Haymarket, VA · Member since 2016 · 45 posts · 10 votes
I purchased a rental property in cash (half personal funds and half using a 48 month personal loan from discover at 7%). I just got an offer from Bank of America for a 15 month 0% $0 balance transfer. I am currently 6 months into the loan and am considering doing a balance transfer to eliminate the interest. I have the ability to pay off the balance transfer in the 15 months and have reserves to cover the loan but would prefer having the liquidity. Are there any risks to this strategy I am not thinking of? Seems like a simple way to save decent amount of money in interest.
Crossville, TN · Member since 2017 · 121 posts · 168 votes
9y
@Michael Plante I said no because the deal is straight forward and it is an interest free loan if you follow the terms of the agreement. What happens when you don't follow the terms of your mortgage? People seem scared to take a no interest loan on a credit card but seem eager to pay hard money lenders a few points and 12%. Successful people manage money. Money manages losers.
Flipper · Louisville, KY · Member since 2017 · 65 posts · 28 votes
9y
This is called "card surfing". The credit card companies are banking that you won't pay off in the specified time or "surf" the balance to another card. I did payoff a mortgage of about $15k on a card once and paid it off in the allotted time and saved some interest money. The reality is that the interest on such a small amount borders on trivial especially when you consider that it's all deductible anyhow. It's a valid strategy if you have the discipline to follow through, you just have to decide if the juice is worth the squeeze.
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
9y
It all sounds good until none of your plans actually work out, you lose your job, your wife drains your account and runs away with your best friend. Then the collections guys are harassing you and your credit is jacked up. No thanks.
The interest rate is 7%, so if you pay it off in 6 months, you will have effectively paid 3.5%. That is what I would do. Get your head out of the noose as soon as possible.
Crossville, TN · Member since 2017 · 121 posts · 168 votes
9y
@Michael Plante I said no because the deal is straight forward and it is an interest free loan if you follow the terms of the agreement. What happens when you don't follow the terms of your mortgage? People seem scared to take a no interest loan on a credit card but seem eager to pay hard money lenders a few points and 12%. Successful people manage money. Money manages losers.
@Michael Plante I said no because the deal is straight forward and it is an interest free loan if you follow the terms of the agreement. What happens when you don't follow the terms of your mortgage? People seem scared to take a no interest loan on a credit card but seem eager to pay hard money lenders a few points and 12%. Successful people manage money. Money manages losers.
I'm confused
He asked if he should take a 0% credit card and you said no but now your answer seems like you're saying yes
To the people said it short term I have cards to go for a year and a half at 0% interest I have the cash in the bank I can use to pay off if I want to if you got good credit you can easily get $150,000 interest free for year after year after year
Oakland, CA · Member since 2017 · 133 posts · 58 votes
9y
I would say yes, go ahead to get the 0% interest rate credit card only if you are 100% certain that you can pay off the balance before the 0% interest rate expires.
I have been using 0% interest rate credit cards to buy rentals for a few years. I love numbers. I love mathematics very much. I am always able to pay off the balance before the 0% interest rate expires, then get it (0% rate fund) again after paying it off.
If you are not good at numbers, or if you are not sure if you can pay it off before the 0% rate expires, then this may not be something you want to do.
Haymarket, VA · Member since 2016 · 45 posts · 10 votes
9y
Thanks for the replies. The reason for no mortgage is that the rental only cost $54k. Going on 16 years of using credit cards and never paid any interest so I think I have the discipline. The interest saved would only be a couple thousand, which isn't a lot in the grand scheme of things but is 4% or so of the purchase price of the property. Cathy, I think I will start using this strategy regularly if this ends up being a good experience. Personal loan in the future for the down payment with mortgage and then transfer the personal loan onto one of these credit cards.
Investor · Walla Walla, WA · Member since 2017 · 2 posts · 3 votes
9y
One thing to note is there a transfer fee? I was reviewing a similar offer from a Credit card promo and it had a 3% charge of the total amount as a transfer fee. Might not be a big deal, but worth noting.
Haymarket, VA · Member since 2016 · 45 posts · 10 votes
9y
That's the awesome part, 0% interest and no transfer fee. First time I had noticed that before, but there seem to be a few cards that offer this. This one is through Bank of America but citi and I think a couple other offer similar.
