What's the catch with 0% APR credit cards?

[CTrain]

Originally posted by: user1234
There are a few catches, but if you understand them and know how to avoid them, then you can really get a zero percent loan (=free lunch) at least for a few months. I should know, I have $25K on zero percent, and haven't paid a dime in interest or fees. The most important rule is that after you transfer the balance, you should not use the card for normal purchases, because the APR on purchases will usually not be zero percent. But your monthly payment (which will probably the minimum required) will always first go to cover your balances with the lowest APR - that is your outstanding balance from the initial balance transfer, so your purchase balance cannot be paid off until you pay off the initial balance transfer amount. So if you make any purchases, you will pay interest on it until the initial balance transfer amount is paid off. So just remember to not use the credit card for anything else, and pay your minimum monthly payment on time, and you got yourself a zero percent loan. Also remember to pay off the balance before the last day when it starts to accrue interest (read carefully which is the last zero percent billing cycle).

BTW, these offers vary and some of them have just been amazing in the past year or so. For example, I got a zero percent balance transfer without any transaction fees, plus they gave me a "balance transfer check" which I could deposit into my checking account (which is exactly what I did), so it's more like a cash advance, not just a balance transfer. And all this without any interest or fees !

You must have a Citi Bank CC ??
I had the same exact offer except my CC limit was $15K.
So I got a check for the whole $15K and its sitting in ING collecting the 2.2% interest.

 

[user1234]

Mine's sitting in a moderate allocation investement so far returning 5-10% a year. btw, I also have a zero percent car loan. Can't refuse a good deal.

 

[CTrain]

Originally posted by: user1234
Mine's sitting in a moderate allocation investement so far returning 5-10% a year. btw, I also have a zero percent car loan. Can't refuse a good deal.

I should put it in a 3yr CD getting 3.8% but I might need it for something.
Don't feel like putting it in a mutual fund for right now.

 

[rudder]

Just don't use the card. What ever you purchase won't get paid off until the transferred balance is paid off first.

 

[Doggiedog]

I might have missed it but another catch is any new charges you put on your credit card will be paid after the 0% interest charges.

So say you have $10K in 0% and you charge up $2K later. When you pay your bill, the 0% stuff gets paid off first before the interest bearing charges get paid off. You cannot specify to have the $2K interest bearing charges paid off with your payment.

 

[Lawrencetan21]

The only thing with balance transfer with the 0% is that they gona charge you transfer fee wich is around 5% of the amount that you gona transfer.

 

[RossMAN]

Originally posted by: Lawrencetan21
The only thing with balance transfer with the 0% is that they gona charge you transfer fee wich is around 5% of the amount that you gona transfer.

Not true with all balance transfers. My wife just received a BT offer for 0% until July 2005 with NO FEES.

Usually there is a fee of 3% or $50, whichever is greater. But not all the time.

 

[Passions]

You must have a Citi Bank CC ??
I had the same exact offer except my CC limit was $15K.
So I got a check for the whole $15K and its sitting in ING collecting the 2.2% interest.

Wow, is this a good idea? I have a $13k limit, so should I just get it and dump it into ING? I was just going to do $6k, but this seems like a good idea. Can't seem to go wrong!!!

 

[RossMAN]

Originally posted by: Passions

You must have a Citi Bank CC ??
I had the same exact offer except my CC limit was $15K.
So I got a check for the whole $15K and its sitting in ING collecting the 2.2% interest.

Wow, is this a good idea? I have a $13k limit, so should I just get it and dump it into ING? I was just going to do $6k, but this seems like a good idea. Can't seem to go wrong!!!

Here is a link to that thread.

 

[CrazyDe1]

I buy tax lien auctions on 0% cards. I have the cash to back it though. It's nice because I would have normally bought the tax liens with cash but now I can hold the cash in an account earning 3% while earn 5.5% on the tax liens in 6 months, then take the cash off and pay the cards and still earn 5.5% on my cash the rest of the year.

 

[user1234]

Originally posted by: RossMAN

Originally posted by: Passions

You must have a Citi Bank CC ??
I had the same exact offer except my CC limit was $15K.
So I got a check for the whole $15K and its sitting in ING collecting the 2.2% interest.

Wow, is this a good idea? I have a $13k limit, so should I just get it and dump it into ING? I was just going to do $6k, but this seems like a good idea. Can't seem to go wrong!!!

Here is a link to that thread.

Wow, zero percent without expiration date - that means something like 5 years until it's paid off if you make minimum payments. That's even better than my car loan (0% for 3 years), although not quite the same amount of money (unless you got them to give you a 30K "balance transfer check").

 

[Ranger X]

While you're at it, take advantage of MBNA's 10% cash back until June 2005.

 

[Anonemous]

I wonder how Ctrain's doing with that 15k transfer...

 

[CTrain]

Originally posted by: Anonemous
I wonder how Ctrain's doing with that 15k transfer...

Doing just fine.
Its sitting in ING right now.
I've seen 2-3 yrs CD with 3.5% to 3.8% that I should dump the money in but never know if I need the money for something unexpected.

I have a mutual fund account thats been going up and down so I don't think I should dump the 15K in it.
Never know whats another 4 yrs of Bush gonna bring us.

 

[CTrain]

Originally posted by: Passions

You must have a Citi Bank CC ??
I had the same exact offer except my CC limit was $15K.
So I got a check for the whole $15K and its sitting in ING collecting the 2.2% interest.

Wow, is this a good idea? I have a $13k limit, so should I just get it and dump it into ING? I was just going to do $6k, but this seems like a good idea. Can't seem to go wrong!!!

I don't know if its worthwhile for you since the 0% is only good for 7 months.
If you borrow the whole $13K(assuming they let you have cash instead of making you make balance transfer) and put it into ING.
For 7 months, you will earn roughly around $170 minus the $30 fee = $140 net.
Its up to you if its worth while or not.