Transfer complete, pay down when ready.

I wrote in November that I had applied for an MBNA MasterCard with a 15-month, 0% balance transfer offer. Well, I've received and activated the card, and last Friday I requested the a balance transfer of $14,800 into my chequing account.

I've now received the funds, and made a $14,800 payment to my line of credit. This effectively converts $14,800 of my revolving debt to interest-free debt. The terms of the balance transfer are as follows:

• One-time balance transfer fee of 1% of balance ($148 in my case), which will be part of the balance due on my first payment


• Monthly minimum payment of $10


• Provided I keep the account in good standing, my 0% APR will end in March 2009 (at which point I will use my line of credit to pay off the remaining balance on the card)

The $148 fee means that my $14,800 has actually been converted into $14,948, but this move should cut my monthly interest charges by nearly 75%, so in the end I'll more than make up for this one-time charge.

The most important thing now is for me to keep up my reduction of my line of credit debt. If I take this opportunity to rack up new debt, then this will all have been for nothing. I'll be keeping my bi-weekly debt payments at the same level, but with the smaller interest charges, I'll make much faster progress. This is essentially a debt snowball.

If I manage to wipe out the line of credit before the 0% offer expires, then I'll start socking away my debt payments into a savings account, for some short-term credit card arbitrage. In the meantime, however, I'll enjoy the tax-free interest savings on my line of credit.