Based on that last thread, it looks like there are more of us doing this now. I was curious who all is doing it and your experiences (hopefully including where you got the 0 APR advance from)
You should title this thread "Signs that it's officially a bubble."
I have been doing 0% APR balance transfers since about 2007. It's very cheap money and the banks don't seem to mind that you pay off the balance (with a transfer from a different card) the moment the 0% APR period ends.
What banks do you guys use for these? I find that Citibank is the most generous with both balance transfers as well as credit lines.
Also, there has been some misinformation floating around on these forums, so I'll clear it up: money you borrow (for investment) is considered by the IRS as a cost of investment, similar to broker commissions and margin interest. Whether you borrow from LendingClub, a 0% APR balance transfer, or from your uncle, you can deduct the interest straight from your investment revenue.
Just make sure you keep detailed records of your transactions (cash trail from the borrowing source to your investment account), so you can prove to the IRS that you borrowed the money for investment purposes. Also, try to keep the accounts separate (i.e. don't do a 0% APR balance transfer on a credit card you actively use for everyday purchases).
It's worth noting that lots of credit cards offer 0% interest introductory periods for purchases with no fee at all. One could make all their normal purchases with such a card instead of using their cash (and invest the cash instead).
- The payoff is actual 0% APR and no-fee access to money for investment.
- Careful, you probably can't deduct the interest on your taxes if you let the introductory period lapse.
I've only done this to invest in Lending Club once and it was US Bank. It was a higher fee of 4%. We used a 0% APR check from my wife's Chase MasterCard for a business investment and that is a 2% fee. In the future, I may continue to write myself a check for investments, but it will be using the Chase MC for the lower fee. But then again, I'm still earning a good amount over US Banks 4% fee, so maybe I'll use them both. US Bank had a longer term of 15 months. Chase was 1 year.
I recently got offers from Chase, Discover, and Citi for 0% for 15 months and a 0% balance transfer fee.
I guess those offers are making a comeback. I haven't seen them like that since pre-2008.
The picture is not so clear, but it seems you are charged a certain% one-time transaction fee.
Good thing I'm not your trash man. You seem like a good customer to have on the route!
I got 0% convenience check from chase, barclay, discover and BOA, but none of them is with no balance transfer fee. The lowest I got is usually 2%.
Just wanted to add a word of caution here that may not apply to everyone, I did this with my REI card (US Bank), so I got a 0% APR 15 mos. advance for 4% fees. Sounds ok, but the only catch is I like to use my REI card for the 5% cash rebate, and apparently the cash advance counts toward your balance, so basically there is no grace period.
Now whenever I use my REI card, I get charged interest, and US Bank has a $2 minimum interest payment, so even if I charge something for $30 and send a payment the next day, I get charged $2, and my rebate (from REI next year) would be $1.50.
It's not a big deal, but it's annoying and adds up over time. I suspect most cards are like that, so my advice would be to only use this on a card you don't plan on using for anything else.
For the people doing this, do you pay the cc minimums from withdrawing from your LC account or from your regular or other income? I'm considering this for about 10k at 2% up front. I haven't computed the minimum payments but I would likely need to either withdraw every month to pay it back or not invest it in later months to make the last month balloon payment at the end of the term.