0% APR and Balance Transfers?

Question

Hey all you lucky people who are starting at your dream school!

I was talking to a friend the other day, and we were talking about the American Express Blue card with its 15 months 0% APR deal... along with some Citibank Cards that give you 12 month balance transfer with 0% APR. I was wondering if anyone has tried to use the 15 months 0% APR deal to buy every day stuff (anything that lets you use your AmEx), and then when that's up, transfer the balance to a CitiCard and pretty much have zero interest for the duration of your MBA? You can still get loans, but just keep them in high interest savings or CD, and pay off the credit card bills the second you graduate and get a job. Is there some flaw in this, or is it too good to be true? (other than paying for tuition, of course)

aaudetat · Answer

Don't know either card well, but I will tell you what I used to tell me financial counseling clients:

BEWARE THE FINE PRINT

If you accidentally make a purchase on the card with the 0% balance transfer, that purchase will accrue the going rate, whatever that will be. And of course any payments you make on the card will be applied toward teh 0% balance and not the higher rate balance. Yikes.

If you miss one payment, even by a matter of a day, your rate on the whole shebang will go through the roof. Bad.

If you miss a payment on something else in your credit report, the credit card companies might decide to nail you with universal default rates - bad.

Playing the "shell game" with credit cards can be beneficial, but you have to do it right. Some folks I know manage that well, but many don't.

And don't forget that opening lots of new accts is likely to adversely affect your credit score. Of course, this is a fairly minor consideration, especially if your credit history is already fairly robust.

zakk · Answer

i did that to consolidate a few smaller things. if you are VERY disciplined it could work, but if you miss by a day hello 29.99%!

kryzak · Answer

Thanks Aau and Zakk.

Yup, I know the part about balance transfers. I plan on opening a card only to hold the transfer, and never use it (since I have other cards that I normally use). The American Express 15-month 0% APR is just a normal card that has no APR for 15 months...

piper41955 · Answer

Bear in mind that Amex is famous for pulling Financial Reviews. If you are a full time student without a regular income and they FR you, it could mean the loss of your credit line.

kryzak · Answer

ahh, didn't know that, that's very good to know! I will look into that!

kidderek · Answer

It might be difficult to get approved (at least for more than $1,000) for the second cc that allows balance transfers if you have a heavy duty balance on another cc.

Otherwise, it seems like a crafty plan. As stated earlier, just don't miss those payments! I would make them the first day the statement is available.

dosa_don · Answer

I work for a pretty big CC issuer as an analyst and can say that I do know how the cards work. What you plan to do is VERY Common BUT- make sure you NEVER miss a payment on your 0% BT and DO NOT use it for any purchase once you transfer balances over to that card. IF you miss payment on that card-your APR rises up not only on that card but also on all your other cards (known as universal default). I know companies are moving away from UD but most companies still follow this.

PM me if you have any questions

kryzak · Answer

Thank you dosa! I'll keep that in mind! I don't plan on using the the CC that I do the BT on.

VeritasPrepMike · Answer

Taking advantage of a 0% balance transfer offer can certainly be a good idea, depending on your situation. First of all, I wouldn't attempt this without good credit in the first place. Carrying such a big balance on a credit card will drop your credit score a few points. If you are already low, it will hurt you for other loans you might need. Second of all you need to be very good with keep track of your payments. If you are late with even one payment the credit card company will start charging you interest and it ruins your entire ROI. Finally, check the balance transfer fee, it can be quite large depending on the card.

0% APR and Balance Transfers?

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