Personal loan

[sohguanh]

There must be some psychology behind this regular minimum payment of Credit cards. It is like they take this thing so seriously. They charge you a late fee if you miss a payment, no matter you pay like 5X the min payment the previous month or the next month, they still want you to keep paying the minimum payment atleast.

Thanks for sharing. As to why the insistence of monthly minimum payment I am thinking from bank perspective not to have too many high valued bad debt if you as borrower should default. At least out of 86k they loan to you they already get some back so the amount is reduced from the total amt loaned out. Me also guessing too.

This balance transfer can be useful if you find alternative to get more monies but just need more cash which you lack say startup a company etc

 

[BBCWatcher]

I’m just missing the part where you got cash. I think of balance transfers as, well, transfers. That is, Credit Card Company “New“ pays off your card balances at other banks, and you end up with $86+K (in this case) on your new card and zero balances on the others. (And you lower your interest rate in the process.) So I was just wondering if you had ~$86K in credit card debt on those other cards. For example, did you charge a lot of business travel expenses and then consolidate them?

Or is this really a personal loan attached to a credit card (and with special terms) rather than a standalone personal loan? So there were no balances transferred from other cards. Instead (as with other personal loans) Citibank handed you some cash.

 

[revhappy]

I’m just missing the part where you got cash. I think of balance transfers as, well, transfers. That is, Credit Card Company “New“ pays off your card balances at other banks, and you end up with $86+K (in this case) on your new card and zero balances on the others. (And you lower your interest rate in the process.) So I was just wondering if you had ~$86K in credit card debt on those other cards. For example, did you charge a lot of business travel expenses and then consolidate them?

Or is this really a personal loan attached to a credit card (and with special terms) rather than a standalone personal loan? So there were no balances transferred from other cards. Instead (as with other personal loans) Citibank handed you some cash.

Yeah, the term balance transfer isn't used in its strict sense, atleast here in Singapore. The credit card company pays out the money into your bank account and doesnt pay off another credit card. I think even if you insist that they pay it directly to a credit card, I dont think there is a way to do it. When you try doing it automated for example with SCB, it asks you for a bank account to transfer the funds to.

But If I recall correctly in my home country balance transfer, by regulation means, they can only pay it to another credit card and not to a bank account.

So yeah it is a personal loan in terms of usage of the funds perspective. But from perspective of the payments terms and structure of the loan, it is a balance transfer.

Personal loan terms are not very good. You need to pay equal monthly instalments and if you prepay the loan, you are charged a fee equal to the interest amount to be paid for the remaining tenure. So you are kind of locked it for whatever 3 or 5 years.

 

[BBCWatcher]

I don’t think we necessarily need to respect credit card companies’ marketing departments when they name something that isn’t a balance transfer a “balance transfer.”

There’s nothing in the loan agreement (contract) that requires you to have credit card balances and to use the cash loan to pay them off, correct?

 

[revhappy]

I don’t think we necessarily need to respect credit card companies’ marketing departments when they name something that isn’t a balance transfer a “balance transfer.”

There’s nothing in the loan agreement (contract) that requires you to have credit card balances and to use the cash loan to pay them off, correct?

Correct. Nothing.

 

[BBCWatcher]

The only other potential financial negative I can think of is that a credit line is a finite, time limited resource. In this case you probably cannot grab a second ~$86K tranche at a low EIR for a fresh 12 months. (Although maybe you can roll the same ~$86K into a new 12 month term via another credit card company.) But in many cases you don’t care since you’re very unlikely to ever need that credit line.

Of course some people get in trouble because they go spend more on whiskey (metaphorically or actually), i.e. they start living beyond their means. But if your spending behaviors are identical and prudent then low (or low enough) credit can be great stuff.