Investor · Kansas City, MO · Member since 2017 · 791 posts · 1k+ votes
9y
So long as you're certain you can pay it off in the 15 month period go for it! I've used credit card advances/balance transfer checks as a method for short term cheap financing. The only risk is not paying it off by the end of the promotion period because then you typically get charged the high interest in arrears. As long as you're certain you can pay it off in the promotional period you're set.
One thing to note is there a transfer fee? I was reviewing a similar offer from a Credit card promo and it had a 3% charge of the total amount as a transfer fee. Might not be a big deal, but worth noting.
Lowell, MA · Member since 2017 · 143 posts · 37 votes
9y
Michael Osborne yes do it If you have the funds to pay it off and you're also good at managing money. Just make sure it's paid off before the promotion expires.
Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
9y
I use zero interest offers from my cards all the time. I normally charge all my business expenses on my cc's and always pay off my balances every month, I just make bi-weekly payments, whatever I charged I pay off, so my cc companies extend a lot of offers. I use the cash back, and points that running everything through my cards generates, and use the 0% offers to get FREE money for 12-18 months depending on the card. The cash back is free money also, so if they offer 0% for 12 months, plus offer X% cash back, its like being paid to use the money. To me this is a no brainer, as long as you're in the position to take advantage of it, and not really needing the funds with potential to get caught not being able to pay the payments or balance before the term expires.
Rental Property Investor · Philadelphia, PA · Member since 2015 · 213 posts · 160 votes
9y
This comes down to discipline and budgeting, in my opinion. I started a budget when I graduated college and started working full time (only 3 months ago...). I have a decent idea of how much all my expenses, income and therefore savings will be every month. If you track your finances similarly and are able to see that you have enough to cover the balance + at least a few thousand over, then I would say go for it.
Don't just assume you'll be able to pay it off, make sure you project your savings over time and actually WILL be able to do it.
Oakland, CA · Member since 2017 · 133 posts · 58 votes
9y
I agree with Charles Kennedy , I project my personal income expenses saving all the time, that's how I find out if I will be able to pay off the credit cards before the promotional period end.
Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
9y
I've done this several times. You've got the funds to cover if necessary, sounds like you've got the discipline to get it paid off - I see no downside. Apparently I don't need to see any down sides though since @Anthony Dooley sees them in the most depressing manner possible.
Schaghticoke, NY · Member since 2015 · 216 posts · 57 votes
9y
@Michael Osborne forgive me if I misunderstood or if you already spoke to this, but above you mentioned using a personal loan for the down payment while getting a mortgage. So if you wanted a $100k property, you would walk into a bank asking for a $20k personal loan and an $80k mortgage (not considering closing costs here)? Can you explain how you can do this? I feel like if I tried this the bank would laugh at me since I'd have no skin in the game; they would essentially be providing 100% financing.
Haymarket, VA · Member since 2016 · 45 posts · 10 votes
9y
@Mark Smith So the initial personal loan was used along with personal funds to pay cash for one property. I plan to pay off the personal loan (7%) with the credit card (0%) transfer and then take out another personal loan if needed to purchase another property. The personal loan would be coming from a different bank than the mortgage, so not sure the connection would be made. Plus the personal loan is not secured by the rental property. Again I have not attempted to do this, so that part of the plan might not work. If that is the case I have the funds to cover the down payment. The personal loan would just be there to allow me to keep funds invested in stocks instead of having to sell them to make the down payment.
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
9y
@Michael Osborne it sounds like you are borrowing from the left pocket to put it into the right pocket. Robbing Peter to pay Paul. Like a dog chasing it's tail. There is such thing as over leveraging, but if all of the stars align in your favor, you will have out smarted a multi-billion dollar industry. I wish you good fortune.
Haymarket, VA · Member since 2016 · 45 posts · 10 votes
8y
Its been about 9 months since I posted this question so just thought I would check in. I did go ahead with the credit card balance transfers. I ended up paying them off faster than I had planned, so only saved on the 9 months or so of interest. Probably wasn't worth the hassle, but maybe having the new credit card debt hanging over my head motivated me to pay it off much quicker than I would have with the personal loan. For me this strategy worked out and I would consider doing it again in the future.