Author Topic: Using a credit card for a home repair  (Read 1672 times)

jnw

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Using a credit card for a home repair
« on: February 22, 2023, 01:10:05 PM »
Instead of paying cash, let's say for a roof replacement, open up a 0% APR for 15 months credit card with $300 sign up bonus which pays 1.5% back.

Say the roof repair costs $10,000.    So you get the $300 for signing up and $150 cash back.  That's $450 there.

Then instead of paying off the credit card at like $1500 per month, put all that cash instead into the money market or t-bill currently getting 4.5%. 

By the time the 14 month rolls around you might earn say another $450 in interest from money market account.

So you get a grand total of $900 paid to you for borrowing a bank's money for 15 months :)

At the end of the 14th month, draw out the $10,000k from money market account and pay off the credit card in full.. and then close it out if desired.

Sibley

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Re: Using a credit card for a home repair
« Reply #1 on: February 22, 2023, 01:20:27 PM »
You'll be required to make minimum payments on the card, but overall the theory is sound.

jnw

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Re: Using a credit card for a home repair
« Reply #2 on: February 22, 2023, 01:47:56 PM »
You'll be required to make minimum payments on the card, but overall the theory is sound.

Yeah I forgot to mention minimum payment.  Thanks for bringing that up.

TreeLeaf

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Re: Using a credit card for a home repair
« Reply #3 on: February 22, 2023, 05:26:55 PM »
Yes - the credit card hacks are back!

Back in the day when credit cards often had 0% intro apr for 15 months or so for balance transfer I had one card I could do a cash advance to a checking account for free. I then took that balance and transferred it onto one of 5 other cards, each with 20k limits.

I then took this 100k and bought 12 month cds paying 5%. Rinse and repeat.

I was making around $400 dollars per month doing this - VERY helpful when you're a broke college student, lol.

It's too bad the banks closed some of these loop holes and tightened up credit after 2008. I haven't seen a credit card with 0% cash advance options in a LONG time....

snic

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Re: Using a credit card for a home repair
« Reply #4 on: February 22, 2023, 07:08:16 PM »
Say the roof repair costs $10,000.   

AND say the roofer accepts credit cards AND say the roofer doesn't charge a 3% fee for credit card payments.

In my experience, overpriced high-end contractors accept credit card payments with no fee. The affordable ordinary guys take cash and checks only, or charge a fee for credit cards.

jnw

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Re: Using a credit card for a home repair
« Reply #5 on: February 22, 2023, 07:36:36 PM »
Say the roof repair costs $10,000.   

AND say the roofer accepts credit cards AND say the roofer doesn't charge a 3% fee for credit card payments.

In my experience, overpriced high-end contractors accept credit card payments with no fee. The affordable ordinary guys take cash and checks only, or charge a fee for credit cards.

Well I had my HVAC replaced for a very good price and they didn't charge me any extra when I put it on my 2 credit cards.   But I understand what you are saying.

Chris Pascale

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Re: Using a credit card for a home repair
« Reply #6 on: February 23, 2023, 10:34:35 AM »
Not the worst idea. And 0% transfers are easy to get when you have good credit.

PJC74

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Re: Using a credit card for a home repair
« Reply #7 on: February 23, 2023, 05:46:00 PM »
Yes - the credit card hacks are back!

Back in the day when credit cards often had 0% intro apr for 15 months or so for balance transfer I had one card I could do a cash advance to a checking account for free. I then took that balance and transferred it onto one of 5 other cards, each with 20k limits.

I then took this 100k and bought 12 month cds paying 5%. Rinse and repeat.

I was making around $400 dollars per month doing this - VERY helpful when you're a broke college student, lol.

It's too bad the banks closed some of these loop holes and tightened up credit after 2008. I haven't seen a credit card with 0% cash advance options in a LONG time....

I had an offer from Discover couple years ago. It was a true 0% balance xfer with zero fees whatsoever. The best I could ever get after that was the 0% with the standard 3-5% fees on all my other cards.

