Tuesday, July 19, 2005

Free Money with 0% Interest

Yes, you read right. I said free money. I don't know about you but I get tons of low APR checks from my credit card company every month, some of them offering 0% interest for 6 months. I get them so much that I started thinking of crafty ways that I could use them to my own advantage. If you are a regular reader (haha, all 2 of you), then you'll probably know that I have used those checks to lock in low rates for all of my other debt. That's all fine and good but it's not FREE money.

Well here's my idea. What if you write the check to yourself, deposit it your ING Direct savings account that earns 3% interest (yes, you should have a savings account with ING Direct and if you don't you should email me so I can hook you up), and then once the 6 months are up just pay the money back. Depending on how high your credit limit is that could be a nice chunk of change.

Let's say for example, once I have paid off my credit card balance I will have a credit limit of $23,700 and I write myself a check for $23,000. If I deposit that money in a savings account earning 3% interest over 6 months and I have to pay a transfer fee of $50 max, than I will end up with $305.50 or about $50.91/month. That is $50 a month for doing absolutely nothing! Not bad I say.

Be careful though that your credit card company doesn't charge fees that would work out to be more than the actual interest you would be earning. My card is great in that there is a max to how much they will charge for balance transfers. Others do not have a max and so there would be little point in trying to pull this off. Also, if you don't pay it back on time the interest rate will shoot up to the max they can charge which is usually about 23%, and that would just not be good at all.

I need to hurry up and pay off my credit card so I can start earning free money. :)

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ncnblog said...

Hey, just found your site. I am trying to do the same thing as you are...get rid of all my debt. Thanks for visiting, and I have added you to my links.

Chris said...

I'm sure you have more than two readers since I certainly am not 50% of your audience :P

Regardless, that is a brilliant idea. A buddy of mine and I had come up with a similar one a few years ago but never actually put it into practice.

One thing I will say though, once you are out of debt, you will probably cancel all your cards knowing you NEVER want to get involved in that stuff again and will find yourself saving exponential amounts of money due to the fact that your income shot up MUCH more than your 4% raise (which is pretty standard unfortunately so you know) ever gave you.

Well thats pretty much what happened with me anyhow.

Anonymous said...

I don't have a blog but I will create one soon (its in my to-do list) but I had already posted something as anonymous and want ya to know I'm not 50% of your audience either I'm sure you got lots!

I don't think that I would ever want to use those checks or credit cards again if I got out of debt I feel that somehow something would happen trying to make a profit and I would end up owing them big bucks again! but if it works let us know ; )

Leanne said...

I would have to agree with anonymous, I would think after getting out of so much debt, you wouldn't want to play around with anymore debt. What if something came up that was a real emergency and you couldn't make the payments back. Yikes, that would scare me!!

I think you have a lot of readers too, I know a lot of people lurk and never post! You are doing a great job, keep it up!

stevie.be. said...

crafty! I'M IMPRESSED. thanks for keeping my mind on it's toes. (or something like that) :)

Anonymous said...

If I were you, I'd suck it up and continue to live at home for 16 more months. You know how it is when you move out - stuff always comes up that costs money. You would probably not be able to pay as much down on your debt as you think once you have all those additional bills again.
Or, find some other relative or friend who will let you live with them for free if it's the people who are really driving you crazy living at home.
This is the only time in your life you will have the option of living at home to pay off debt, I would take advantage of it if I were you...

Anonymous said...

wow! it's my first time to read a real life story of somebody who accumulated as much debt as you did just for your regular comsumption..hehe i mean i'm still a student and i've been dreaming of getting a credit card for myself but your blog seems to tell me of the possible things where i could get myself after...hehe anyway im glad i was reminded that i once made a blog for myself..its in http://bluemask.blogspot.com