I borrowed a combination of government and private student loans to pay for college. While the government loans have favorable rates, the private loans are now hovering around 10.25% on $80,000 (with a 30-year term). Yikes!
A few weeks ago we got an offer we couldn’t refuse: an $11,000 balance transfer offer for a credit card with 1.9% fixed for the life of the transfer. This offer came from our credit union (yet another reason to love credit unions). I applied for the transfer and it went through this week. We will make minimum monthly payments on the balance transfer until it is paid off.
So how much will we save by borrowing smarter?
By calculating a loan amortization table (there are lots of free calculators available online) we determined that we will be able to pay off my private student loan a full TEN YEARS earlier by paying off all that principal now. We will also save ourselves from $30,500 in interest. The interest on the balance transfer will only cost us about $900 in comparison.
If we get another low-rate balance transfer offer like this in the future, we will definitely do this again.
Him&Her: Who are they?
Him and Her are engaged twenty-somethings living in Chicago. After college they realized that they had a lot of debt, and worse, that they actually had to pay it off. In the time since then, they’ve managed to eradicate all of their credit card debt and start mowing down their student loan debt. They’ve also had to learn how to balance debt repayment with funding their retirement, the costs of living in a big city, and planning for a big wedding. You can read their adventures in finance on their blog, Make Love, Not Debt, and see how they fare.