Author Topic: 0% Interest Rate  (Read 1057 times)

Football750

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0% Interest Rate
« on: February 01, 2018, 07:03:20 PM »
Hey Everyone,

I have a promotional rate of 0% for my credit card that will last until January of next year. Besides deferring minor expenses (aka putting it on my credit card) and bolstering investment contributions, is there anything I should do or take advantage of since I essentially have 'free financing'. We typically use cash and the envelope system, but we have been putting more purchases on the credit card lately. I will pay off the card a little every month so the outstanding balance does not explode (IE more than $2-3K).

What do you guys think?

Finances_With_Purpose

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Re: 0% Interest Rate
« Reply #1 on: February 01, 2018, 09:51:00 PM »
No.  I turn those kinds of things down constantly.  It's cheap credit, but it's only one year, and you don't really *want* debt. 

Plus, you miss one payment - say they receive it a day late due to a postal error (and I am convinced some places create those), then you get to pay all the interest + fees immediately. 

Not worth the time for a small risk of high cost, and a low return on your capital at best.  You'd be better off finding CCs with cashback or signup bonuses.  Merrill had one for a free $500 once you minimum spend last year, e.g.  Took probably two hours total to set up, call, etc. and get it all done.  That's $250/hour.  I'll take it. 

seattlecyclone

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Re: 0% Interest Rate
« Reply #2 on: February 01, 2018, 09:54:17 PM »
Search for "manufactured spending" for ideas here. It's not a game I tend to play, but it can pay off a bit if you're careful about making all your payments.

Rosy

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Re: 0% Interest Rate
« Reply #3 on: February 02, 2018, 06:03:15 AM »
Hey Everyone,

I have a promotional rate of 0% for my credit card that will last until January of next year. Besides deferring minor expenses (aka putting it on my credit card) and bolstering investment contributions, is there anything I should do or take advantage of since I essentially have 'free financing'. We typically use cash and the envelope system, but we have been putting more purchases on the credit card lately. I will pay off the card a little every month so the outstanding balance does not explode (IE more than $2-3K).

What do you guys think?

Actually - "we have been putting more purchases on the credit card lately" is a red flag to me. It's first and foremost a credit card - the goal is to pay it "all" off just before the due date. That in itself gives you a little leeway - and in effect a mini interest-free loan.

I think I know exactly where you are coming from and it is tempting an' all, but my advice is, forget you even have zero percent because bottom line - you have to pay it off in the end just the same and your extra $2-$3K may come due at a most inopportune time.

Use it as a "free" emergency fund or for a large unplanned purchase or project - but only if the need arises - don't even think along the lines of putting a little extra on it, that may come back to haunt you.

Just my two cents.
I do the occasional bank bonus and credit card bonus - see doctorofcredit.com it is an excellent blog with good information. But, I only care about 12-15-18 months of zero interest if I know we have an upcoming project we could use a little relief with.
I'm like you in that I'd like to take advantage - but it is too easy to get in trouble that way.


Football750

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Re: 0% Interest Rate
« Reply #4 on: February 02, 2018, 07:02:36 AM »
Hey guys. I have had the credit card for over 10 years and this dealwas offered by my credit union since we lived in a hurricane disaster zone in Florida. It is 1.5% cash back with a zero percent interest rate. Credit card limit (including my wife's card) is $34K and we would never spend ANY extra money just because we have a zero percent interest rate. We may switch our cash purchases (IE the $270 food budget to the card) since it makes sense. We have a goal of putting away $70K this year for investments so this card can help since some of our mandatory purchases (grocery and gas) are deferred...kinda along the lines of corporate finance...aka accounts payable growing faster than accounts receivable, etc. We would pay off the card a little each month so we don't have to pay off a significant amount of debt before the 0% rate expires (significant meaning like more than $7K ish). We hate debt, but this deal is pretty nice.

The promotional rate end next year :(  Maybe Florida will get another hurricane down the road so we can have the same deal.. 

Football750

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Re: 0% Interest Rate
« Reply #5 on: February 02, 2018, 07:06:02 AM »
Pretty sweet deal to have a 0% rate and 1.5% cash back. Not sure if this will be offered again in the future..

frugaliknowit

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Re: 0% Interest Rate
« Reply #6 on: February 02, 2018, 07:21:08 AM »
"Fagetaboudit".  It's not worth the energy.  More potential downside than upside.


boarder42

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Re: 0% Interest Rate
« Reply #7 on: February 02, 2018, 07:37:03 AM »
i'm all about leveraging for investing but you have a 1 year timeline so lets say you spend 20k a year that can be put on a credit card and next january comes around and your bill is due for that 20k - market went up 10% hell lets get frisky and say 20% - you have an extra 3k to your name (prorated investment of 20k slowly going in over a year)- how much did this really decrease your time to FIRE - now the flip side - market went down 20% you are 3k short how are you going to make up that gap- lets also assume its a taxable account this is going into since you'll need it to pay off the card you have to pay tax at your marginal rate of likely 25% since its a short term captial gain plus lets sat 6% state taxes so now you made around 2k - i dont see this as really being worth the hassle or the downside risk