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please can u tell me about 0 interest for 24 months credit card transfers

Discussion in 'Property Finance' started by justine77, 4th Jan, 2016.

  1. justine77

    justine77 Well-Known Member

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    Please can u tell me about 0 interest for 24 months credit card transfers and their benefits and pitfalls and can we keep doing that when the time draws to an end to keep avoiding paying interest untill the credit card debt is paid off.

    someone told me they have credit card debt and i was researching ways to help them have 0 interest so they have a chance to manage to pay it off

    Once the time limit is nearing an end for the various advertised offers re 0 interest credit card transfers, can we then do it again with another offer from a bank for 0 interest credit card transfer, and in this way continue to avoid paying interest giving a chance to pay it off?

    what are the catches and pitfalls of these 0 interest credit card transfers.

    Does anyone else have other suggestions that i can offer them about having lower or 0 interest so they have a chance to pay off this credit card bill.
    Thank you.
     
  2. Davothegreat

    Davothegreat Well-Known Member

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    I've been shuffling between 0% interest credit cards for years and never had an issue. By doing it you can keep more of your cash in offset against your mortgage since it's costing you nothing to maintain a balance on the credit card. No problem to transfer from one 0% card to another provided the lenders are different - I usually transfer with 4 - 6 weeks left so as to never pay interest.

    The best cards to get are the ones with both 0% purchases and 0% balance transfers, that way you can get away with just 1 credit card and you can still use it during the 0% period without paying interest.

    Of course you need to be remember that holding any credit card affects your borrowing capacity for other lending.

    Cheers,
    Dave
     
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  3. montoya

    montoya Well-Known Member

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    Like Dave, I've been doing this for 3 years and its allowed me to slowly pay off some big credit card debt and still invest, as 100% of the repayments are going to the principal, and there is no rush to pay it off other than the increased borrowing capacity it would give me if I had a 0 balance.

    The only other thing worth mentioning is that with every new credit card application, comes a hit/inquiry on your credit file.

    Lucky for me I have not had to make a new application in years since I call and ask for the offers generally only available for new customers, and on the odd occasion they say no I say I want to then close my account and get transferred to another department where they magically have the power to do so. (currently they are HSBC, WESTPAC IGNITE, CITIBANK). I have had other cards call my bluff and not offered me anything after the introductory offer (COLES,BANKWEST, ANZ)
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you forget to make a payment on time once the interest free period will likely cease and then you will be up for 20%+ per annum on the whole amount.
     
  5. wogitalia

    wogitalia Well-Known Member

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    Yeah the catch is that they generally charge interest on a cash advance rate after the period ends, so if you don't re-transfer or pay it off in the time the interest rate can be in the mid 20% range.
     
  6. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    ....and overall it must work in the banks' collective favour or they would not offer it. If you are disciplined though it can be a good thing to pay off card debt.
     
  7. Greyghost

    Greyghost Well-Known Member

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    The banks know humans are creatures of habit.......

    What percentage actually pay off the card and close it down - therefore the bank only makes the one off annual fee? Hardly any I would think..

    So it is a long game for them, Getting your business across at 0% interest is just part of the game.

    I used a 0% credit card once:
    1. Had about 4k left on my uni debt (HECS)
    2. Boss was withholding for this - affecting cash flow
    3. Applied for a 24 month 0% card
    4. Cash advanced on my current credit card and paid that amount out.
    5. Balance transferred that amount.
    6. Cost was the annual $59 fee

    Improved my cash flow by about 50 per week if I remember..
    Obviously at the time I didn't have enough other IP and PPR debts to worry about that this was a serious consideration for me back then hahaha.....
    But in summary, if you have the correct strategy they can be useful - but also dangerous.
    Those "one off random costs" that we forget about or incur that we need a credit card for to smooth things out ARE NOT. one off costs. If you budget correctly you should have a contingency for expenses like these for whatever they are - pet operations, new hot water system at home, new TV....
    To me unless you use a credit card for:
    1. Living off it and maximising your offset interest
    2. Point accumulation and not incurring interest
    Then it is just a cas of bad budgeting or not being realistic with yourself.

    You do not have to have 45 bank accounts to account for every category of expense in your life, birthdays, holidays, entertainment etc.

    You need to do a true and honest budget encapsulating all expenses, even one off ones. Then group expenses such as rego, birthdays, pet operations etc and pool them. Put that amount of cash away so you have roughly accounted for it. The way you will not overspend on entertainment and fall short on real expenses in life and have to find it elsewhere.
    I know people with like 10 bank accounts for life admin, but I think 2-4 is ideal.
    Some run their lives via credit cards but my point is that you do not have to live via the budget - but it is a tool to identify your actual surplus/ deficit each month and compare this to what you thought was your surplus/deficit - it can be a rude awakening...
    Sorry for going off topic guys..
     
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  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I did it once too. I withdrew a $20k cash advance from my westpac card and then transferred the balance to an interest free card for 12 months. After that I did a balance transfer to another card for 2.99% for the life of the balance transfer.

    I can't remember what happened but I missed a payment accidently by a few days and stuffed it all up. So I just ended up paying it out with cash.
     
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  9. headsonbeds

    headsonbeds Well-Known Member

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    The other big catch is that you often pay full interest on purchases. So if you spend $500 and then pay $500 off the balance then that comes off your interest in advance money and you pay 20% on the $500. Lack of discipline is where the banks make there money.

    Also credit growth is an important thing on a banks balance sheet and I'm sure these deals help them with that
     
  10. Azazel

    Azazel Well-Known Member

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    I've been curious about this too, but have never done it myself.
    Funny that this came up as an ad for me on this page:
    cc.jpg
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not a great thing for marginal credit scores generally or specifically

    Both the regular unsecured credit apps,,+ the fact that there is HARD resilient debt at > 50 % of limit tends to suggest to most black boxes that this applicant is so so

    ta
    rolf
     
  12. Redom

    Redom Mortgage Broker Business Member

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    I would consider this in line with your property objectives too.

    There are interest saving benefits if your disciplined.

    If you continually swap, it doesn't look particularly good for a credit file. Lenders that credit score (big lenders and those who insurer all deals) may look for reasons to say no on marginal deals, rather than yes.

    During the APRA changes in August last year, had many who cut out some of their very limited options because of this continual swapping. The insurer didn't like it so wouldn't approve the deal, so it left limited lending solutions to find an appropriate fix.

    If you have ambitions to purchase property within a 6 month window, i'd consider the above costs higher. If not, find the best deal and go from there.

    Cheers,
    Redom
     
    Last edited: 6th Jan, 2016
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