Time to Put the New Card into Business
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the 0% balance transfer business, that is.
Last month, I applied and was approved for a new Citi PremierPass credit card. I usually don’t (in fact never) try to get a card that carries annual fees, but the promotion for this card was too generous to pass over: no annual fee, 15,000 bonus ThankYou points, and, as usual, 0% BT for 12 months. On the second day I received this card, I activated it and made a purchase in order to get the bonus points. Last week, I paid off the balance of the first and only purchase, getting ready to put it into business.
Finally, this morning after some delay, I called Citi to make a balance transfer of $18,500 ($1000 less than the credit limit), payable to me in check. What’s weird is that it was clearly printed on the card carrier that there is a maximum of $250 balance transfer fee for this promotion, but the CSR I spoke with this morning told me there’s no fee. To make sure he got me right, I said the fees I meant was not the interests, but just for doing the transfer. Again, he insisted it was fee free. While, since the CSRs make mistakes all the time, I didn’t really expect to get the loan totally free when the paper says I have to pay $250 for it. Somehow I remember before when I did 0% BT with Citi cards, there was indeed no fees. So maybe the CSR was correct. If that’s the case, the deal is even sweeter.
Currently, I have another on-going BT with Discover card for about $8,000, which expires in June. As I said many times, I like play the BT game and enjoyed the free money made from it, but I won’t get a bunch of cards at the same time (thus all the inquiries are treated as one instead of multiple), just for the purpose of getting the free loan. I usually get a couple of cards in a year (I got two last year) if the terms are right and the cards look nice (like the PremierPass card). The negative effect of applying for a new card every several months on credit score is that I always find this line on my credit reports:
- The time since the most recent account opening is very recent
But do I worry about it? Not really, and the impact on credit score seems to be quite small, as I recently found out from my credit score. Once the promotion expires, I usually move the credit line of the new card to other old cards and cancel the new card if I don’t want to keep it. In this way,
- The total combined credit limit is increased, and
- The credit history is not shortened.
If I do want to keep the new card, the most likely scenario is it will find a place in my drawer collecting dust before I can find any good reason to use it. But I won’t cancel the old cards for obvious reason.
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Forgive me,
I am pretty new here and just learning. So are you saying that you received this card so that you can write your self a check for 18,000 and pay it back within a year? I guess it would help if I knew what BT meant..Hope you have time to explain that one…
thanks
First of all, BT stands for balance transfer. The card I applied (actually, many other cards as well) offered a 0% interest rate balance transfer for 12 months, meaning that I can use the money (up to the credit limit) to pay off any other balances, if any, carrying higher interest rates without paying any interests from the new card. This effectively transfers balance from other cards to the new card. This is quite common for new card offers, though some times there are other conditions such as a certain amount of fees for the transfer.
However, if I don’t have any balances (not necessarily credit card balances), I can still get the interest free money by asking Citi to send me a check payable to me so I can deposit the check into my account and save it for 12 months to earn some interests. Sometimes, the credit card company, for example Chase, can send me a blank check so I can just write myself a check with the amount I want, but Citi insists to send me a check with my name printed on it and the amount specified. For other credit card company such as Discover, they don’t send check and the 0% balance transfer can only be used to pay off balances. In this case, I just ask Discover to send the amount I want to my Citi cards, though the cards may not have any balance on them, then use Citi’s online tool to request a refund check and collect the cash.
In my opinion, 0% balance transfer is OK to play, but have to be responsible of paying the minimum monthly payment. If miss or late once, the whole promotion will be terminated immediately and the regular interest rate will knick in.
Please keep us posted after you made the first purchase. Many card company let you pay off the lowerest interest balance first. Therefor, if you made a purchase $100, after $18000 zero interest transfer, and you want to pay off the $100 when the first bill came. You will find your $100 balance at 15% or higher interest are there, only your transferred balance amount is smaller.
If this trap is not there, you led us to the gold.
Actually, I already made the first purchase and paid off the balance before asking for a balance transfer check. You are right about that any payment will go to the low interest balance first and I learned it from a lesson a couple of years ago when I was doing a balance transfer with Citi. At that time I used the card to make a purchase but somehow the delivery was delayed for very long time and I forgot about it. Then I paid all the balance on the card and asked for a balance transfer. Shortly after that, my purchase was delivered and the charge was put on my card when the product was shipped, but it was after I made the transfer. So I had to pay back the money I borrowed plus a $75 balance transfer to minimize the interests. Since then, I always make sure I don’t have any outstanding balance when I transfer balance.