I don’t carry a balance. I’ve mostly ignored access checks until now. I just rip them up so that fraudsters don’t get them. Yesterday I had the opportunity to buy a nice used car for $15,000. So I started looking at loans because I didn’t want to tap my cash reserves in the current financial market. Then I saw the access check calling my name…
Apparently I’m allowed to take my entire credit limit at 0% until September 2009. So I took $30k. Since then the car deal may have fallen through. I figured I could get $1000 profit in a 9-month CD. They only charged me a $99 transaction fee.
This seems like a sound strategy right? Take the $30k, put it in a CD, pay it off when the promotion ends… repeat whenever possible. If nothing else, it has to be better than an 8% 36-month used car loan.
One thing to check on is if you plan to use the card for regular purchases in the meantime. I think some (most?) cards will apply your payments to the balance at the lowest interest rate so you’ll be paying off your 0% balance and leaving the regular purchases balance to accumulate finance charges.
Your 8% car loan on $15,000 will cost approximately $2000 in finance charge over 36 months.
If you take the $30,000 and put it in a CD, you will have to make sure that the money is accessible at the end of the promotion period to be able to pay off the loan in full. You will also have to make the minimum monthly payment to the card company. Sounds like you have that covered by doing a 9 month CD, and your calculation is on target for the profit. What would the minimum monthly payment on a $30,000 balance be? You won’t be able to take from the principal in your CD to pay it.
I don’t know if I would go through the hassle though. Taking out your full amount of available credit on a revolving account will lower your credit score too. It would probably be easier to just put the car on the credit card and pay it off in a year at 0%.
Will they credit card company accept that as a purchase?
Often these type deals are on purchases only and not on cash advances.
In addition as somone else noted you still would have to make the minimum monthly payment. That would range from 3-5% ($900-$1500) per month.
On ANY bill. Some creditors check your credit report from time to time, and some of those will bump your APR up to default if you miss a payment on ANY of your bills. BTW default (in Wisconsin anyways) is 29.99%
As others have said be VERY careful to not be late or miss a payment and DO NOT use the card for any other purchases.
Your FICO score will take a hit, making this a bad idea if you need to take out any other type of loans until the balance is paid off. To minimize the hit on your FICO do not take out more than 90% of your credit limit. Make sure your total utilization across all your credit cards is not more then 50%.
I have made thousands of dollars off of the credit card companies doing this, but you must be diligent and responsible about the whole thing.
Are you sure that you can take that out from using those checks? Most (all) fine print I’ve seen says that NO MATTER WHAT those checks and cash advances have APRs, even if regular card purchases have some kind of promotional APR.
I’ve done this. I missed payments and made purchases by mistake a couple of times and they started adding interest. I called and whined until they took it off again. Generally the rule is you get one “free throw”.
If you had whined enough at the beginning they would have waived the $99 fee as well.
ETA: I’ve had the balance for over 2 years now. Every time it expires, I call and they renew it for me. I think the this year the gig might be up though.