haniboo

good plan, or bad plan?

need to make a big purchase. have a card with double miles promo now, but thinknig to close down card soon. the USAir signature visa has 25000 first spend miles and 0% for first 6 monthes on balance transfers, so that seems like good deal. but then i read the fine print.

http://www.bankofamerica.com/creditc...estTimeout=120

i have never done a balance transfer from one CC to another, not sure what 0% first 6 monthes means, though it sounds good! could pay for purchase upfront but wouldn't mind the 6 monthes if it were really 0%.

can anyone advise. Thanks!!

ingy

If you want purchase and need it for the 25000 miles do it FIRST and pay it off BEFORE doing the balance transfer.

Be careful with BofA as they have BT fees sometimes as high as 3% which negates the benefit of the 0% transfer

lin821

The Credit Card Forum seems to be a better place for this thread.

Like ingy said, you have to look very close to the terms and see the fee schedules before deciding any good deals. If the link you provided is indeed the terms for the card you are thinking about using, no balance transfer fee would be charged. Besides:

1. Annual fee: $90
2. 0% APR on all purchases, balance transfers, and cash advance checks. That's a nice offer upfront. There's no need to pay off your purchases before any balance transfer during the first 6 billing cycles since they all carry zero APRs.
3. 0% APR only for the FIRST 6 billing cycles, NOT after your balance transfer. It seems you've had the card for a while since you are about to close it. So essentially you don't have the full 6-month free ride "grace period" any more. If your credit limit is not substantial enough, factor in if it's worth it.
4. You mentioned you never do balance transfers. Just remember, pay off everything before (or by) the 6th statement closing date (NOT payment due day) to avoid any further finance charges. You can call the CSR and verify the last day you have to pay off without any extra charges, write down the names/date of conversation..etc, in case you have to fight off the charges later on.

Hope it helps!

gre

Many poeple play the balance transfer credit card game to effectively finance large purchases (or debt) for free.

Yes it can work but you must know the rules of each deal and follow them precisely. It is not a game for amateurs, or more acurately, amateurs are likely to be taught some expensive lessons.

Djlawman

And usually, when you do a no interest balance transfer, the credit card rules will say that payments will be applied on a FIFO ("First in, First out") basis -- i.e., applied to your balance transfer before any purchases you add on top of it.

So, if you absolutely need the card for other purchases, you may get hit with some significant charges.

OTOH, if you can afford to do one small purchase to get your 25,000 bonus miles, and then do the balance transfer and not charge anything else to it for the next few months, then it can be free money. (Did it with my BoA card last year when they ran it with courtesy checks. Just stopped using the BoA card for anything else. Got a free $10,000 loan for 5 1/2 months.)

lin821

I admit I only did a limited number of BTs and I'd "studied" closely the terms offered in my Citi, Chase, Discover, Amex creditcards. This is the first time I ever heard of "First in, First out" rule.

All the cards I ever looked into come with the "payment applied to the lowest rate" clause. It means if you use your card for both purchases (w/ regualar APR%)and BT (w/ 0% APR), then make a payment, the payment will be applied to the BT balance, i.e. the zero APR, first. In which case, use the card for purchases will be very unwise since it will accumulate the hefty interest rates (20% -30%). UNLESS, all the BTs were paid off before using the card again. That would beat the purpose of "free loan" during the promo period.

The terms OP provided in the original post#1 stated 0% APR to purchases, BTs, and cash advance checks during the first 6 billing cycles. Meaning OP is free to use the card and no other interest will be accessed/collected during the promo period. It shouldn't make any difference whether BTs or the purchases happen first. If OP so chooses to make payments during the first 6 billing cycles, the payment will be applied to the lowest APR. Since they all carry zero APR, there would make no difference how the payments are allocated if everything will be pay off before the promo expires.

Two caviars though. One for the bonus miles and the other, transaction fees.

In terms of bonus miles, OP needs to make a regular purchase to get 25K bonus miles. If I were OP, I would do the purchase sooner than later.

As far as transaction fees goes, BOA is charging 3% with no cap, which is HIGH. (Transaction fee for Cash Equivalents posted either during the Promotional Period for Purchases or before January 19, 2008: 3% of each such purchase (minimum $10).) Not sure if BOA treats purchases as "cash equivalents." If so, certainly no deal for me. On top of that, I believe certain banks collect interests on the transaction fees also. Better straight things out with BOA before taking any move on BTs.

After factoring in all the terms, transaction fees, now-much-shorter-than-6-month period, and the double-mile offer, if OP still thinks BOA has a good deal, then take it. Otherwise, keep looking. I believe there are better BT offers out there, cash-wise.

What gre said, "It is not a game for amateurs."

thegeneral

You shouldn't be carrying a balance on a credit card. If you are, then your discussion should be around how you pay it off, not what new credit card you get. Transferring debt also hits your credit rating quite hard as many people do this when they can't keep up with their bills.

haniboo

i am not carrying a balance on a CC. i was interested in learning about utilizing a 6 mos 0% BT offered bya potentially new card.
but point taken that doing so is unwise.

Podcat

I don't believe any signup offer from B of A is any good -- mostly because of the 3% balance transfer fee with no cap. They're sort of the Caesars' Palace of CC issuers, taking a "we don't have to be competitive because of our name" stance. Almost every other bank has a cap, usually now around $100, but occassionally as low as $50. (You should call and try to negotiate the lower rate.)

