License to steal?

[Mr._johngalt]

I assume some of you have been offered a promotional
-0- APR by your credit card companies. Typically these
offers run from 3 to 9 months. Would like to hear
your views on this, i.e. their motives, did you take the money, where you put it, etc etc.

 

[1HappyFool]

I took advantage of one of these offers. You have to be careful with them. Some have gotchas.

Gotcha #1. If you have a balance and add a balance transfer from another card, you may incur finance charges on your existing balance until the balance transfer is paid off.

Gotcha #2. If you add charges to your card after addinga 0% balance transfer, you may incur finance charges on your new charges until the balance transfer is paid off.

Usually, only one of these gotchas will apply and clearly, you can avoid finance charges using the card appropriately.

I think they do this in the hope that you will start paying finance charges eventually, but that also you will use that card for new charges (and close the card you transferred from).

1HF

 

[BigMoneyJim]

I've placed credit cards in my "evil entity" category. That may not necessarily be fair, but for me I think it's the best thing. Be extra careful of any card that is Delaware-based as they have the loosest usury laws. (With determination and no job suprises within 14 months I'll have no more CC debt.)

Before The Motley Fool went pay there were discussions about credit card companies getting wise to people who keep getting new 0% cards and repeatedly transferring balances and adding conditions that would cost you money if you paid it off too soon or otherwise financially discourage this practice.

I'm not a very disciplined person; any offer that's tempting at first I figure they're going to get you on the back end. I now prefer financial deals that don't change terms if I later forget about or ignore them. But a more disciplined person can take advantage of the front-end terms if careful.

 

[Mr._johngalt]

If rates stay down and the credit card companies
continue their current marketing practices, I honestly
believe I could finance the rest of my life using nothing
but credit cards. It would be a little messy for my heirs though .

 

[Rachel Waltz]

Hi, I am new to this discussion, and was intrigued and confused by your post. Can you elaborate? Thanks, Rachel

 

[Mr._johngalt]

Hi Rachel! Far be it from me to steal GDER's thunder,
but it works like this. Recently the credit card companies
started offering -0- interest rate for a fixed period from about
3 months to maybe a year. There were some fees
which had to be considered, but if you had very high
credit limits (and lots of cards) you could make good
money by taking all of the -0- % money you could find and investing it in some short term vehicle like
money market accounts. Then, when the -0- %
expires, you simply pay off the credit card. There was
some significant money to be made but it appears this may be over. In GDER's case, he not only kept
the difference in the interest rates, but double dipped
by racking up awards for using the cards. Maybe a once
in a lifetime opportunity. Probably all done now.

 

[Joe Galewski]

Hi,

How do you get that much money into a credit card? The only way I can think of is to rack up that much in consumer purchases. Since I currently don't have any credit card debt, I don't have anything to transfer into a 0% credit card, and I don't think my mortgage company would accept credit card payment even if I wanted to do that.

 

[Mr._johngalt]

I still have around $150,000 in credit card availability
and my income is below the poverty level. Of course
I am good for it, so the cc companies will never lose a dime on me.