Balance Transfer Credit Cards Question

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Balance Transfer Credit Cards Question

Bryan L.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes

I've recently been using some of those "0% Balance Transfer" cards to help fund my deals. They have a 0% introductory rate for 12 months or so, and you pay 3 points up front. That's incredible compared to hard-money. Anyway, I have one of my rehabs finished and it's under contract to sell and will be closing soon. I will use the proceeds to pay off the cards before the introductory period ends (which is soon). Here's my question. When the introductory period ends, and if I have no balance on the card, can I just cancel the card and then apply for the same card again to get a new introductory period? Has anyone done this?

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John Chapman
Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
12y

I did this for years and it's a great way to fund acquisitions and rehabs.

If you cancel after the intro period, I'm pretty sure they won't let you reapply right away, but there's really no need to as there are so many offers out there. Keep the card open as you will almost certainly get another offer at some point.

The trick is to get enough of the cards open both in you and your spouse's name. Once there's a certain number you will always have a certain number of offers outstanding if you want to roll one over. It's really hard to predict when a card is going to give you offers, but I've noticed over the years that the quality and quantity of the offers diminishes as you leverage up more and more.

I always make it a point once a year to call my cc companies and ask for a credit line increase even if it's a just a few grand. Over the years it really boosts your access to credit and, ironically, your credit score as your revolving line % goes down.

The biggest thing to do is always make sure you never miss a payment. I use autopay but even then I had Citi screw me once. I had set it up for autopay, but they did not have it kick in. Their fault and they admitted it. They let me keep the rate but cut my line. It was really scummy. The lesson I learned is keeping making those payments until you see an autopay actually hit. Yes, you might make two payments in one month, but it's better than missing a payment, even if its their fault.

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  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    12y

    i have not done it for my rentals, but did it early in life. I don't think u can get the same card again, but u can move from card to card. I know people that have done it.

    Thats cheap money, my friend.

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    Its unlikely you would need to cancel. The credit card company will send you balance transfer checks with similar deals that they used when you opened the card. The downside is that they often have an up front fee. Points, essentially. You use one of the checks for $10,000 and they put an extra $300 on your balance.

    1Reply
  • Bryan L.
    OP
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Jon Holdman - Exactly right on the fee. Basically, 3 points up front, but paying 0% interest monthly. That's a pretty sweet deal. I currently have 3 of these at $10,000 each. But the 0% introductory period is about to expire. So you're saying that they will likely send me some more balance transfer checks with the same terms (3 points, 0% interest for a certain period of time)?

    1Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    Yep, very likely. No guarantees, because I don't know how they decide to do them. I have a statement from one card that came yesterday that includes some checks. This particular one is at 0.99% until 5/1/15 for three points. Mail from existing cards that says "important information about your account" on the outside is almost always checks. The terms vary. That offer above has a very long term compared to most of these offers - 18 months. So maybe that's why it comes with that 1% rate.

    0Reply
  • Bryan L.
    OP
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Jon Holdman - Thanks Jon. That's great info to know. Any ideas on how to get more than $10,000 available on one?

    Anyone else have any experience with this?

    0Reply
  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    12y

    I did this for years and it's a great way to fund acquisitions and rehabs.

    If you cancel after the intro period, I'm pretty sure they won't let you reapply right away, but there's really no need to as there are so many offers out there. Keep the card open as you will almost certainly get another offer at some point.

    The trick is to get enough of the cards open both in you and your spouse's name. Once there's a certain number you will always have a certain number of offers outstanding if you want to roll one over. It's really hard to predict when a card is going to give you offers, but I've noticed over the years that the quality and quantity of the offers diminishes as you leverage up more and more.

    I always make it a point once a year to call my cc companies and ask for a credit line increase even if it's a just a few grand. Over the years it really boosts your access to credit and, ironically, your credit score as your revolving line % goes down.

    The biggest thing to do is always make sure you never miss a payment. I use autopay but even then I had Citi screw me once. I had set it up for autopay, but they did not have it kick in. Their fault and they admitted it. They let me keep the rate but cut my line. It was really scummy. The lesson I learned is keeping making those payments until you see an autopay actually hit. Yes, you might make two payments in one month, but it's better than missing a payment, even if its their fault.

    5Reply
  • Account Closed
    Involved In Real Estate · Biloxi, MS · Member since 2013 · 76 posts · 30 votes
    12y
    Length of time an account is open affects your credit score. So don't open and close too many too quickly. A lower score could lead to higher rates and possibly less offers.
    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    Utilization and total available credit also affects credit score. If you have a $10K credit line, you do not want max that out. Best if you have a $20K plus credit line and take less than half.

    1Reply
  • John Rooster
    Denver, CO · Member since 2013 · 409 posts · 105 votes
    12y

    As has been said, the upfront fees on credit card cash advances are killers these days. That was not always that way. Ten plus years ago I funded many a house on credit card cash advances. Then I was able to get cash advances, depending on the card, of $5,000 to $15,000 for something like the lesser of either 3% or $50. So only $50 for a typical $10,000 cash advance, which would be 1/2 point. Now I believe the terms are something like the greater of either 3% or $25. So $300, 3 points, for a typical $10,000 cash advance.

    0Reply
  • Bryan L.
    OP
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    I'm not talking about "cash advances" because those usually have very high interest rates. The best way is to do balance transfers off of a line that has check-writing capability, thus freeing up that line for more check writing.

    1Reply
  • Rob K.
    Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    I've played the credit card game in the past. They will give you a new deal if you call them. They are betting on the odds that you will miss a payment or go past the twelve month period. That's when they jack your interest to 30% and cash in. You're beating them at their own game by playing it smart.

