credit card allows you to make money??

17 years ago

OK,

heres situation, one of my credit cards offered my 0% interest for 13 months. I Was going to takeout maybe 5k and pay off my other c/c debt, when I thought let em see how much they will give me (they provided conveience checks. Turns out my credit limit was 36k.

Now am I missing somethign here, why not pay off my 5kin c/c debt and take the other 31k and invest itin a year cd and get 5.75% on it? Then whenthe year is up I can just takek the money out and pay back the c/c.

What am I missing here? Just seems too easy!!

thx guys,

harvey

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Comments (9)

western_pa_luann
17 years ago
Is the 0% for cash advances? Usually it is just for purchases....
clg7067
17 years ago
I get those 0% checks all the time. It's either 0% for a number of months, or a very low percent, like 4.99%, until you pay it off. You can write the check to anybody, including yourself.

Harvey's logic works for me.
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DH & I also have several cards with no balance on them. We will be applying for a mortgage soon, so I asked my banker this question. He told me to cancel the majority of the cards, but to keep either a couple with fairly low limits or one card with a pretty decent limit. He said that banks like to see someone have $30,000-$40,000 worth open credit on cards (depending on your income). He says that lets them know that you have a source of available money that you can access quickly. He said they don't like to see huge amounts of open credit because that shows the potential for a problem. We pulled our own credit reports & they said that the amount of unused credit we have may actually be hurting our score. We have only a tiny fraction owed but a lot of open credit. Another thing my banker & the credit report mentioned was the ratio of how much you owe to the amount of open credit. Example: If you owe $5,000 & have two cards with a total credit limit of $20,000, cancelling one card that has a $10,000 limit can actually hurt you. Instead of having a balance that equals one quarter of your available credit, you will now owe an amt. equal to half of your available credit. If you want to cancel, make sure you write a letter to the credit card company & keep it & proof that you mailed it on file. Make sure to request that they note in your file that the card was cancelled at your request. Having a lender cancel your card can hurt your credit score. If you won't be applying for a loan any time soon, you can just leave them & they will drop off of your credit report after a few years.
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...And of course the real advantage of delaying a purchase for a year to save money for it is that you probably wouldn't even want it anymore after a year. If you still wanted it after a year, then it's a pretty safe bet that it's something you really do have an interest in owning. I think if any of us (myself included) look around our homes, we see the results of all the "sport shopping" we do. Not only do we waste thousands of dollars this way, but we litter up our homes with a bunch of junk.
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I'm so sorry your time in Daytona was not so wonderful because of the weather. I'm really grateful for the 34 hrs non-stop rain we've had here so far on Mon and Tues because we need it so bad, but it isn't so great when it ruins plans. I would suggest Before disputing the nonrefundable charge with the credit card bank you may want to make sure to read the terms and conditions of reserving rooms in that particular hotel. Most hotels have a stated policy that they will not refund for early departures; weather related being one of the most declined refund reasons: Especially this time of year when the weather is just beginning the rainy season here in Florida. They are specific that you have to pay if you book the room for a time limit and then try to renege on the time. There is an acceptable time limit usually for a cancellation of a reservation 48 -72 hrs is most often the norm. It is a matter of they turn down other bookings because you have said you are going to be using the room for so much time. With the economy in the crapper losing money because of weather related early departure is definitely not on. You can dispute the charges with your credit card bank and probably get the money back. Credit card banks are being most agreeable if there is no specific contract. Unfortunately just filing a dispute will of course put your name and credit card # on lists of flagged cards. These lists are maintained and used by many places and companies that accept credit cards for many things from Dr. offices, Spa and salon establishments to ordering on-line or by telephone. Once on this list it is virtually impossible to get off the list. It does not hurt your credit in anyway except the companies you try to buy from see you as a risk and will not always accept your card. This is not against the law or any kind of prejudice. It is just a way to make sure the people who have accepted your card and word you are making a good faith transaction get the money you have agreed to pay. When you dispute a charge that has been legally made it makes you a risk for the next transaction and many companies just plain don't want the hassle. Even when the charge is not refunded the seller has to spend time and money on researching the incident and that is not compensated. CT
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Chemocurl zn5b/6a Indiana
17 years ago
Many times the cash advance carries a charge of 3% of the transaction, up to a certain amount (often it is $70 I believe), whichever is less. Does it carry a cash advance fee? Have you read the terms?

I cannot really believe it would be for $36,000, for 13 months. Sometimes the available credit is divided into 2 different amounts...part is available for cash advances, and the other part is available for purchaces.

Have you read all the fine print?

Also, they can raise the interest from 0% to whatever, if at anytime in that 13 months that you are late paying for 'anything' and they get wind of it.

They will be requiring you to make minumum monthly payment on it for 13 months too, won't they?

Keep us informed please.

