Balance transfer self pay

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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creditguy123
 
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Balance transfer self pay

Postby creditguy123 » Wed Mar 18, 2015 7:58 am

My CC issuer offers the option of making a balance transfer in the form of a personal loan to my bank account (offering 0% APR 18 months). I don't have a remarkably high balance (less than $2000). What is to stop someone (theoretically) from requesting $ via BT to pay off that same CC to therefore take advantage of the temporary 0% APR? The BT rules say you can't transfer balances from other CCs issued by the same bank, but this is the same card. Is this a loophole to potentially lower the card's APR to 0% on the existing balance?


augiedog
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Postby augiedog » Wed Mar 18, 2015 11:58 am

creditguy123 wrote: What is to stop someone (theoretically) from requesting $ via BT to pay off that same CC to therefore take advantage of the temporary 0% APR?


The 3% transaction fee; the idea is you won't take out money you don't need if you're not willing to pay for it, and that you will pay for it if you do need the money.
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Postby CarefulBuilder14 » Wed Mar 18, 2015 12:05 pm

Which issuer and card are we talking about?
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creditguy123
 
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Postby creditguy123 » Wed Mar 18, 2015 1:27 pm

It's CitiBank. Also, the 3% fee is potentially less than the APR interest on the balance that would then be subject to the 0% promo rate.

augiedog
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Postby augiedog » Wed Mar 18, 2015 8:53 pm

creditguy123 wrote:It's CitiBank. Also, the 3% fee is potentially less than the APR interest on the balance that would then be subject to the 0% promo rate.


That's the trap. After 18 months you are subject to whatever interest rate they assigned to you since the day you transferred the money. You will be paying that plus the transfer fee (which is also subject to interest) if you let a payment slip or don't pay it off in time. It's not free money: you're paying them for it, and they're eager for you to take it.
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Postby JamesMS » Thu Apr 16, 2015 1:55 pm

augiedog wrote:That's the trap. After 18 months you are subject to whatever interest rate they assigned to you since the day you transferred the money. You will be paying that plus the transfer fee (which is also subject to interest) if you let a payment slip or don't pay it off in time. It's not free money: you're paying them for it, and they're eager for you to take it.


I agree. Citi will be hoping that you fail to pay off the "loan" within the 0% grace period.
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Postby takeshi » Fri Apr 17, 2015 8:44 am

(nevermind)

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Re: Balance transfer self pay

Postby whit » Sun May 31, 2015 12:17 am

Honestly it's not as bad as a business owner applying for a 0% apr for 12-15 months with a high limit and "charging" that card only to pay the 2-3% merchant swipe fee. Definitely a cheaper way to go about cash advances.

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Re:

Postby Gamma » Sun May 31, 2015 1:06 am

augiedog wrote:
creditguy123 wrote:It's CitiBank. Also, the 3% fee is potentially less than the APR interest on the balance that would then be subject to the 0% promo rate.


That's the trap. After 18 months you are subject to whatever interest rate they assigned to you since the day you transferred the money. You will be paying that plus the transfer fee (which is also subject to interest) if you let a payment slip or don't pay it off in time. It's not free money: you're paying them for it, and they're eager for you to take it.

I think you got that mixed up with store credit cards. Store credit cards offer promo periods and charge you deferred interest on the day you made the transfer and unless you pay it in full before promo period expires, that deferred interest is added to your balance. After the promotional period with most major banks (Citi in this example) you are charged interest beginning the day AFTER the promo period expires. The only thing you pay for that promo period is the balance transfer fee (in this case, 3% for 0% interest for 18 months.) Banks don't charge you interest on the balance transfer fee itself.



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