Mailbox stuffed with offers

[wincrasher]

I'm noticing alot more offers for balance transfers and outright cash advances for 0%. Some as long as 2 years.

I don't really need the money, but am considering taking one of these since it's such cheap money. Maybe I'll buy some property with it or a new car.

Are these fixed contracts? Can the terms be changedfor any reason other than paying late?

[boosami]

Typically they are fixed, but they state the rate can change if you violate the terms and conditions of the agreement.

I've used them many times in the past without problems. Just make sure you remember to make payments well ahead of time so you don't accidentally post late!

[PetMom]

I would very carefully consider this.

If a credit card company is sending these read not only the fine print but make sure you understand it (which in some cases is the intention for people to barely understand it).

There are credit card reforms going on - but they will find a way to get more money.

[boosami]

Another word of warning...

Many times those "pre-approved" 0% offers are not a guaranteed rate. They send the offers to almost anyone, but only approve the rate for people with credit scores over 700 (or whatever). So, if you have a 699 score and apply thinking you'll get the 0% rate, they'll give you the standard 14.9% rate (or whatever). Of course, they won't tell you until you've already applied and been granted the account. So check your terms after you sign up as well. You may end up with a useless credit card and an extra credit pull on your report. I would call and try to ensure I'd qualify for the promo rate before applying.

This happened to me many years ago when I was a student... I financed a computer from a major retailer because they advertised 0% for 18 months. However, when I signed up I didn't qualify for whatever reason, and the rate was like 23%! They didn't make it obvious when I applied, and in fact I didn't figure it out until I got my first statement in the mail. Thankfully, I had the money in savings and paid it off instead of delaying the 18 months.

[wincrasher]

Most of these are on cards I already have. Very high limits on these cards as well as a FICO near 800. Of course that would drop a bit if I took the money.

[tmvijai]

Nothing comes free. No free lunch as its been advertised. There is always catch. I used them many times and make use of them all the time. My FICO score improved just because of these offers but you should be careful in choosing them. 0% balance transfer or cash advance is good but they always have 3% transaction fee or some sort of fee added to it. Check it out. If it 3% of 10K, its $300 fee. If you planning to put 10K to CD to get 2% for a year or 2, it might not actually work. It used to work 2 years ago when I did it. Not now with less saving interst.

Also they won't give you the approved amount as they sent in the offer. So you might not get 30K as they say. May be just $10k according to your debt-ratio. Read the terms carefully.. I been looking for no transaction fee but haven't seen any past year or so..

[boosami]

Originally Posted by tmvijai

I been looking for no transaction fee but haven't seen any past year or so..

I noticed that too... Almost all the no-fee balance transfers have disappeared lately. I have only seen one in the past year or so, and it was for a very small, local bank's credit card.

[lehresman]

I've used 0% cards many times for balance transfers from higher rate cards while I was working hard to pay them off. You need to be careful though. First, they often charge a flat rate or percentage fee initially to transfer a balance, and that can often be higher than you'd pay in interest over the life of the loan. Also, I would caution you from seeing this as "free money." It is debt, even though it's 0%. If you don't need a new car, why enslave yourself to a payment? Why not save $200/month and in a few years pay cash for a new car?

[boosami]

Originally Posted by lehresman

First, they often charge a flat rate or percentage fee initially to transfer a balance, and that can often be higher than you'd pay in interest over the life of the loan.

With a typical credit card balance paid off spread over a 12 month term, you're paying more than 3% of the original balance in interest. Unless your CC rate is lower than like 6.9% APR. Plus, the fees are often capped so you may be paying far less than 3% of the balance. I can't see you saving money paying interest versus a transaction fee unless the fee is ridiculously high (percentage-wise) or the CC APR is very, very low.

[rc1078]

Go for the credit card shuffle and see where it gets you!