Credit Tarting: how I use the banks to knock a few grand off my mortgage interest every year • /r/fiaustralia Just came across this recently and I was wondering if there are any downsides to doing this for an IP? Will it affect deductibility in any way? Thanks!
The flaw is that the 0% interest only applies to a balance transfer. Using your CC to pay off your mortgage is a cash draw-down, which in most cases is charged at full interest. In many cases cash draw-downs even ignore the 55 day interest free period. This effectively uses an 18% credit card to try pay off a 4.5% mortgage. There might be some cards that aren't subject to this, you'd have to read the (very fine) print.
Reading a bit close, the poster is first drawing credit card A, which will incur interest. He then uses credit card be to do the balance transfer on 0% interest. It might actually work...
I only know one person to do a balance transfer. You could only transfer 70-80% of the outstanding balance (limit wasn't the problem) is this common or unusual? Could leave you stuck with a portion at high rates
There are a few threads on this here already. I did it once when I bought a car. It all went fine for months until I accidently was later with a payment.
Thanks, I understand there is a degree of risk to it (ie forgetting payments and can affect credit ratings) but that all seems controllable to me. Would this be considered "parking borrowed money in an offset"?
It won't matter as long as you are not trying to claim any interest on the card and have no existing borrowed money in the offset.
There is no downsides to doing this for a PPOR loan is there? I cannot think of any and just received an offer for a balance transfer so was looking at doing the following:
And we thought carbon tax was a money-go-round. Realistically, how much difference would a plan like this make?
Perhaps only a couple of hundred dollars a year saved using a $5,000 credit card, more worthwhile with a larger credit card... but considering it would take around 10 minutes work I don't see the harm.
I've recently maxed my borrowing capacity so i decided to do this while i renovate a property. i could only afford 15k cc (bt 80%) 12.8k at 4% (sitting in ppor offset) $512 p.a or before tax $13.10 p/w i got the annual fee waived as well. i also took out another cc for every day spendings i did the numbers ages ago i think it was around $50 a month/2nd month worth of fuel vouchers and money saved using it and keeping pay in offset account maybe another $300-400 p.a? this is hardcore penny pinching haha.
My old boss in the UK did it about 10-12 years ago, he ended up juggling around 100k (GBP) around various cards, had a big spreadsheet to track it all. He made about 4-5k from memory over about a year (GBP) until eventually no one else would give him a card. By the end he was spending so much time trying to keep track of it all, one or two missed payments would have really hammered him. I can imagine trying to replicate that here would have a huge impact on your serviceability having so many "live" cards on the go, not to mention what your credit file would look like. Not sure it's worth the hassle for what you'd make out of it?
I did this many years ago when I bought a car - juggled $20,000 for about 6 months and then missed a payment date by mistake. So I had to quickly pay it out.
