Best Way to Minimize Interest and Finance Charges on Credit Card Bills

A

aeliodon

I'm going to start charging my card for all my expenses. Basically the plan is to keep as much money in my IB account as possible so I can have more money available to put to productive use and IB pays good interest on cash balances over 10k.
I have two cards, and it seems there is a permanent offer of 0% apr on transfers. So I'm thinking I can use one card to charge everything then when the bill comes I can transfer the balance to the other card. Then charge more on the other card and when the bill comes, transfer again. That way I pay no interest. Seems to good to be true. Is there a catch to this? What are some other good strategies to lower CC interest and finance charges?
These CC companies basically create money out of thin air with no backing whatsoever, so there's no way I'm paying the 15% apr + finance charges on carryfoward balances.
 
Quote from aeliodon:

What are some other good strategies to lower CC interest and finance charges?
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Ummmmmm, the easiest way is to just pay off the card in full each month.

You're trying to avoid some credit card interest with your approach. Isn't that what IB is doing by not paying any interest on the first $10K? So you're "losing" interest ($500/year @ 5%) and you're saving how much on your credit cards? And the time and effort to keep doing what you're proposing is a "cost" as well.
 
I put money to work for a living and I'm just trying to put as much money to work as possible.

Okay so I've found the catch: There's a 2% balance transfer fee after the promotional period. But now let's say I call up one CC company when the bill arrives and I say I want to pay the bill using another CC card. So now wouldn't that count as a payment rather than a transfer - hence no balance transfer fee? Or are the CC companies too smart for this. If so, then damn they've got the best business model running: create money out of thin air and charge 15% apr and if folks try to pay the balance using another card then the other CC card co. charges 2% fee on the transfer.
 
re: CC card transfer fee "real" cost.

First of all, check if the CC company has a cap on what the max is. Then you gotta see what the "equivalent" cost of the money is using a rate calculator.

ie, even tho the balance is at 0%, the fee, when amortized over "x" amount of time, should be compared to it's equivalent % APR.

A simple example would be $10,000 @ a 2% transfer fee of $200 is equivalent to the 2% APR when the payback period is one year. A cap on the fee, or a longer pay-back period, reduces that equivalent APR. Of course, if the money isn't paid on time, the accrued interest at a higher rate (typically 11%-15%) would come due at the time the loan was due, so the risk is making the full payment on time...they wouldn't understand a day's delay, lol.

The point is, it isn't money for nothing and should be treated as a fixed cost for the time you anticipate using that money.

amg
 
i live in australia and theres a simple method i use for maintaining credit card debt interest free over an extended period of time (i trade on credit debt all credit cards maxed out for my account)

1). open up a online betting account with a betting agency (betfair etc..)

2) send in ID and all associated documents to the betting agency so that you can xfer money out of your account.

3) in austrlia we have 55days interest free, im assuming most of ur cards will have an interest free time period.

4) transfer the equivalent of your balance on your credit card to the betting agency. i.e if u owe 2000 then xfer 2000 to the betting agency. Check just do it with a small amount once to make sure that its charged as a "credit" purchase and not a cash advance.

5) xfer 2k from betting agency to bank account. use that to pay off the 2k that you owe.

6) u now have 2k of debt to the betting agency which is 55 days interest free

repeat until you have enough cash or ur trading turns net positive to pay off the debt. If ur stingy enough u can do it until u die and not pay at all.
 
A lot of the issuers are removing or raising caps on the cash-advance balance transfer fees so your APR is gigantic. If it is capped at a low amount and you can borrow 20k or something it's not a bad deal.

You need to absolutely sure of the fee structure before you start doing this, and be sure not to miss any payments. Many revert to 18% interest if you screw up. Use internet banking at B of A or elsewhere to pay the bills automatically.

This is a decent source of cheap money, but the people that are usually drawn into it get in trouble one way or another. You usually can't borrow enough to make this a decent carry trade. Better to use it to lower your overall cost of borrowing.

Oh, and doing this aggressively tends to wreck your FICO scores since your loan to credit limit ratios end up being a lot higher. Ditto for the guys signing up tons of airline cards for the frequent flyer mile signup bonus.
 
Zero interest is not zero interest. You get hit with a 3% transfer fee with each transfer. You can run but you can't hide.
 
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