0% Purchase vs 0% BT

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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kelvSYC
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0% Purchase vs 0% BT

Postby kelvSYC » Mon Nov 21, 2016 2:14 am

Suppose I'm looking to make a large purchase (say, $5K or so), and wish to finance it through a new card that advertises a promotional 0% on purchases and BTs. Would it be better for me to do the purchase on that card directly, or to do the purchase on one of my regular cards and BT that amount to the new card?

Also, would it be safe to put on additional purchases or BTs on this new card over the course of the promotional period, in terms of not accumulating new interest? (So, if I have 0% for 6 months, would the strategy be to pay ⅙ of the balance the first month, ⅕ of what's remaining in the second month, and so on)
Current Credit Scores:
VantageScore 3.0 - 760 TU, 764 EX (11-19-16, Credit Karma)
FICO 8 - 747 EX (10-22-16, AmEx statement)
Discover - 750 TU (11-4-16, Discover statement)

Current Credit Cards:
RBC - $8000 CAD
BoA - $13500 USD
Capital One - $2750 USD
AmEx BCE - $4000 USD
Discover It - $8000 USD


badger83
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Re: 0% Purchase vs 0% BT

Postby badger83 » Mon Nov 21, 2016 10:37 am

kelvSYC wrote:Suppose I'm looking to make a large purchase (say, $5K or so), and wish to finance it through a new card that advertises a promotional 0% on purchases and BTs. Would it be better for me to do the purchase on that card directly, or to do the purchase on one of my regular cards and BT that amount to the new card?


I'd use a 0% on purchases card and just make the purchase on that. If you make the purchase on another card and then transfer, you'd have to pay a balance transfer fee.

Also, would it be safe to put on additional purchases or BTs on this new card over the course of the promotional period, in terms of not accumulating new interest? (So, if I have 0% for 6 months, would the strategy be to pay ⅙ of the balance the first month, ⅕ of what's remaining in the second month, and so on)


If you can pay it all off before the period expires, no harm, no foul I'd say. Obviously you have to pay at least the min amount due each month.

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Vattené
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Re: 0% Purchase vs 0% BT

Postby Vattené » Wed Nov 23, 2016 3:18 pm

If the card you have in mind is a Chase Slate it won't have a BT fee, but on just about any other card even with a 0% APR promotion there will be a transfer fee as mentioned. Also, whether you make the original purchase on it or transfer to it, you'll have to get approved for the new card with a limit that can accommodate the amount of the purchase. Given your signature that may not be an issue, but even so be aware of the impact this will have on your utilization. If you decide to make the purchase on a current card then transfer, you may want to apply for the new card before that large purchase gets reflected in your reported utilization. A final consideration is rewards. Avoiding BT fees and interest should be a higher priority, but if making the large purchase on a current card will earn rewards and the new card won't it's a factor to consider.

You can certainly make other purchases/BTs with the new card, but have a game plan in place to pay everything down to $0 before interest kicks in.
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TXviking
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Re: 0% Purchase vs 0% BT

Postby TXviking » Sat Nov 26, 2016 9:19 am

If you don't have a BT fee, I'd go that route. I'm skeptical of apping for cards just for a one-time purchase, even a large one. I've done it a couple of times in the past, but at the time I didn't have a no-BTF 0% BT offer sitting around. If the deal is good enough it may be worth it, but if you can get the same deal with an existing card and avoid apping for a one-time-use card, that may be better.

Just my .02 x :money:

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CarefulBuilder14
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Re: 0% Purchase vs 0% BT

Postby CarefulBuilder14 » Sat Nov 26, 2016 1:46 pm

You're asking a highly quantitative question, but not providing many necessary details.

For how long will you have 0% on purchases? It's not clear to me if 6 months is just an easy hypothetical or the 0% period of a card you're considering.

What rewards would you earn on the purchase? A nice cash bonus can influence the answer. Do you care about price matching or getting an extended warranty on a major purchase?

What BT fees might you pay? Have you asked your existing creditors if they have any special APR offers for purchases or BTs?
Warranties and sketchy merchants: Schwab Platinum
Price rewind: Costco
Travel insurance: Prestige, CSP
Perks: IHG, Hyatt
Rewards/Offers: Discover, Freedom, ED, BCE
Taxes/Misc: SPG

Limited value, might close: Arrival

Might add: First Tech, proper business card

kelvSYC
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Re: 0% Purchase vs 0% BT

Postby kelvSYC » Mon Nov 28, 2016 9:45 pm

To clarify on the issues pointed up in responses:

Of course, the longer the 0% period, the better - the ideal scenario would be something like getting 0% for 18 months, and having my purchase paid off in 18 equal instalments, and assuming that I'd use up the entirety of the new credit in that purchase. So, if I was approved for $7000, I'd make a purchase that is at or near $7000 on that card, and put any amount in excess of that on one of my regular cards as a "down payment" of sorts.

With a balance transfer card, the amount that I could transfer onto the new card would be adjusted down accordingly to account for BT charges, resulting in a larger "down payment". (This is assuming that paying off of the card results in the fees being paid off first, and then the principal; if it's the other way around, then 18 months of interest on the fee alone isn't worth any kind of BT...)

Rewards on this hypothetical card is secondary and only on a "nice to have" basis, though I'd consider those with rewards before those without, for the sake of its usefulness beyond the life of the 0% offer. My regular cards all have rewards for the BT route, and I am getting 0% purchase offers on cards that have rewards (mostly dining/entertainment) - but I am under the assumption that once I put the purchase on the new card, I will make no further purchases on that card until that card is fully paid off in the worst case. (If I understand the 0% on purchases correctly, I can put more purchases on the card as I pay off the card, as long as my payments increase proportionally.)

It's basically a strategy that I've employed on my Synchrony Bank (CareCredit) account, but for "general purpose" use instead of on a specialty basis (I basically opened that account six months ago for a medical expense that was interest-deferred for 18 months for that purchase only; similarly that purchase was about $5000.)
Current Credit Scores:
VantageScore 3.0 - 760 TU, 764 EX (11-19-16, Credit Karma)
FICO 8 - 747 EX (10-22-16, AmEx statement)
Discover - 750 TU (11-4-16, Discover statement)

Current Credit Cards:
RBC - $8000 CAD
BoA - $13500 USD
Capital One - $2750 USD
AmEx BCE - $4000 USD
Discover It - $8000 USD



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