Mmm, 0% APR balance transfer for 15 months...

[ibneko]

Citibank's offering me a 0% APR credit card for 15 months (12 if I don't actually use the card for at least $100 in the first three months). I'm tempted to do the Balance transfer trick - essentially requesting a large, $10,000 balance transfer, snagging the difference and storing that into my HSBC saving account, earning me 5.05% interest => A total of $591.61 in 14 months (presuming it takes some time to actually get the month).

Except there's an irritating 3% transaction fee for the balance transfer. Which means I only put in $9,700. At the end of 14 months, according to INGdirect's tool I'll have $10,273.87. A $273.87 after I pay off the $10,000. Potentially a tiny bit less since I have to pay the monthly minimum... About $250 earned total? Poop.

Mmm, chevy chase may be better. :) Same 15 months, but a $75 max Balance Transfer charge. Ooh, hm, it's 0% APR on both purchases and balance transfers... Hmmm. Yes, much better. It should net me around $512.18? A bit less, again, due to the minimum monthly payments.

Now to figure out which credit card I should transfer it to...

Oh, yeah. I did post about this previously. If you missed the post, here's a step-by-step post by someone else that shows what I'm planning on doing: http://www.mymoneyblog.com/how-to-make-money-from-0-apr-balance-transfers/

(In short, request a balance transfer from a new card - it's like a loan, but with 0% interest for a set amount of time. The balance transfer is applied to a card, or you get a check. Move the money to some high interest savings account* and let it accrue interest. When the 0% set amount of time ends, pay off the card and rejoice in the interest you have earned without spending a dollar. Supposedly.)

*we recommend INGDirect or HSBCDirect, both online banks. INGDirect has quite possibly the best banking/financial website I've had the pleasure of using... but I digress. If you want to open an account at the former, tell me, and I'll refer you. You'll earn a bonus as will I~

Comments

[fbartho.livejournal.com]

HOLY SHIT. This sounds like a bad idea. Free money doesn't exist... or at least doesn't exist for long, so you might get your ass owned by this if you're not careful. Read the fine print buddy... (and now I go to read about a dangerous scheme for free money. I hate you. ;) )

[ibneko.livejournal.com]

Hahaha. Indeed, I would get owned majorly if I wasn't careful. But assuming I stay under the radar - that is, pay the monthly minimum for all my cards for the next year and a bit, I really shouldn't run into any problems. But yes, fine print is important: that Chevy Chase Visa card I noted at the end of my lj-cut'd section has a bit about how they can change the APR for literally anything - something that's not found on the other T&Cs I've been looking at. And random changes to the APR = BAD.

That being said, I had talked to my dad about doing something like this, and he told me that he took advantage of the same thing to pay off mortage/loans or something of that sort - essentially turning a chunk of money from an interest-loan to an interest-free-load.

I always read the fine print. Well, except for software... ::is going to get screwed by some opensource license someday...::

[fbartho.livejournal.com]

I've decided I'm going to file this for further reference. Maybe someday I'll follow your dad's example, because his approach seems pretty sound, he already has that debt, and he's transferring it to a temporarily lower rate, the only risk he opened himself up to is messing up and triggering bad apr or not being able to pay it all off by the end of the year. The tutorial article guy mentioned how he was making a couple extra thousand per year, and given that he's exposing himself to a 40000 dollar dept risk, I'd say for me at least, the risk is not worth it. I already make a good salary, and instead I should focus on that and my life.

[ibneko.livejournal.com]

Personally, I think that's more risky, since if you mess up there and you can't pay it all off, you'd be quite screwed, whereas in the case of using it to earn more money, you're setting the borrowed money aside, so paying off the card in an emergancy should be as simple as paying off a normal credit card...? I dunno... not entirely sure. But yes, 40K is a bit much to randomly borrow with the risk of it all suddenly turning into a 20-30% APR loan...