LG John

Today I was really struggling for bathroom material when I stumbled on a credit card leaflet offering all the usual b*llocks (0% for 6 months, blah, blah). It was in the back of my mind that I want to get a computer set up for around 1500 bucks but that I don't have that kind of money lying around

Then it hit me:

Get a credit card that has a 0% interest on purchases for the first 6 months and buy the computer. 6 months later you haven't paid a penny and this is when you get a credit car with a rival company that has a 5.7% APR (that's what the card I was reading offered) deal on balance transfers for life. I did the maths and you'd have you computer/whatever interest free for the first 6 months and then thereafter it worked out that you'd pay about 7 pounds in interest per month (0.48%) - big wow, thats nothing!! If you make minimum payment of 2% you'd pay 30 which is 37 in total in the first month and if you keep paying minimum payment then the number will drop as the balance drops! You can slowly pay it off over years with a fairly minimal interest penalty or you can do the sensible thing and pay it off a little quicker as 7 pounds a month over something like 6 years would actually be pretty stupid to just give away!

This was just one card I looked at as well, I bet if you shopped around you could mix and match two better deals and save even more money which might allow you to get that big turbo and FMIC but spread the payments over a stupid period of time (i.e 5-6 years) and not even notice it coming out your wages each month! It certainly seems more cost effective than the standard loan route which usually has an APR rate of over 10% for a loan of that amount.

Any body see a flaw in my plan?

Brun

Yep - You've completely forgotten the CTR, Clio and Golf and more Scoob mods are swimming around ya head - Good Work SB

LG John

I suppose there is the problem! When you think "I can have 1500 bucks worth of gear and I only loose 7 a month" you start to think, "I can have 5000 of stuff and it won't be that much

Amanda-Jane

having worked in a bank you get to see a pattern with folks accounts!

Every 6 months or so they were getting new credit cards and transfering their balances.

Don't really see a flaw except you are just delaying paying it off!

AJ

LG John

For ever and ever

Credit card switching V a normal loan it seems that the card have the victory

fast bloke

SB - Works fine if you have the control to stop after your first 'I want'

Unfortunately the companies need to make their money somewhere, so they will give you loads of credit. Then you get more 'I wants', more credit until you eventually end up with a balance you are unlikely to be able to repay.... ever. You remortgage and take a bit extra to consolidate your loans. This costs you next to nothing, so you now have loads of credit and a bit of spare cash.... a few more toys and you need to remortgage to consolidate again.... soon robbing banks will be the only way to generate enough cash to pay them back

Luke

Credit cards are evil!!!

LG John

Yeah that's a fair point FB. Fortunately I have a fairly controlled mentality when it comes to money! I've had a credit card for years that I've never used and I never make rash purchases.

I did a bit of searching on the net and found loads and loads of interest free deals on balance transfers for 6 months or so Thus if you rotated the cards you'd never pay interest on your purchase Worth it for the hassle of applying every 6 months.

If you are a controlled spender but want something thats out your reach but you can afford to make minimum payment on then it seems to be a good idea I think I'll use it to buy a new computer...........and I might as well chuck in some new clothes while I'm at it, and maybe a new sofa, oh, I could really do with a nice gents watch as well.......and....uh-oh

chiark

Listen to FB.

Before you know it, you're up to your eyeballs in debt and can't afford it.

The "problem" (and money maker) for credit cards is that there's no schedule to pay back the money you borrow, so it's all down to self control

I pay my credit cards off in full every month. It's nice to have a safety net, but it can really screw you up financially.

If you've got the self control then you can do this, but what happens when the card issuer who you turn to next for your 6 month "interest free" hit turns you down on the grounds that you're not going to be making them money (which they can do, and they will see that you're going from card to card to card....)

You're shafted at a punitive rate.

Honestly mate, it's not worth it IMHO.

LG John

Self-control is my middle name Fair point re: getting turned down! I suppose in that case (assuming everyone!!! turned me down) I'd just use my over draft (which is interest free) to pay off the car and then I'd pay off the balance as quick as poss as I like having my overdraft safety net!

Graz

You can also end up with a low credit rating doing tricks like this. Every time you apply for a new card it is noted in you credit history. Apply too many times and you rating will drop making it harder and harder to get another card

LG John

Noted mate Cheers

flat4

well i'm fecked then think i'm on my 8th '6 months free' card by now, must get round to cancelling the others at sometime


kev

flat4

double post


kev

[Edited by flat4 - 7/7/2003 6:42:44 PM]

LG John

I assume that this system has worked for you then?

south-star

Im on my 6th 0% credit card....bill atm 4k.......just keep transferring it.i NEVER pay interest on ANYTHING.Downsides are....

1.Its a bit of a drag tbh
2.The last one i took out got lost in the post and i missed the deadline from my prev one....all back on track now.

robski

Just pray interest rates dont go soaring up because if they do the card people are going to be laughing. Suddenly they see money pouring in from people who cannot afford to pay off the balances, so fighting to make a profit from low interest rates falls quickly into distant memory, with all the marketing like 0% apr etc....

robski

south-star

cannot afford to pay off the balances,

Who said i cant afford to pay it off...

Kevin Greeley

It's not too difficult to get >£40k at 0% (being married helps). Then get an offset mortgage and let the money work to reduce the mortgage interest/term.

NotoriousREV

Been there done that, spent years climbing out of the debt hole I ended up in. I used to justify my loans/credit cards in exactly the same way as you just have. I ended up in £25,000 of personal debt plus my mortgage. It's taken me 5 years of living in poverty despite earning very good money to get to where I am now: no debt except my mortgage. I now have that much disposable income that for most things I want I can pay cash.

Ever got to the end of the month an still got £1000 left in your account? Ever since I've had a job I've always been skint a week before payday and then watched as my direct debits took 75% of my wages each month.

What opened my eyes is redundancies in work. I'm on a high wage for what I do, moving jobs would almost definately mean taking a pay cut which I couldn't afford. I was trapped. Now I can take a £10,000 a year pay cut and survive, the feeling of having options is indescribable.

Sorry for the long lecture, but I'd hate to see someone go through what I did.