If you are in debt, or considering going into debt over something worthy, READ THIS POST!!
For years, I’ve been rotating debt by churning (reapplying for) the MBNA Platinum Plus Mastercard and using its 0% for 12 months balance transfer option.
Back before TD bought it, you could actually negotiate with them on your rate and transfer fee. One time, I got 18 months at 0%, paying only a 0.5% balance transfer charge, but those days are loooong gone…
Now, when you apply, you’ll pay 1% to transfer your funds. Great Canadian Rebates is offering $60 cash for applying through their website. Use my link here to go to their website so that I can get a referral please if you’ve never signed up to their website. After signing up, go to the left hand column where under “Categories” you’ll see “Credit cards and Finance.” When you click on there, the MBNA Platinum Plus with the 12 month 0% financing option will show up at the top, offering you $60 cashback when applying through their link. That way, you win and I win! $60 would be the equivalent of borrowing $6K cash from them (as they charge 1% for whatever you transfer over).
You can transfer the cash into your line of credit, a regular bank account, or to pay off another credit card. If you are carrying debt,. this is a terrific option, and remember, it’s not just for 12 months! Make a note on your calendar when the MBNA monthly statement will print that will mark the official end of your 0% deal, and pay it off the cheapest way you can. I pay it off with my line of credit. Then, I reapply for another Platinum Plus card. I may have to call them, as they may not approve me instantly. The system may show you already have a card with them, so you simply call them, and ask them to approve you for as much as possible ($500 is the minimum) and then transfer the old credit limit that you paid off to the new card and perhaps close the old card. That way, you get the promotion and you also get a minimum guaranteed credit limit that you held before.
Example, you get approved for $15K your first time you apply. You have them transfer the $15K to your line of credit, where you’re paying, perhaps as little as 4.7% interest. You’ll pay $150 for the transfer, but with the $60 you will eventually get from GCR, you’ll only pay $90 to borrow the money! You also will have to pay a minimum back of 1%, which in this example, would come out to $150/month. If you are have a significant other, s/he could also sign up, get the $60 and borrow MORE money!
Perhaps you’re not in debt? You could invest the money and MAKE money on the bank’s money! Careful of course, investing in an unguaranteed investment such as mutual funds could be obviously risky, in that you may lose money at the end. Also, it may not be worth it to put it in a high yielding bank account (Tangerine gives 2.1% for the first 6 months with one of their accounts, and then 1.05% after that, so you won’t make much and it may not be worth the credit hit to do this.
Your credit WILL take a hit as your credit to debt amortization will be high (owing $15K with a $15K credit limit for example). I’d also advise that you try to pay it off (if you’re in debt) MUCH faster than paying the minimum. If you pay $150 per month and keep renewing this offer with a new MBNA card every year, it will take you 100 months or 8 1/3 years to pay off at a cost of $702 in borrowing costs. Paying $312.50/month would mean paying it off in less than half the time, exactly 4 years, at a borrowing cost of $374.50-$240 for using the GCR link that assuming it stays at $60 cashback)=$134.50!! Compare that to, assuming your paying it down over 4.44 years (54 payments) in your line of credit at 4.7% (assuming it doesn’t go up–good luck with that “hope”), that would cost you $1630.46, meaning doing this will save you $1495.96 over 4 (or so) years!
Other cards offer 0% but not usually for 12 months, and their payback minimum is more than 1%, so this would be a great option to pay off debt!
Be sure to set up preauthorized payment out of your bank account to pay off the monthly payments so that you don’t end up going past due–that would automatically lead to you forfeiting your 0% rate and jumping up to around 19.9%. You DON’T want to go there!
And NO, you won’t get any points for doing this–but you’ll save enough to get a nice vacation perhaps if that’s where you choose to allocate your savings–or perhaps just put the savings into the debt to pay it off faster!