I got 5,000 on cash advance (no transfer fee) for 1 year. Right now the min pay is for $60, but I have it set up to automatically take the minimun plus $250 each month from my checking. B4 the year is up, I imagine I will have another similar offer from another company in hand, and will use it to finish paying this one off.

In the meantime, I keep getting these checks for the company I have the 5,000 borrowed from. They think I will weaken, and use them, and then whatever I buy, I will pay interest on until after the 0% part is paid off. They always apply the payment to the portion of the bill carrying the lowest interest rate.

If I don't have a super offer handy when the end of the 0% draws near, I can always use the already approved line of credit home equity loan at my bank. I got approved about 3 years ago, and haven't used it yet. Once another super totally free offer comes along, I'll then use the cr cd free interest money to pay off the home equity loan.

Sue
jlhug
17 years ago
Just be aware that your credit score takes a hit when you use those checks. It doesn't make any difference what you do with the money; it's the fact that you have taken on more debt and have most likely made your credit used to credit available ratio higher.

It's ok if you aren't planning on applying for a mortgage or buying a car in the near future, but if you are considering either before you pay it off, don't do it. You may pay a higher interest rate as a result of this.
joyfulguy
17 years ago
Quite often the 0% (or low-rate) offers are for transfers that you can make from competitors' charge/credit cards only. Not including other subsidiaries of their company, of course.

And be careful not to use the low/no interest rate card to buy any other stuff, as it'll sit there racking up interest at their regular rate (and further interest on that accrued interest, of course) until the total amount of the loan on the amount transferred is paid.

Don't wait to read all of the fine print until after you apply and are approved - have them provide full information first.

Harvey's suggestion may work - but I'll bet there's a kicker in there, somewhere, to make it not work.

Or every smart financial guy in the country would be taking them up on it - sorry, gals: every smart financial gal would, as well. And there are quite a few of them.

I hope that you're all having a great day.

I drive a carnival guy around, one of whose projects is guessing age/weight.

When he was setting up shop today, he weighed himself to set it correctly, so I stepped on and had him guess my weight.

Drat - he guessed me at about 20 lb. less (that's a bit less than 10 kg.) than actual of about 195 lbs.

oh, well.

ole joyful
cathie54
17 years ago
joyful -
"Drat - he guessed me at about 20 lb. less (that's a bit less than 10 kg.) than actual of about 195 lbs."

That was his way of "paying you" (or "thanking you") for driving him around! It was a "feel good" gesture! haha

I remember those guys at the carnivals when I was young. I watched them read "others", but I NEVER paid them to read me. Afterall, I already knew my age and weight - so why would I PAY someone to tell me something I already knew? LOL!
Maybe I would today tho...I threw out my bathroom scale in 1979, and have never owned one since.

All I know is that if I can stand up straight, bend my head down and still see my feet, I'm OK.
If I can connect my thumb & first finger around my wrist with ease, I'm OK.
If I can wear a pair of levi's cords without hearing "ZIPZIPZIPZIP" as I walk, I'm OK. LOL!!!
(OTOH - If I go to Doc & weigh in at under 100 lbs - I should be concerned!)

"harvy..." Sounds good in theory...but I myself certainly would not take the risk. PLUS, remember, you CANNOT take out the WHOLE 36k. You'd be "over limit" immediately, slapped with fees, and then the HUGE hike on APR!
hardware_bum
17 years ago
This is done all the time harveymasons. Make sure you read a follow all the terms and conditions of the card and be sure you know what fees are charged.

Head on over to the fatwallet.com finance forum and read up on how others are doing it.
caligirl626
17 years ago
You Betcha I use those 0% CHECKS I get in the mail. Here's my setup:

40K - My own cash
19.3K - Chase Mastercard
20K - Discovercard
24.4K - MBNA Card
12K - AT&T Universal Card

Total: $115700

Most checks are like cash advances, and are good for a time period of 3 ~ 12 months. To keep it safe I run 3 month CD cycles. I simply write them out to ETRADE BANK From there its a snap to open up a CD (currently 5% for 3 months!!). The one I just completed netted over $1400.

Warnings:
Minimum payments close to $600/mo - must have that in mind.
Credit Score maybe affected, but with my car paid and mortgage doing fine, don't see a problem.
Fees total $200 from using the checks.
Have a usable CC for real purchases - I use a Citicard Rewards for day to day purchases.

Bottom Line: Is it worth it? Pays my property taxes. I'd say yes.
cathie54
17 years ago
HUMPH! I'm going to rush right over to fatwallet and also consider what "caligirl626" is doing.

And where is "harveymasons"? lol!

Not comfy with the idea. However, when I FIRST read OP's (harveymasons) post, it DID sound good (was wondering why my head was up "U-know where", & "what am I missing here").

Back to the drawingboard! haha...

credit card allows you to make money??

Comments (9)

western_pa_luann

clg7067

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