# 0% Credit Cards for Balance Transfers



## cannon_fodder (Apr 3, 2009)

It's coming up to that time of year. For the last 2 years I have been able to get a 0% credit card - once through Citi and once through MBNA. Two years ago there was 0% interest and 0% on the fee to perform a balance transfer. Last year I had to pay 0.5% of the balance to perform the transfer.

Has anyone seen any offers this year? I was surprised, actually, to see the offer last year when we were in the throes of the credit crisis but I'm hopeful there will be some lucrative offers available now.


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## Four Pillars (Apr 5, 2009)

CF - what do you do with these offer? Borrow $N from the card and make interest on it?


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## PMREdmonton (Apr 6, 2009)

What I've done in the past is just withdraw money from the card and then apply the borrowed funds to my LOC on which I still carry a balance. Since my LOC charges P (prime rate), I save the interest that I would have been paying on that portion of my LOC. 

This tactic was more useful a couple of years ago when prime was around 6.25%. With the rates so low already last year, I didn't even bother.

I have now entered the stretch ran of paying down my gargantuan post-med school LOC of $175K. I'm down to the last $25K now. 

Does the water test any better when you're debt free (not including mortgages)? It has been so long that I have to ask.


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## Berubeland (Sep 6, 2009)

Not sure about the water.... but it will feel like a giant weight has been lifted off your shoulders. You may float for a few days


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## cannon_fodder (Apr 3, 2009)

Four Pillars said:


> CF - what do you do with these offer? Borrow $N from the card and make interest on it?


Actually, I paid down my mortgage that was around 5.25% at the time. The following year I paid down the mortgage and reborrowed out of my HELOC to invest.

Generating a guaranteed after tax return of 5.25% was a very nice way to put a 0% loan to work.


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## cannon_fodder (Apr 3, 2009)

PMREdmonton said:


> What I've done in the past is just withdraw money from the card and then apply the borrowed funds to my LOC on which I still carry a balance. Since my LOC charges P (prime rate), I save the interest that I would have been paying on that portion of my LOC.
> 
> This tactic was more useful a couple of years ago when prime was around 6.25%. With the rates so low already last year, I didn't even bother.
> 
> ...


I think you should reward yourself if you've been diligent and focused in paying this debt down. Then, after your minicelebration is done, continue to put that same effort to retire any other non-deductible debts, or create an investment portfolio, or whatever it is to continue your way to financial independence.

If you can make it a lifestyle decision, as automatic and as unwavering as breathing, then you will be far ahead of the vast majority of people.


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## nizmo_gtr (Dec 7, 2009)

So if you apply the balance transfer funds to your loan, at some point you have to repay the BT before normal cc interest rates kick in. Therefore you need to be careful that what you use @ 0% can actually be paid back before the deadline.

I wonder how much interest savings you would actually defer?


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## cannon_fodder (Apr 3, 2009)

nizmo_gtr said:


> So if you apply the balance transfer funds to your loan, at some point you have to repay the BT before normal cc interest rates kick in. Therefore you need to be careful that what you use @ 0% can actually be paid back before the deadline.
> 
> I wonder how much interest savings you would actually defer?


I have only been able to get around $20k. So, it easily has saved me several hundreds to almost $1,000 per year.

But, you are right about repaying it - some offers (most?) will actually *retroactively *charge you at a much higher rate if you don't repay in full by the date.


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## PMREdmonton (Apr 6, 2009)

nizmo_gtr said:


> So if you apply the balance transfer funds to your loan, at some point you have to repay the BT before normal cc interest rates kick in. Therefore you need to be careful that what you use @ 0% can actually be paid back before the deadline.
> 
> I wonder how much interest savings you would actually defer?


When I did it, I saved 6% per annum on 20,000 invested for 11 months or:

20,000 x 11 x 0.06
------------------
12

= 1100

Now it did involve a bit of time but still not too bad for doing next to nothing for a few hours.


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## cannon_fodder (Apr 3, 2009)

Found some codes at redflagdeals in the Personal Finance forum. MBNA is offerinvg 0% for 15 months and 1% fee on balance transfers.


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## cannon_fodder (Apr 3, 2009)

Heard from MBNA. Very nice CSR. They will cancel the previous CC with them that had the same deal (although I negotiated only a 0.5% fee on the Balance Transfer).

So, I will get $25,000 for 15 months and it will cost me $250. If only I could think of a way to make $25,000 earn/save me more than $250 after taxes. Hmmm....


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