Have you exhausted all the known good offers?

There are some rippin' CC offers right now. I'd especially look hard at the US Airways Dividend Miles MC from Barclays -- but BEWARE: you must get the BEST offer. Check FT for the right link (there are many inferior ones). It's an easy 25K miles, with a 0% bonus transfer capped at $100 (a good deal for 10K). I think there's a way to deposit the money directly to a bank account; if not, just prepay your favorite CC. When it shows as a credit, have them send you a check and deposit that.

If you're credit is good, I think you can enroll multiple times, serially or concurrently.

Marathon Man

I have never seen a successful bal transfer happen without a hitch. At least not in my own world, and I have excellent credit with little to no debt. There's always a catch and they rarely wish to bring over the whole amount. Could be just me but I would be very wary of anything BofA puts out. Now I happen to use them for my own checking needs but that's cuz I know how to work around what they give... And it's only a checking account. I cancelled my CC with them and have others.

Sorry to be the downer but it's good to read all perspectives, I think.

Now if you wanna earn a lot of miles... Well, right from the horse's mouth, I do know that Citi has NO LIMIT on the number of cards you can order and get the miles from. UA and Chase stopped churning. NWA WP lets you if you have different card types, but currently, it seems Citi and AA let you crank up to 100k per year on as many cards as you want.

Heck, you could order many that give a sign on bonus and reap a bunch of miles just from those! No Annual fee for the first year, and you are set! once you need to pay the bill, it will still be worth it, I think. Then slowly cancel them out.

Just shouting out ideas here... I dunno.

MM

pgary

I have been doing these types of "transfers" regularly for several years, resulting in a significant profit. Some comments:

• For the offers involving 3% fees, there has to be a cap on the fee and the free loan has to be large enough (i.e., your credit limit on the card has to be large enough) to make enough money on where you invest it to pay for those fees. I made a good profit over the loan and annual card fees on the very card you mention, plus received the miles.
• When you do the math, remember that the income on the money you invest from the loan will probably be taxable, and the fees are probably not tax deductable. (But I expect some experts may tell us otherwise on the latter.)
• You almost never have to actually make an actual balance transfer. You can usually get the bank to send you a check or electronically send the money to your banking account. The only bank I have delt with that was a bit sticky on this was Chase, which wanted my Priority Club business card to be alive for 3 months before doing an electronic transfer to my bank account. But then they sent me some checks that accomplished the same thing.
• Extensive use of these offers does affect your credit score - about 100 points for me for over about an $80K total outstanding balances in free loans. But the score seems to recover after paying off the loans. Just be sure you won't be looking for a mortgage or other loan during the time of the 0% offer plus a month or two.
• Because these types of offers seem to be comming along more and more frequently, it is advisable to maintain as high credit limits as possible. I open a new credit card account with a bank before I close an old one with that same bank. Then I ask them to transfer my credit limit to the new from the old, and then close the old. This works well from personal to either personal or business cards; less well from business cards to personal cards. Yes, higher credit limits have both positive and negative effects on your credit score and ability to obtain new cards.
• Be sure to read my comments on how to deal with 0% loans on my website below. It in the Credit Card section on the Important Starting Info page, Cautions section.
• Sometimes the fees can be partially or substantially offset by receiving a cash bonus for accepting the card. See the specially negotiated bonuses on my website for many cards. Click on each page in the Credit Card section (important), then do a word search on "carbenefit.com".

biggestbopper

Good info from Pgary.

But, IMHO, these offers are coming along less and less. And those that do come have more and more heavy fees attached, often with no cap which makes the whole transaction too pricey.

Perhaps, with the Fed trying to push down interest rates, we will see a revival of decent offers.

fly co to see the yanks

i've watched these offers for a long time (since i get them in the mail all the time). historically, the transfer charges were a fixed percentage (i.e., 3%) with a cap. but, more and more the offers i have seen have had no cap. with no cap, these offers would be a non-starter for me. is this an increasing trend?

sdsearch

One "secret" to know: Never pay just the minimum balance, even if paying off a 0% balance with plenty of time to go. Pay at least $1 over the minimum balance each month.

The excessive simple credit reporting systems only report whether you paid (a) just the minimum balance or (b) more. They count in whole dollars, so $1 more counts as (b) more! In turns, the credit score may take this factor into account, and since the reporting agency didn't report any finer degree, all the credit scorer can choose in calculating the score is between (a) and (b). If you do a 0% transfer for 12 months and then pay exactly the minimum every month, you keep showing (a). Add a dollar or two to the minimum every month and you start showing (b).

lin821

A few good tips in the last couple of days. All the words of wisdom are what I have been practicing and should be kept in minds for those "new kids on the block".

I would say it's an increasing trend.

I have observe the no-cap-on-fee trend since late 2006 and early 2007. I used to play the "free loan game" and, with carefully calculation, I was able to make profits by hundreds. No bad for a student living on a tight budget. pgary's post was right on. When I was in the game, it did cost me about 100 points in credit score. Since I paid it off before any interest would kick in, I was always ahead of the game.

I used to prioritize the true zero fee, 0% APR on BT cards. Those offers are significantly decreasing nowadays. Besides, with the recent no-cap trend, it's not worth it playing the game no more, at least for me.