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Think big!  Why You Should Make Large Purchases With a 0% Balance Transfer Card

In previous articles, we have talked about how to use 0% balance transfer offers to your benefit when you have a large existing balance to pay off on your credit card.  We will now tackle the issue of how to make the most of these 0% interest rate offers for new purchases.  Most credit card companies offer the 0% deal to customers that have excellent credit and the offer is good for one year’s billing cycles.  You can use these offers to benefit you during a time when you will be making a large purchase whether you are buying a new home and need to furnish it, or looking to purchase a car, or buying new electronics for Christmas.  All of these times may be ideal opportunities to use a 0% offer on new purchases.

The example that we will use here will be someone moving into a new house.  There are many expenses associated with this type of transition in someone’s life.  Expenses like these:

• Couches:                                       $4,000
• Entertainment Systems              $5,000
• Dining Sets:                                  $3,000
• TOTAL                              $12,000

If you go ahead and receive a 0% interest rate credit card directly before making these purchases, you will have up to the first date of purchase to use the 0% benefit.  Assuming you purchase all of these items on the same day and purchase all of them on your credit card we will run through an example.  Instead of spending $10,000 in cash on these items, we will use the card and invest the cash elsewhere.  Let’s say that you took $3,000 for the first 3 months and put that away in a low interest bearing checking account to pay for the initial payments and the rest you put into a high yield checking account paying 4.5% for one year and allowed 2 checks a month (there are many of these types of accounts online).  Here is what will happen to your money:

You just made over $236.00 borrowing a credit card company’s money.  For anybody that tells you it’s not worth it, don’t listen.  All you do is write one check a month to the credit card company and you find yourself with a $236 bonus.  Not a bad deal!!  Take advantage of these credit card companies when you can…they would take advantage of you.

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By Woody Alpern

CPA and Registered Investment Advisor