Should we use a 0% intro rate to pay off some old credit card debt?
I have sterling credit, no debt, etc, and tried to get one of those cards just to see if I could make a large purchase on it and pay no interest for a while. The best deal I found at the time was Amex Blue, so I jumped through the hoops and got the card. The 0% for 18 months offer (or whatever it was) was just a come-on. The card they sent was 0% for about 6 weeks, and had an absurdly low limit. I didn’t even bother activating it. (I figured since they changed the terms of the offer, we didn’t have a contract unless I accepted their counter-offer. I’m just waiting for them to ding my credit somehow, without a contract. They’ll wish they’d given me more than 18 months of free credit then!) So…uh…what’s my point? Read the fine print, don’t sign if the offer is not what you agreed to, and expect to get jerked around.
Even if you do read the fine print, beware. Part of the standard boiler-plate agreement with any credit card you get is a clause that allows them to change the terms at any time without any advance notification. Seriously – one month, no interest, the next, you’re paying off those appliances at 18%. There was a Frontline piece recently about the secret history of the credit card that laid out how nasty these guys are. Something I didn’t know – because all the banks share information, you can be penalized on one credit card for trouble you have with a completely different, unrelated account. Late on a car payment or missed a different credit card bill? You can see your interest rate jump up on an unrelated card because of it. Make sure you keep an eye on your statement every month if you decide to go for it, and don’t hesitate to call them on any bullshit, not that it’ll do you a whole lot of good without an army of law
Just got an offer in the mail for a Discover card with 0% interest for life on balance transfers as long as you make two purchases each month. Of course, they do ding you with a 3% cash advance fee on the transfer (though the maximum is $29, so it would only be like three quarters of a percent on a $4000 balance), and the 0% introductory rate on purchases expires July 1, so you’d want to pay it off by the end of July to avoid paying interest on purchases under the catch that dobbs mentions. Not a terrible deal, though there may be better ones.
0% interest for life … as long as you make two purchases each month Oooh, that’s evil! IIRC, most of those 0% deals are set up so that any new charges you put on are at whatever the bank’s usurious rate is. And, of course, any money you send in goes to retire low-rate debt first. So if you’re required to make two purchases a month, then those amounts probably accrue interest at 18% for life, or at least until you pay off the original balance transfer. And I’d bet dollars to donuts that the balance transfer would be limited to some trivial amount, calculated to give you just enough time so that your two purchases per month would turn into an undentable 18% APR balance. Credit card companies belong in hell, right next to TV executives and Dick Cheney.
1. Are there any serious drawbacks to this? There can be. SO and I routinely open and close 0% credit card accounts to avoid paying interest on our (thankfully ever-shrinking) debt. You MUST MUST MUST read every little bit of the fine print available to you. Credit card companies can be sneaky. Some tell you if you have any late pays EVER on anything (even in the past) that they’ll jack the rate up to the “default” rate, which is usually above 20%. Most of them have a “if you’re late even once, you lose the 0% and get the default rate” clause. In the case of some cards, you are accruing interest during the 0% period and will have all of that interest added to your balance if it’s not paid in full by the time the 0% expires. If you read (and understand) the fine print, you’ll know what you’re signing up for. 2. Is there an objective review site of credit card companies, something like Amazon user rankings, perhaps? I have never heard of anything like this, but