PJC74

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Re: Using a credit card for a home repair
« Reply #8 on: February 23, 2023, 05:51:29 PM »
Instead of paying cash, let's say for a roof replacement, open up a 0% APR for 15 months credit card with $300 sign up bonus which pays 1.5% back.

Say the roof repair costs $10,000.    So you get the $300 for signing up and $150 cash back.  That's $450 there.

Then instead of paying off the credit card at like $1500 per month, put all that cash instead into the money market or t-bill currently getting 4.5%. 

By the time the 14 month rolls around you might earn say another $450 in interest from money market account.

So you get a grand total of $900 paid to you for borrowing a bank's money for 15 months :)

At the end of the 14th month, draw out the $10,000k from money market account and pay off the credit card in full.. and then close it out if desired.

You could ask for a cash price and maybe save more than $900.

RWD

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Re: Using a credit card for a home repair
« Reply #9 on: February 23, 2023, 05:54:00 PM »
[...] draw out the $10,000k from money market account [...]
If I had $10 million in a money market account I wouldn't be worried about credit card rewards. =P

Finances_With_Purpose

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Re: Using a credit card for a home repair
« Reply #10 on: February 23, 2023, 06:34:29 PM »
A few notes, from experience:

First, great point.  Yes, CC hacking works well in that way.  I am doing something similar now.

Second, you just have to watch for missing an auto-payment or the like.  It happens.  I've had friends lose a lot on these sorts of setups that way.  They accelerate the whole balance plus add fees and interest.  But so long as you're aware of the risk and careful, you're good.  (It was riskier before e-bills and e-pay.) 

Third, and most important: offer cash first.  I always offer cash for things like this if it's an option, and all the more so if the receipt is irrelevant.  Dave Ramsey is right about that: cash is power.  Especially for house repairs; the industry usually wants cash.

For example, I had one vendor offer me $5-600 off of a $1,200 bill once by paying cash up front.  He literally began throwing in more free things to lock down that cash--he must have wanted it badly.  Better than any return on any deal with a credit card--and the payoff was instant.  He walked away thinking he had gotten a great deal, and I walked away knowing that I had.

Always test cash out: you can often get even better deals.  If that fails, jump to the CC.  My favorite phrase now is: "What discount do you offer for cash?"

jnw

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Re: Using a credit card for a home repair
« Reply #11 on: February 23, 2023, 07:42:00 PM »
[...] draw out the $10,000k from money market account [...]
If I had $10 million in a money market account I wouldn't be worried about credit card rewards. =P

Oops Typo lol

jnw

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Re: Using a credit card for a home repair
« Reply #12 on: February 23, 2023, 07:44:01 PM »
A few notes, from experience:

First, great point.  Yes, CC hacking works well in that way.  I am doing something similar now.

Second, you just have to watch for missing an auto-payment or the like.  It happens.  I've had friends lose a lot on these sorts of setups that way.  They accelerate the whole balance plus add fees and interest.  But so long as you're aware of the risk and careful, you're good.  (It was riskier before e-bills and e-pay.) 

Third, and most important: offer cash first.  I always offer cash for things like this if it's an option, and all the more so if the receipt is irrelevant.  Dave Ramsey is right about that: cash is power.  Especially for house repairs; the industry usually wants cash.

For example, I had one vendor offer me $5-600 off of a $1,200 bill once by paying cash up front.  He literally began throwing in more free things to lock down that cash--he must have wanted it badly.  Better than any return on any deal with a credit card--and the payoff was instant.  He walked away thinking he had gotten a great deal, and I walked away knowing that I had.

Always test cash out: you can often get even better deals.  If that fails, jump to the CC.  My favorite phrase now is: "What discount do you offer for cash?"

