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A New Master?

Well, my debt is under $10 000 and settled nicely into my Line of Credit at 5.25%. The only strategy I had planned for the next year-and-a-bit is to plug as much money possible into that account to pay it down to $0. I was looking forward to starting with my next paycheque on the 28th (I get paid once a month, right?).

I figured at least one of my credit card companies would come sniffing around since they all have zero balances. So I don't know why was I surprised today to receive an invitation from MBNA to switch to their PremierRewards card. Normally I shred these invites but today I sat down and looked it over.

If they approve me for $10 000 I can move my LOC balance over and pay 1.99% for ten months. The "small" print at the back of the page tells me that there is a balance transfer fee of 1% of amount transferred with a minimum fee of $7.50. So right off I will pay $100 to transfer over. Interest on $10 000 is $16.58 per month, which would go down if I continue to be aggressive with the repayments.

Currently I pay between $30 and $40 a month in interest, and my minimum payments are about $250. I always pay much more than that but spread out throughout the month.

The "Rewards" the card refers to are 1% cash back for purchases. I wouldn't be using the card for purchases until after the ten month introductory period, when the interest rates shoot to 19.99% and I have transferred the balance back to my LOC. I currently use a MasterCard that offers points towards goods and groceries, and I was considering looking around for a card that offers cash instead. Any cash earned on the new card will be applied to the account once a year. I would prefer it applied to my chequing account ...

There is also no annual fee, unlike my VISA card, which I planned to cancel last summer prior to the fee being applied, but hesitated and decided to keep for another year. I was afraid closing the account would affect my debt-to-credit ratio (25% of my credit used vs 50%). Opening another card will increase my open credit, so I may feel more comfortable closing the VISA after all.

I'm not going to decide today. The letter says I have until April 30 to decide.