Zero Percent For One Year…
Posted by Stephen on
January 14, 2007
A while back, I mentioned a promotion for a ZERO PERCENT rate Mastercard from Citibank. After hearing about this promotion from my blog, John Chow also applied and got approved, but he got a measly $5000. But like he said, better than no money at 0%. In the meantime, I thought they had forgotten all about me. Apparently not!
While I was at CES, I got a call from Citibank telling me that I was not only approved, but I was approved for a $10,000 line at 0% for one full year! That means that I get rent free money till January 2008! The current promotion they are doing is still good, but you get dinged 0.9% now. Still a good promotion, but not as good as 0% of course.
Although it is 0%, it isn’t totally free. Like a credit card or loan, there is a minimum payment each month, usually about 3% of the balance. I asked Citibank to transfer the full $10,000 to my CIBC VISA. Since my VISA is nearly paid off, this will trigger a positive balance. I will then transfer that money off my VISA to pick up some RRSP’s this year. I will then use the tax refund triggered from the purchase of those RRSP’s to pay off the balance of my card when the time comes.
In the meantime, I’ll probably throw it into a PC Financial Interest Plus Savings Account that is currently offering a 4.0% rate on a minimum $1000 deposit. Plus, at the end of the year, they will apply an extra 0.03% on the daily closing balance over the year as a bonus for letting the money stay put. If I put just $5000 away, that will be an extra $205.24 that I didn’t do anything for.
The only downside to this card is that it has a very high interest rate of 18.9%. If the balance isn’t paid off in full by the maturity date, the remaining balance is billed at this rate when the 0% promotion ends. I’ll probably just end up canceling the card unless they can offer me a better rate. It never hurts to ask.
Geesh you guys and your credit cards
And John complaining about only getting $5000 limit! My only creditcard now has a limit of $1500 and it’s staying there. I have no need for a huge limit. I don’t like using them all that much anyway.
Yes credit is a good thing as long as you’re good with it but you don’t really need it unless a) you do online purchasing b) need to reserve things like travel tickets or hotel reservaitons or c) use it as an emergency fund for repairs/gas etc.
*shrug*
In this case, both of us are using the rent free money to make money off of it. It is literally, the opposite of what most people do with it which is LOSE money.
By taking advantage of the 0% loan, we have taken money out of the governments pocket by buying RRSP’s that trigger tax refunds. When I transfer the money to my CIBC VISA, I get to cash advance the overpayment, which will be well over 7 - 8 K of interest free money for a year. Taking part of that for RRSP’s, then reinvesting the refund will allow me to not only pay off the balance of $10K when the time comes, but it will also allow me to make a profit by making the money work for me for4 a year interest free.
If I put away 5K for a year, I’ll earn about $205 in interest at 4%. Most people pay that much in interest charges each month with their 18.9% high rate cards. Some even pay 21%.
If a loan makes you money, it is GOOD DEBT. If a debt has you out of pocket each month then it is BAD DEBT. A credit card is usually bad debt for most people, but not for me.
That makes sense.
I would like to get out of debt. Debt is no fun and is depressing. Though I won’t attempt what you and John have done. I’ll just keep my little limit and work with it and find anothe way to bring in extra money.
If you have credit card debt, I recommend negotiating for a lower rate immediately. I have cards that give me 10.9%. They exist and most people just accept what they are offered. Doesn’t hurt to demand what you want especially when it comes to interest rates on credit cards.
Dang, I just lost a comment on this post as I couldn’t see the captcha image in FF. Basically I said that I play the 0% game myself and have $12k sitting in my ING Direct account courtest of AmEx.
I also mentioned to Tyler that I have posts on my site about calling your credit card companies and asking for a better rate.