Credit card loan or no?

Question

We got a promotional offer through our credit cards for 1.99% and 3.99% APR for the life of the loan if we take advantage of it by March 1. My thinking is that's cheap money and I could turn it into some good returns by investing it and taking advantage of the low APR

I realize credit card debt is something we'd want to avoid, but if we were to for instance look to get a silent partner to help with a down payment on an STR we'd likely be looking at a much higher interest rate, so why not take advantage of this? Seems like a no brainer to me, but others that I've spoken to seem to think otherwise, curious what my BP community on here thinks. To me it's the power of the velocity of money...

What am I missing though? Aside from the debt on the credit report

Cory Lucas · Answer

@Stephanie Medellin great stuff! Thank you so much for responding and the insight. We’re actually going to cut out about $6k of debt then put the rest on those cards. So we’re going to consolidate our debt and cut our payments in half with this offer. I’m talking to our lender on Friday about other things, but I’m going to bring this up to her as well to see what she has to say on how it will affect us. Appreciate the feedback

Cory Lucas · Answer

@Ryan Hehman I called them and they said I could write the checks out to ourselves. And it would not be considered a cash advance

Stephanie Medellin · Answer

@Cory Lucas  It actually sounds like a really good deal.  If there is an additional transaction cost (usually 3-4% with 0% offers), be sure to factor that in.

One thing to consider is how many other credit cards and credit lines you have open.  Maxing out your only two cards with a relatively limited credit history can do some damage to your credit score until the balances are paid off.  Once they're paid, your score will go back up.  If you have 10 other cards with large credit limits, it probably won't affect your score as much.  Just something to be aware of.

I've seen people with previously good credit get into the trap of financing repairs or improvements on credit cards.  When they try to refinance a mortgage with that additional debt, their score is lower and they won't qualify for the best rates on a mortgage.

Ryan Hehman · Answer

I think it might depend on the fine print. Are there any restrictions on the types of purchases that are eligible for the promotional rate? To put the cc funds toward a STR, you may need a cash advance from the credit card, which I've sometimes seen at a higher rate than the introductory rates.