Best 0% Transfer Credit?
June 3, 2018 1:23 PM   Subscribe

Best 0% Transfer Credit? I need to get my credit finance charge lower, 0%, if possible.

My research is spotty; and I am wary of getting trapped into a bad deal. I have heard that the transfer amount must be less than 50% of the credit limit, the fee is a percentage of the transferred amount, and the deal only lasts one year to either pay off, get hit with astronomical fee, or transfer again. So, if not paid off, another transfer is do-able; until all is paid?? Are credit reports a factor? Basically, this is a device to bring you aboard, hope you run up more than the 50%, and get stuck with a high interest after one year. A savvy customer can pay down, not add, switching cards, until all is paid off. Upping the credit report
posted by ebesan to Work & Money (7 answers total) 4 users marked this as a favorite
 
The Citi Diamond Preferred card is one of the best cards in this space.

Balance transfers are charged a one-time fee of 5%, but are then 0% interest for 21 months. If you can pay the transfer down to zero in that time, that's the equivalent of about 3% interest over the life of the loan.

If you can't, it'll start accruing interest at a higher, typical-for-a-credit-card rate. There's no special fee at the 21-month mark other than the commencement of interest. And if you can find another 0% on balance transfer card - there are several - nothing would prevent you from doing a new transfer.

There are no special rules about balance transfer amounts vs. overall credit limit; it looks like you could max out your credit limit with a single balance transfer the day you get the card.

You can't transfer other Citi balances, so you can't pay off, say, a Citibank American Airlines card with this.

Finally, you are correct; they are hoping you'll transfer a few thousand over to your account, tell yourself that you have 21 months to pay it off, neglect it, and suddenly start paying 18% interest on it in early 2020. But the 5% upfront fee is pretty sweet for them too - they're not going to lose money or be sad if you pay it all off in the 21-month zero-interest period.
posted by Hatashran at 1:41 PM on June 3, 2018


If you are in the position of making minimum only monthly payments you should inquire what percentage minimum monthly payment you are required to pay on the 0% card. Sometimes you end up with higher minimum monthly payments on a 0% deal.
posted by charlielxxv at 1:53 PM on June 3, 2018


You also need to be careful that you don't put any new purchases on the card - usually repayments go to the zero interest balance first while the new purchases are happily accusing interest from day one.

Also, you need to be really honest with yourself about whether you will be able to get it paid off within the allowed time - they make their best money when you can't.

Here is a list of some good deals from US News - most require you to have a good to excellent credit score. The Amex everyday looks like a good deal - no transfer fee, no interest for 15 months.
posted by metahawk at 2:08 PM on June 3, 2018


Yes, they are hoping that you will misjudge your ability to pay off the debt in time and otherwise manage the logistics of it all (also, because you are a confirmed balance-carrier, you are going to be profitable to them). Nothing personal, but you need to take a hard look at the circumstances that got you needing such a thing, do all the math, and be very honest with yourself about whether you are able to successfully take advantage of such an offer. If you don't get much paid off and the interest rate on the transferee card is significantly higher than the rate on the original card, it won't take too very long for the savings of the interest-free year to evaporate. Speaking generally, "savvy customers" don't carry balances.
posted by praemunire at 2:53 PM on June 3, 2018 [1 favorite]


A co-worker uses Award Wallet and also keeps an intense spreadsheet of the cards he has and when the special offers (0% interest on transfers, etc.) expire.
posted by bendy at 10:29 PM on June 3, 2018


Another option, which is more expensive if you really can pay off the card in the 0% interest window, but maybe less expensive and less risky for most people who won't actually do that, is a debt consolidation loan with your bank. You'll probably get a 6 or 7% rate, but it will be like a car loan with a fixed length of time so you'll know exactly when you will pay it off and how much interest you'll pay on it. Play with the numbers - it might be a situation where the cost difference to you is pretty minimal for the less risky option. For example. you might pay $500 more over 4 years with the bank consolidation vs. the best case credit card transfer, but is $125 a year worth it to not have to play the credit card transfer game? Of course, all this depends on your ability to not run up new debt while paying off the old debt.
posted by COD at 6:13 AM on June 4, 2018


Response by poster: Let me be clear. I agree w/ praemunire's HARD LOOK comment. I will soon be able to make a large payment on the card. It will bring down to below 50%. I do not use the card. W/ a 0% transfer, I will be in a good position top pay it down. IF, IF I am unable to pay off after 12, 15 mos., can I then transfer again? in order to finish off all the payment? In other words, the tranfers are solely to pay this off, NOT to continue using it again.
posted by ebesan at 10:05 AM on June 4, 2018


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