Expert: kkemper - 9/25/2005

Question
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Thank you very much for getting back to me so quickly.  What a nice surprised.  I am watching football, while checking my email. Thank you for the advice. Believe me, I watch all my finances. So, I will indeed give it my full attention monthly. You didn't answer my one question:  How long will it take approx. to pay off $9800.00 at 1.99% paying $200.00 a month?  Please do the math for me.  I don't have my scientific caculater due to my daughter having it at school. You knowing banking probably can figured this out quicker.  Plus, it doesn't hurt to have someone else double check.
I ask so many questions it was probably easily overlooked.  Thank you for your help.  I will look into everything you mentioned and get back to you if need be. Looking forward to your reply. Sandra.
Followup To
Question -
I hope you can help me since the last expert didn't even try.  I got an offer from one of my Credit Card companies that is offering a balance transfer promotion at an interest rate of 1.99%,until the transfer balance is paid off, with NO transfer fee. It's sounds like a great offer.  I have NO balance on this card offering the promotion.I was planning on transfering $9800.00 from another card and use it strickly for paying off the $9800.00.  I will Not make any purchases, obviously due to the purchases being at a higher interest rate, they state clearly the lower interest will be paid first, leaving the higher interest rate just sitting there.  I intend on paying $200.00 a month, on time, of course, which would be more than the minimum payment asked.  Can you tell me at 1.99%, paying $200.00 a month approx. how long it will it take to pay it off $9800.00?  Also, are there any hidden catches I should be aware of with an interest rate this low? Finally is this type of offer better than getting a bank loan?  Again, I only plan on using this transfer offer to pay off the $9800.00. Thank you Mr. Kemper for volunteering your time.  I look forward to your reply with great interest. Sandra.
Answer -
a; do the math;
if you are paying now, on a 10% interest rate,
and it drops to just under 2%, you are having 8% more
of your cash go to principle.  That is excellent.

b; catches; their interest rate can change at a moment's notice to 5-10-15-20-25.

I have a card with CITI and it jumped WITHOUT one word
of notification, from 10 to 30%.  i called and asked what
is up and they offered no explanation and simply returned
it to 10%.  IT had been at 30% for 3 mo before i noticed
it.

banks are run by money mongrels; they will slide whatever they can past you to see if you notice and if you do not
notice, or complain to THEM, they have gotten extra
millions [most people fail to complain].

YOU sound prudent.  Do what you are planning.  WATCH
like a hawk, the interest rate actually billed every month.

NEVER charge so much again.

YOU failed to mention your investments or savings
programs.  IT is likely you have money sitting in a checking
acct or a CD and both should be removed.

I can guide u on that.

u can earn, safely up to 500% a year if you are willing to
research different investment systems.

thanks for asking

am available to help further,

kkemper1@mindspring.com

Answer
$9800.00 at 1.99% paying $200.00 a month.....

i do not have the banking or sci calculator.  Neither
is needed. This is simple math unless u want to calculate
exactly, amortized debt--which I cannot do from memory.

for the simple method;
2% of 9800= 196.00 is the annual interest if the
principle was not reduced.

so, u need to use long hand and do it over and over again;
9800 x2%=196.00
that means annual interest is about 196. Divided by
12= 16.22.  YOU will have a $16.00 interest debt due
[and since u owe just under 2% per annum, we can just
round out for now]

minus a $200 payment = 9800 +16 interest =
9816.  9816 minus 200 = 9616

9616 +  $15 [192.32 annual interest] [2% of 9616] / 12 =  monthly interest = 9631
9631 - 200= 9431.00

u take it from there --the calculator does this
automatically when the right keys are pressed.

basically you are dropping the principle 175 a mon, minimally.
so, 9800 /175=a max of 56 mo, or under 5 yrs.
could be 4 yrs.

10,000 overall debt

what is your occupation?
---------------------------------
reminder of the simple math involved;

start with the total amount oweing --or oweing now

9800

compute annual interest
2% [or 1.99 if you prefer]
multiplyiing .02 [same as 2%] = 196.00
that is the annual interest--all interest is first
calculated on an annual basis.
since you are paying monthly and you are making
principle payments, the total balance is lowered
monthly.  so, we took the annual 196 and divided by
12.  that gave us about 16.

we added that to the monthly debt due.
so, the principle we are paying against is
9800, and that amount costs us, for one month,
$16.00

we add the 2 amounts and get our debt due.
we subtract the payment of 200 from that and get
9800 + 16 - 200.

the next month
the procedure is almost identical
9616 times the annual interest rate
divided by 12
add the monthly to the principle and then
subtract the payment

keep doing that till u reach zero debt.

thanks for asking