I always pay all my bills manually on the same day of month. No auto pays. I keep a spreadsheet for paying off bills.  I’ve never paid a dime of interest on cc’s nor any fees etc

GilesMM

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Re: Using a credit card for a home repair
« Reply #13 on: February 24, 2023, 06:28:47 AM »
[...] draw out the $10,000k from money market account [...]
If I had $10 million in a money market account I wouldn't be worried about credit card rewards. =P


The monthly “cash drag” would be a lot more than that.

EchoStache

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Re: Using a credit card for a home repair
« Reply #14 on: February 26, 2023, 04:38:19 AM »
A few notes, from experience:

First, great point.  Yes, CC hacking works well in that way.  I am doing something similar now.

Second, you just have to watch for missing an auto-payment or the like.  It happens.  I've had friends lose a lot on these sorts of setups that way.  They accelerate the whole balance plus add fees and interest.  But so long as you're aware of the risk and careful, you're good.  (It was riskier before e-bills and e-pay.) 

Third, and most important: offer cash first.  I always offer cash for things like this if it's an option, and all the more so if the receipt is irrelevant.  Dave Ramsey is right about that: cash is power.  Especially for house repairs; the industry usually wants cash.

For example, I had one vendor offer me $5-600 off of a $1,200 bill once by paying cash up front.  He literally began throwing in more free things to lock down that cash--he must have wanted it badly.  Better than any return on any deal with a credit card--and the payoff was instant.  He walked away thinking he had gotten a great deal, and I walked away knowing that I had.

Always test cash out: you can often get even better deals.  If that fails, jump to the CC.  My favorite phrase now is: "What discount do you offer for cash?"

I always pay all my bills manually on the same day of month. No auto pays. I keep a spreadsheet for paying off bills.  I’ve never paid a dime of interest on cc’s nor any fees etc

An interesting idea that I'd never considered before.....lining up all bills to be due on the same day of the month....hmmm.  My current system is autopay for everything and I keep 1 months living expenses in my checking account(@~2.3% interest).
« Last Edit: February 26, 2023, 04:40:09 AM by UltraStache »

jnw

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Re: Using a credit card for a home repair
« Reply #15 on: February 26, 2023, 05:53:30 AM »
An interesting idea that I'd never considered before.....lining up all bills to be due on the same day of the month....hmmm.  My current system is autopay for everything and I keep 1 months living expenses in my checking account(@~2.3% interest).

I get my monthly pay check on the 3rd.  I pay all my bills on the 3rd, with both bill pay and logging into sites and initiating ach transfers or paying by credit card if they allow it. Some bills aren't due until say the 15th, most are due by the 10th.  My city water company bills later in month and they expect you to pay in less than 30 days, so it's sort of annoying, a bill I have to pay in the middle of the month -- otherwise they tack on like 1 or 2 dollars late fee each month.. unfair if you ask me.. they should allow 30 days with no late fee; they won't let me change the due date, they go by when they go read the meters.

I keep a bills checklist  with amounts & confirmation numbers in a spreadsheet.  When new month comes around I copy the old spreadsheet for the new month, clear out the nubmers & confirmation numbers etc and rinse repeat.

I haven't had a late payment in 15 years.
« Last Edit: February 26, 2023, 06:00:12 AM by JenniferW »

EchoStache

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Re: Using a credit card for a home repair
« Reply #16 on: February 26, 2023, 06:00:01 AM »
Even if I were to consider trying to set things up to pay all bills on the same day, I'll still use autopay.  All my bills get paid automatically.  I literally have to do nothing, it just happens.  And there is always way more than needed in checking.  The extra balance I carry probably comes with a $50 or $100/year opportunity cost, but its worth it for the simplicity.

jnw

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Re: Using a credit card for a home repair
« Reply #17 on: February 26, 2023, 06:01:43 AM »
Even if I were to consider trying to set things up to pay all bills on the same day, I'll still use autopay.  All my bills get paid automatically.  I literally have to do nothing, it just happens.  And there is always way more than needed in checking.  The extra balance I carry probably comes with a $50 or $100/year opportunity cost, but its worth it for the simplicity.

