0 Percent Purchase/Balance Transfer Question

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0 Percent Purchase/Balance Transfer Question

Postby Garmel » Mon Jun 22, 2015 7:02 am

I can't seem to find an answer anywhere for this. I have the citi diamond preferred card with the 21 month 0% on purchases and balance transfers.

My question is, if I have used the card for purchases, would it be alright to do a 0 percent balance transfer? Or should the card simply only be used for one or the other and not both? I'm not certain on this because every article about this topic says not to do both on the same card; However, those articles seem to be referring to cards that only offer 0 percent balance transfers, and not 0 percent on purchases.

Would it mess with my grace period at all by using both the 0 percent on purchases and balance transfers at the same time?

Thanks in advance. :)

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Re: 0 Percent Purchase/Balance Transfer Question

Postby takeshi » Tue Jun 23, 2015 8:57 am

Always check your terms. With most cards you lose your grace period when you carry a balance. If you have 0% on purchases then the grace period doesn't really matter since there's no interest on purchases.

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Re: 0 Percent Purchase/Balance Transfer Question

Postby Kevin86475391 » Sat Jun 27, 2015 12:52 am

Yes, definitely do check your terms and I also recommend calling them up and trying to get as straight an answer as possible from them. If necessary run through hypothetical situations with the rep.

However, I've come across a few different ways this is handled:

1) On a new card you'll have an introductory 0% balance transfer and 0% purchase APR. In these situations, in my personal experience, it's usually okay to both do a balance transfer and use the card for purchases. Again, double check first though, and I'm sure different companies have different terms.

2) You'll have an older card, without any intro offers, but they'll offer you a 0% APR on balance transfers. This is the type of situation where you have to be careful. Generally that means that yes, the balance transfer gets a 0% APR, but from then on unless you pay the entire balance (including the transfer) each month, you'll be charged whatever your purchase APR is on the purchases - but not the transfer. So let's say you do a transfer for $100 and make a $50 purchase, you have to pay the full $150 off or you would be charged your purchase APR on the $50, but nothing on the $100. In this type of situation definitely make sure you only do a transfer if your account has a $0 balance before the transfer, then after the transfer DO NOT make any new purchases as it will be pretty much impossible to avoid interest unless you pay off the entire card the next month, including the transfer amount.

3) The other variation I've seen is pretty much exactly like #2 except slightly more favorable. I've had a company tell me (I didn't actually go through with it so I'm only speaking from what I was told and not direct experience) that if I do a balance transfer, then make purchases, I only need to pay the minimum payment + the new purchases amount to avoid interest. So for example, $100 transfer, $50 purchases - if the minimum payment is $25, I would need to pay $75 ($25 minimum payment + $50 for purchases) to avoid interest - not the full $150 like in the #2 example. In this type of situation it would theoretically be fine to make new purchases after doing a transfer as long as you're sure you'll be able to pay off the entire new purchase amount + whatever your minimum is. Obviously I used small numbers for an easier example, but remember if your balance transfer is large, it could make your minimum payment fairly substantial which might in turn make it difficult to pay the entire minimum payment + the entire new purchase amount.

But yeah, definitely make sure to get the straight scope directly from your card company. Also, depending on your situation you might find this strategy effective: Don't do a balance transfer on the 0% purchase APR, but don't put a dime on any other credit cards. Use the 0% purchase APR for absolutely every expense you can and pay all your other cards down as fast as possible while paying the minimum on the 0% APR card. In essence, depending on your situation, this can effectively 'transfer' the balance without actually doing a transfer.

For me this strategy is also great because I make sure to get the 0% into APR card at least a few months before my previous 0% offer expires, giving me plenty of time to run all new expenses on the new one and pay down old ones, plus that way I get reward points on the new card that generally wouldn't have been possible with an actual balance transfer. Since I pretty much can use credit cards for all of my expenses, including utilities and rent, and since I keep even my 0% balance fairly low, it's never taken me more than a couple of months to 'transfer' the amount anyway.

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