Author Topic: 0% interest loan for 12 months  (Read 3950 times)

Guizmo

  • Bristles
  • ***
  • Posts: 267
0% interest loan for 12 months
« on: December 26, 2014, 07:00:19 PM »
Got an offer from my credit card company. So it is 0% interest loan and there is no transfer fee.

I don't have a need for the money. But heck, even if I kept all the money in my saving account I would make like 50 bucks if I took out $10,000.

What are your thoughts, fellow mustaches!?

kib

  • Stubble
  • **
  • Posts: 197
Re: 0% interest loan for 12 months
« Reply #1 on: December 26, 2014, 07:12:37 PM »
I used to make about $2K a year doing this, back in the day when the cc's  had capped transfer fees and bank interest rates were about 5%.  Important caveats:  you MUST reserve this money as if it wasn't yours, invest in something that is principal risk free - a short term cd or at the very least a reasonable rate savings like Ally, and be sure to pay the money back before the due date.  I can't stress enough that if you can't do that, you shouldn't do this.  Even optimally, I'm not sure it's worth the effort at today's rates, though.
« Last Edit: December 26, 2014, 07:18:03 PM by frufrau »

wtjbatman

  • Handlebar Stache
  • *****
  • Posts: 1313
  • Age: 35
  • Location: Missouri
Re: 0% interest loan for 12 months
« Reply #2 on: December 26, 2014, 07:46:07 PM »
I used a 0% interest CC loan to max out my IRA last year before April 15th. I guess it was worth it, although it's looking like I won't be able to max out my IRA for this year, so meh. And no, I'm not going to do it again. I'm too worried about falling behind and having that 0% interest CC loan turn into a 15% monster.

DeltaBond

  • Pencil Stache
  • ****
  • Posts: 526
  • Location: U.S.
Re: 0% interest loan for 12 months
« Reply #3 on: December 27, 2014, 05:42:04 AM »
I would not, simply because it 'seems' a bad idea to take out loans to invest... but I have a strong need to keep my finances simple or I get very stressed.  My attitude may be costing me money, but money isn't everything.  What is the risk if you go over the 12 months to pay it back?

Able was I ERE

  • Stubble
  • **
  • Posts: 160
  • Location: Austria
    • FIREhub.eu
Re: 0% interest loan for 12 months
« Reply #4 on: December 27, 2014, 07:05:12 AM »
I used a 0% interest CC loan to max out my IRA last year before April 15th. I guess it was worth it, although it's looking like I won't be able to max out my IRA for this year, so meh. And no, I'm not going to do it again. I'm too worried about falling behind and having that 0% interest CC loan turn into a 15% monster.

Are you eligible for a Roth IRA? If so, then you could withdraw your contributions if you're "falling  behind" at any point.   This allows you a "do-over" for last year's contribution.  If you don't contribute, you'll never be able to contribute for this year, but by contributing now, you have the future option of un-contributing.

wtjbatman

  • Handlebar Stache
  • *****
  • Posts: 1313
  • Age: 35
  • Location: Missouri
Re: 0% interest loan for 12 months
« Reply #5 on: December 27, 2014, 08:46:53 AM »
I used a 0% interest CC loan to max out my IRA last year before April 15th. I guess it was worth it, although it's looking like I won't be able to max out my IRA for this year, so meh. And no, I'm not going to do it again. I'm too worried about falling behind and having that 0% interest CC loan turn into a 15% monster.

Are you eligible for a Roth IRA? If so, then you could withdraw your contributions if you're "falling  behind" at any point.   This allows you a "do-over" for last year's contribution.  If you don't contribute, you'll never be able to contribute for this year, but by contributing now, you have the future option of un-contributing.

Good point, something to consider. I probably won't do it, but it's an option.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27911
  • Age: -999
  • Location: Traveling the World
Re: 0% interest loan for 12 months
« Reply #6 on: December 27, 2014, 03:06:31 PM »
If you can handle your finances, it's a great idea.

Unfortunately, for those that can handle their finances, their net worth quickly grows so fast that doing things like this is no longer worth the time or effort.

But I do recommend it to college students and those just starting out, that have the financial discipline.

It's literally free money, the only cost is time (too high of a cost for some, worth it for others whose time is worth less).
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Daisy

  • Handlebar Stache
  • *****
  • Posts: 2050
Re: 0% interest loan for 12 months
« Reply #7 on: December 27, 2014, 09:38:55 PM »
I've used 0% APR credit cards at times. It's a good way to get access to "cash" (in that the year's expenses are put on the card and I just pay the minimum each month until the 0% period is over) when you anticipate some unusual circumstances. Like this past year, when I bought a house and was selling a house and knew I'd have some unusual expenses coming up and I didn't want to have to sell any stocks to do it. Put it all on the 0% APR card as I save up money in my savings account with each paycheck.

The bad thing is my 12 or 15 month "free" money is now due at the beginning of 2015 so I am having to pay it off all in one shot. I knew it was coming so no big deal. But some of that money to pay off the balance has been slowly building up in my savings and was earmarked for the big payout, so it ends up being a wash.

JoshFire

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 37
  • Location: Michigan
Re: 0% interest loan for 12 months
« Reply #8 on: December 28, 2014, 07:50:31 AM »
What credit cards are offering 0% with no transfer fees? All I get are offers from Citi with a 5% fee :(

wtjbatman

  • Handlebar Stache
  • *****
  • Posts: 1313
  • Age: 35
  • Location: Missouri
Re: 0% interest loan for 12 months
« Reply #9 on: December 28, 2014, 08:13:07 AM »
What credit cards are offering 0% with no transfer fees? All I get are offers from Citi with a 5% fee :(

I don't have a specific card to refer you to, but if you check out http://www.bankrate.com you can usually find a CC that meets your needs (0% introductory rate, or 0% on balance transfers, or cash back cards, etc).

Edit: I took 20 seconds to look, and the second result on the balance transfer CC page shows a Chase Slate card that has 0% APR for 15 months on balance transfers and has an introductory balance transfer fee of 0%.
« Last Edit: December 28, 2014, 08:15:11 AM by wtjbatman »