efflandt
Senior Member
Cash: $ 80.45
Posts: 401
Joined: 25 Apr 2005
Location: Elgin, IL USA
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| Banks giving away free money (almost) |
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Has anyone had credit card companies trying hard to offer you free money (0% interest) and taken them up on the offer just to gain from interest or investments?
One of my credit card companies called me (verified by caller ID) trying to give me $29k at 0% interest for 6 months for $75 balance transfer fee limit. At first I resisted, then I thought maybe I should take $3k to contribute to my Roth IRA now instead of later after covering a couple of bills. The kicker was he said it would cost me "no more" to borrow $20k than $3k ($75 total). Maybe I should have taken him up on the $25k or $29k, but dollar signs about unknown monthly payments started dancing in my head.
The $20k showed up deducted from my credit card 2/15, in my checking account available balance 2/16, I opened a regular brokerage account at Fidelity (already have IRA/Roth IRA), and the $17.5k check I deposited at a local office 2/17 has already shown up 2/18 as a balance at Fidelity and debited from my checking account.
How can banks make money doing that, if I can make a couple hundred dollars after taxes and balance transfer fee just parking it in a money market for 6 months? Or are they hoping I will be tempted to spend it and have to pay it back later (or if a day late) at over 21% interest?
PS: This would not be such a good deal if balance transfer fee was 3% or more with no limit ($600+ effectively over 6% APR for 6 months). But $75 limit of $20k is 0.375%, which is easily recovered multiple times in 6 months @ current money market rates. Or where else can you get 100% margin @ 0% interest. Worst case if I lost it all would be covering it with property State of WI wants to buy, which I was thinking of selling this year due to increased property taxes.
NOTE: I would NOT recommend doing this if you would be tempted to spend or lose it, unless you have liquid assets to cover it. If you have a balance you need to pay off, it may be better to get low fixed rate for unlimited time.
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