Are 0% Apr Credit Cards a Magic Debt Solution?

[Jacklad]

Originally Posted by neatdesign

Technically, moving a balance from lender to lender to avoid paying any interest is a form of credit card fraud called "kiting" and is considered a federal crime. However, I never really understood how this could be a crime when the lenders themselves actually promote it and essentially encourage consumers to participate in it.

Actually that's not kiting. Kiting involves, basically, spending money that you don't have, or before you have it. For example, if you write a cheque today that would be NSF if cashed *on the spot*, you're kiting (even if you know that the cheque won't hit your bank until tomorrow, and your pay will have been deposited by then, etc.). It's also called "floating" or "paper hanging" and involves any situation that takes advantage of the delays introduced by processing times. With regard to credit cards, it means paying the minimum payments on one card by using another card - a good example is at http://www.credit.com/slp/chapter8/Downward-Spiral.jsp.

But moving an entire credit line to a lower interest rate vehicle - whether a credit card offer or a consolidation loan or simply renegotiating a mortgage- isn't kiting. The important distinction is that kiting occurs when you are "floating" debt, appearing to make payments with no funds actually coming from you.

http://www.early-warning.com/check_fraud_schemes.asp
http://www.investopedia.com/terms/k/kited.asp
http://www.investorwords.com/2700/kiting.html
http://en.wikipedia.org/wiki/Check_kiting
http://findarticles.com/p/articles/m...62/ai_15139850
http://www.answers.com/topic/check-kiting
http://mentalhelp.net/poc/view_doc.p...d=10656&cn=217

Jackie

[vishenda]

Originally Posted by Tree0164

I paid off 20k worth of credit card debt playing the balance transfer game. If you are responsible and get them paid off the are great tactic to use.

oh the balance transfer game, nah

[greedy4chips]

Originally Posted by neatdesign

I just opened a new account with Discover and transferred the entire balance of one account to it, and about half of another account's balance. It's 0% until next June, but I can extend the 0% by making three purchases each billing period starting in July.

Although the purchases will NOT be at the 0% rate (that's limited to the balance transfers), there is no minimum amount that the three purchases need to be. My plan is to purchase three EXTREMELY cheap items -- like three sticks of gum for 25¢ each -- once per billing cycle. I'll go through the self-checkout line at the grocery store so it will be easier to do the transactions. At most this will add about $2/month to my balance (the three purchases plus the minimum finance charge), which means it will end up costing me far, far less than if I had the BT balance at a higher APR.

~ Jenney

You just took a good plan and ruined it! Find another 0% offer approximately 3 months prior to this one ending, be sure it doesn't have a transfer fee! Don't request your new card just yet. Wait until about 2 days prior to the expiration date of the new 0% offer to see if a better one comes along. If one does not then go ahead and make the transfer, it will take up to 4 weeks to transfer the balance so make sure you give yourself some leeway unless you don't mind a few days of interest.

Don't cancel/close the old card, but hide it or cut it up. The open credit won't hurt your credit score, but could hurt it if you close your acct.

[Ima saver]

Be very careful if you ever decide to get new furniture and make no payments for a year. I did this. I had the cash, but decided to let it sit in the bank.
The first month they charged me for "life insurance" that I never wanted. I got it taken off. I also find they will move up the date of your pay off without you knowing it.
If you miss by one day, you owe for all the interest, so always pay it off a MONTH early.

[vishenda]

thanks for your opinions and output, those are well taken

[neatdesign]

Originally Posted by greedy4chips

You just took a good plan and ruined it!

How did I "ruin" it?

I don't want to open ANOTHER credit card account. My credit's already getting dinged as it is. I would much rather have 99% of my balance at 0% indefinitely than have to keep applying for new accounts every 6 months.

In order for me to keep that 0% indefinitely, all I have to do is make three miniscule charges each month (starting next June). That's it. At most I'd be adding $22-24/year to the purchase bucket, INCLUDING interest, which is nothing in the grand scheme of things, especially when you consider that the other $3000+ will be at 0%.

~ Jenney

[vishenda]

Originally Posted by tener

0% credit cards are fantastic but ofcourse you have to keep your eyes open.. i find them better than loans as long as you can keep transferring them..

maybe not magic but surely better than loans,, approve

[vishenda]

Originally Posted by neatdesign

Technically, moving a balance from lender to lender to avoid paying any interest is a form of credit card fraud called "kiting" and is considered a federal crime. However, I never really understood how this could be a crime when the lenders themselves actually promote it and essentially encourage consumers to participate in it.

I just opened a new account with Discover and transferred the entire balance of one account to it, and about half of another account's balance. It's 0% until next June, but I can extend the 0% by making three purchases each billing period starting in July.

Although the purchases will NOT be at the 0% rate (that's limited to the balance transfers), there is no minimum amount that the three purchases need to be. My plan is to purchase three EXTREMELY cheap items -- like three sticks of gum for 25¢ each -- once per billing cycle. I'll go through the self-checkout line at the grocery store so it will be easier to do the transactions. At most this will add about $2/month to my balance (the three purchases plus the minimum finance charge), which means it will end up costing me far, far less than if I had the BT balance at a higher APR.

~ Jenney

your story speaks the same story of my cousin
Thanks