything is a little topsy turvy).

If you can’t get a balance transfer – some more detail might help. For example, what are your necessary monthly expenses you can’t get out of right now (rent, that sort of thing)? What are the unnecessary monthly expenses you’re not reasonably going to give up (anyone cutting Netflix right now is like!!!)? What is your current debt repayment plan and savings plan like? etc.

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24% interest!?!? I agree that sounds like an emergency.

The “what if you have an emergency?” asked above is a good question. Where would you get the $ to pay for that emergency? If it is a source that is less than (or equal to) the 24% interest you’d be paying on this debt, then paying off the debt - or at least getting it into some vehicle that charges less than 24% - makes sense.

If you are able to transfer it to another 0% promo, create a plan to pay it off before that promo interest rate expires.

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Also worth knowing if the 24% is retroactive to the beginning of the offer or just going forward.

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It’s just going forward, afaik.

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If it were me, if I felt like my job was pretty secure I’d probably just retire it but getting a balance transfer offer certainly wouldn’t be a bad course of action. Not sure whether they still normally carry a 3% upfront charge or whether truly 0% offers are more common again like they were 5+ years ago.