The thing is I track all my personal finances with gnucash and I reconcile the bank with it.  I like to be in control and have balances up to to date. I don't like to depend on others to take my money out for me and have to updte my own data after the fact.  I deliberately make it a point to not to autopay on everything I can. However, tello.com makes me do the autopay.   Google drive and patreon are also auto pay.  (Those are fine.)  I pay variable amounts on credit cards as well and so don't like just the minimum taken out - I will pay the credit cards off in full if no 0% APR promotion.  Sometimes I have to shuffle money around as well to pay bills, like if I am churning bank accoutns.  I really have to be in control of it all.
« Last Edit: February 26, 2023, 06:05:27 AM by JenniferW »

patchyfacialhair

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Re: Using a credit card for a home repair
« Reply #18 on: February 28, 2023, 04:57:50 PM »
A few notes, from experience:

First, great point.  Yes, CC hacking works well in that way.  I am doing something similar now.

Second, you just have to watch for missing an auto-payment or the like.  It happens.  I've had friends lose a lot on these sorts of setups that way.  They accelerate the whole balance plus add fees and interest.  But so long as you're aware of the risk and careful, you're good.  (It was riskier before e-bills and e-pay.) 

Third, and most important: offer cash first.  I always offer cash for things like this if it's an option, and all the more so if the receipt is irrelevant.  Dave Ramsey is right about that: cash is power.  Especially for house repairs; the industry usually wants cash.

For example, I had one vendor offer me $5-600 off of a $1,200 bill once by paying cash up front.  He literally began throwing in more free things to lock down that cash--he must have wanted it badly.  Better than any return on any deal with a credit card--and the payoff was instant.  He walked away thinking he had gotten a great deal, and I walked away knowing that I had.

Always test cash out: you can often get even better deals.  If that fails, jump to the CC.  My favorite phrase now is: "What discount do you offer for cash?"

I always pay all my bills manually on the same day of month. No auto pays. I keep a spreadsheet for paying off bills.  I’ve never paid a dime of interest on cc’s nor any fees etc

An interesting idea that I'd never considered before.....lining up all bills to be due on the same day of the month....hmmm.  My current system is autopay for everything and I keep 1 months living expenses in my checking account(@~2.3% interest).

I also do the same thing. I don't trust auto pay, and paying all the bills manually on the first of the month really helps with my cash flow planning.

jnw

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Re: Using a credit card for a home repair
« Reply #19 on: February 28, 2023, 05:57:26 PM »
I also do the same thing. I don't trust auto pay, and paying all the bills manually on the first of the month really helps with my cash flow planning.

Yeah my spreadsheet in addition to being a bill pay checklist, it's used to track cash flow and keep track of balances.  I basically know how much I will end up with at the end of the month on the 3rd day of the month when I get my paycheck and pay all my bills.  That way I can immediately transfer the known excess to Vanguard money market and start collecting interest on it.
« Last Edit: February 28, 2023, 06:04:26 PM by JenniferW »

patchyfacialhair

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Re: Using a credit card for a home repair
« Reply #20 on: February 28, 2023, 06:14:42 PM »
I also do the same thing. I don't trust auto pay, and paying all the bills manually on the first of the month really helps with my cash flow planning.

Yeah my spreadsheet in addition to being a bill pay checklist, it's used to track cash flow and keep track of balances.  I basically know how much I will end up with at the end of the month on the 3rd day of the month when I get my paycheck and pay all my bills.  That way I can immediately transfer the known excess to Vanguard money market and start collecting interest on it.

Well said. It also helps with not needing to worry about paycheck planning for many people. I'm paid every week, just like my wife, but it's actually opposite weeks. So we get a paycheck every week. But some months, there's an extra Friday in there, and by paying all the bills on the first of the month (as well as budgeting our monthly income on only 4 checks), we don't ever worry about cash flow. I tried the auto pay thing for a while but it just stressed me out and i was logging in anyway to make sure the bills got paid.