|
Another 0% promotional APR offer - what's the catch?
09-04-2011, 06:28 AM
|
#1
|
Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: USA
Posts: 1,050
|
Another 0% promotional APR offer - what's the catch?
From an existing credit card that I currently carry as a back up card. I would not be applying for a new card to take advantage of this offer.
I generally never pay attention to credit card promotions but I read this one... 0% promotional APR offer until 7/12 for up to 20k. Fee is 1% of transaction.
I have a mortgage on an investment property. The rate is 4.125% which is extremely low as it was previously my primary residence. I generally pay an extra 500 a month as I want to pay it off sooner vs. later. If I don't add any more rental property investments, I hope to pay everything off within the next 5 - 6 years with some lump sum payments.
The Good
- save about $500 for the duration of this promotion
- assists in long term goal as the $500 would be applied as an extra payment
The Bad
- using credit card and on credit reports, but still have room on card and other cards for daily and emergency needs
- fee of 1%, but subtracted from savings already
- time to set-up monthly automatic payment, about 5 minutes
- if not paid, 12% interest rate from the beginning of loan (this will never happen)
I know some will say it's not worth the hassle, let's face it, you probably have more $$ than me! But, in my stage of life, $500 is $500 and would be nice in my pocket.
What's the catch with credit card promotions like this?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
09-04-2011, 07:59 AM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Oct 2008
Location: Naples
Posts: 2,179
|
I've used these type promotions in the past, actually within the last 6 months. I used them to pay for home improvements we were making. I could have taken the money out of a CD but would have lost 4.5% interest. Promotion is good until June 2012 at 0%, at which time I will take RMD out of IRA and pay the promotion off in full. Your's is especially good at 1% transaction fee.
I always wonder how many people miss the end payment date and then it costs them a bunch of interest?
|
|
|
09-04-2011, 08:10 AM
|
#3
|
Full time employment: Posting here.
Join Date: Apr 2011
Posts: 625
|
I've done credit card arbitrage twice for 15k and 12k (both at the same time, my name and my wife's name). This was years ago. Worked out exactly as you described, paid the minimum for about a year, then paid them off for ~10k each before they were gonna start earning interest.
I'd imagine it's a terrible idea for most people, and fine for most e-r posters.
|
|
|
09-04-2011, 08:18 AM
|
#4
|
Full time employment: Posting here.
Join Date: Nov 2010
Posts: 628
|
You would have to be ready financially for a personal black swan event to guarantee "(this will never happen)". My black swan was a flood that took out my home AND my banks. Yes plural banks. I had money, but couldn't get to it for a few months and at one bank, nearly two years! What about a large health issue, the most common way to bankruptcy?
The $500 is nice but the risk has a small probability of a high cost. That is the hook. Most people will underestimate their downside risk and 12% is in Guido-the-loan-shark territory.
That said, early in our marriage, my wife used revolving card debt to finance a college bill that ended up with only a few dollars in fees. It worked out. It also caused a huge rift in our marriage for a long time.
|
|
|
09-04-2011, 10:22 AM
|
#5
|
Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: USA
Posts: 1,050
|
Thanks for the comments and sharing. I'll call them just to confirm my understanding.
@ Devans - sorry to hear about your black swans. While "never" is a strong word, I will take extra precautions to ensure I don't end up paying any interest. I paid for my first year of college with revolving credit, not ideal, but my only option at the time. It worked out for me.
|
|
|
09-04-2011, 10:29 AM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
The 1% fee makes this a non-deal. Are there not 0%-rates with no fees out there? There certainly have been in the past. I strung along USAA for 3 years with one.
|
|
|
09-04-2011, 11:22 AM
|
#7
|
Thinks s/he gets paid by the post
Join Date: Oct 2010
Location: Waimanalo, HI
Posts: 1,881
|
While I was still paying on my mortgage, I got way behind on my CCs, and I depended on deals like this. In fact, when the promotional periods ended, I usually did not have the balance paid, so I'd look for another promotional deal on another card I could transfer the balance to. I got quite a few new CCs for the sake of promotions. So long as you can keep paying attention, it works just fine. Sometimes bad things happen if you miss a monthly minimum payment on your card balance.
__________________
Greg (retired in 2010 at age 68, state pension)
|
|
|
09-04-2011, 12:09 PM
|
#8
|
Thinks s/he gets paid by the post
Join Date: Oct 2008
Location: Naples
Posts: 2,179
|
Quote:
Originally Posted by LOL!
The 1% fee makes this a non-deal. Are there not 0%-rates with no fees out there? There certainly have been in the past. I strung along USAA for 3 years with one.
|
I get these offers in the mail every couple weeks. There are a lot of 0% interest offers for up to a year, but I've never seen one with a zero fee.
|
|
|
09-04-2011, 05:31 PM
|
#9
|
Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: USA
Posts: 1,050
|
Only 0% APR loans I've seen are for new vehicle purchases, but I have not always read them in detail.
Quote:
Originally Posted by JOHNNIE36
I get these offers in the mail every couple weeks. There are a lot of 0% interest offers for up to a year, but I've never seen one with a zero fee.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|