    1Reply
  • Mat Lewczenko
    Investor · Lenexa, KS · Member since 2010 · 215 posts · 121 votes
    12y

    I was thinking about this same strategy before actually I did it. I had some of those checks they send that said "must be deposited before xx date". I called the CC company and asked them if they could resend them, they said over the phone that they didn't have that ability. Lo and behold, I now get them at least every other month. So just call and ask for more, they will show up. I am right now refinancing a multi-family that I bought and rehabbed using those CC funds at 3% up front, pulling my credit advance back out from the rehab, increased my equity by 80k and now my CoC returns are up to 30+%. I will be doing this over and over again. It only took me 4 months to rehab and stabilize then refi and cash out my rehab costs plus a little bit more (if I choose) and have a nicely cash-flowing property. Oh and I now have a ton of points/miles, I may take a vacation later this year :)

    2Reply
  • Bryan L.
    OP
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    Anyone else with tips or tricks on this?

    0Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    12y

    @Bryan L.

    Chase Slate has been kicking my door down trying to get myself & spouse set up with their cards. 0% interest, 0 fees on a balance transfer at the time of account opening. I only got a 5k line - boo, but 0 interest is always nice when combined with no fees.

    Within the last 18 months, I completed a 0 interest and 0 (or close to it) fee transfer on a new account with commerce bank.

    PNC also had an offer similar to the commerce one.

    I'm presently torn between maxing out 2 ccs to spend 500 for 0 interest and to apply the funds to mortgages with the goal of paying them off or shuffling around the debt in a year or two.

    The tradeoff is hitting your credit score with maxed out CCs in exchange for free money. If you don't plan on needing a mortgage in the timeframe, it's a decent play.

    0Reply
  • John Chapman
    Investor · Dallas, TX · Member since 2009 · 718 posts · 913 votes
    12y

    One other trick/tip is that business cards do not show up on your personal credit card. The result is that you can take one out and max it out on a good deal without it hitting your credit report. And you do not need an entity to take one out. It can just be "Joe Smith, Sole Proprietor" or something.

    1Reply
  • Account Closed
    Involved In Real Estate · Biloxi, MS · Member since 2013 · 76 posts · 30 votes
    12y

    Credit score is linked to many other costs these days, for example insurance. Maxing out a card may seem like a good deal but you may be unwittingly increasing costs in other areas.

    1Reply
  • Steve Foth
    Sheboygan, WI · Member since 2013 · 107 posts · 18 votes
    12y
    Originally posted by John Chapman:
    One other trick/tip is that business cards do not show up on your personal credit card. The result is that you can take one out and max it out on a good deal without it hitting your credit report. And you do not need an entity to take one out. It can just be "Joe Smith, Sole Proprietor" or something.

    Some companies do report to personal, so make sure you don't grab one of them if that is the end goal.

    I'm personally a huge fan of Chase. I've gotten fairly large limits on 3 cards from them and each one has a higher limit than the last. The customer service is great on their higher tier products and from my experience, getting additional offers has not been a problem. The sign up bonus are high enough to pay for flights right off the bat if you are an out of state investor.

    0Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    12y

    I've been playing the 0% interest rate for years. I have 3 cards that constantly have these offers. If I still have a balance when the time is up I just flip it to a new one. Typically a maximum fee of $75.

    0Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    12y

    @Chris K.

    Which banks / companies presently have these offers?

    thanks

    0Reply
  • Bryan L.
    OP
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @ed

    @Ed O. take a look at creditcards.com

    0Reply
  • Fahd Balile
    Sterling, VA · Member since 2013 · 9 posts · 0 votes
    12y

    i know an even better way to avoid the 3% balance transfer fee. The way that i do it equates to about 8/10's of a % or $8 per $1000 transferred. its also a great way to carry balances they you may not have the funds to pay off yet. PM me.

    0Reply
  • Fahd Balile
    Sterling, VA · Member since 2013 · 9 posts · 0 votes
    12y

    the only reason why I'm asking to PM me is because its too much info to post on the thread. I'm not soliciting any services or anything, just sharing some tricks i've learned with credit cards that i don't think I've seen anyone comment on yet! Anyone heard of American Express Bluebird? Thats basically the key!

    0Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    12y

    @Bryan L.

    creditcards.com really looks like a biased, affiliate site for the companies that show up on their searches. Don't get me wrong, there's some decent info there, but it looks to be a bit biased.

    They don't show the best, no fee 2% cash back card that's out there.

    @Chris K.

    Any chance you care to share who's giving you the 0% offers?

    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    12y

    I did this in the past. I have found that Chase and Citi send me offers about every other month. You can only log into the account online and see what your current balance transfer offer is. With Citi and CapitalOne you can directly deposit the "balance transfer" in your checking account (not sure about Chase). I also have Discover but do not get many offers from them.

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  • Michael Seeker
    Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    @Bryan L. - As somebody else suggested, it's not a good idea to open and close accounts every 12 mos. Once you've got the account established, call every 3-6 months and ask them to increase your limit. If you're paying on time, they'll usually be able to do this no problem. Once you pay off the "loan" just wait for them to send you the blank checks OR you can call them and ask for a balance transfer offer. Doesn't hurt to tell the person in the call center that you've got a balance transfer offer from XYZ Bank and wanted to see if they could match it since they're your preferred CC company.

    I used to do this when I was in college purely for arbitrage - borrow $10K and put it in a savings account at 3-5% interest. Those were the good ol' days, max fees of $50-$100 and interest bearing savings/checking accounts. It was a lot of work for a few hundred bucks, but it kept me busy in between boozing and video games :)

    2Reply
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