The essence of most of these deals is to put the 0% money in a liquid safe place, so as slimcustomer says the minimum payments are no issue at all. OTOH, if you're not comfortable - don't do it. A mistake or two can wipe out all the profits.

manuel said:The essence of most of these deals is to put the 0% money in a liquid safe place, so as slimcustomer says the minimum payments are no issue at all. OTOH, if you're not comfortable - don't do it. A mistake or two can wipe out all the profits.

So really, if I'm following you properly, CDs aren't quite liquid enough in this case because you'd dip into principle to pay minimums?

That would mean putting it somewhere like ING or ED. In which case, we're talking around $300 a year (or less) per $10,000 (assuming ING is around 3%).

Correct?

In it's simplest form you're right FinFledg - it's only about $300 per year (taxable) for each 10K at 0%. That's presuming you have no balance transfer fees, etc.

You won't get rich doing this - at least I haven't. On the other hand it is free money and worked right over time can make you 3k-5k+ a year with essentially no risk. Depending on your strategy - as well discussed in the OP - you may choose to take credit score risk, etc.

There is also LOTS of execution risk - you do have to make payments, you do have to save the money not spend it, etc.

If you're at all concerned about your ability to make the minimum payments right on time, just determine what you'll need for all of those payments for the duration of the 0% period. Set that amount aside in your Presidential Internet PLUS checking account (which is now paying 3.5%), and have the CC company set up Automatic Payment from that account for the "minimum payment." (Make sure, of course, that you maintain the $1000 minimum balance in that checking account.) You can then invest the rest of your BT in one of those nice 7-month 4.16%-APY CDs from WorldSavings, assuming your BT is large enough (& lasts long enough) to do so. If it isn't, you'll still do OK putting it all in the Internet Checking PLUS account at Presidential. Sure beats ING!

bluegenie, I think it really depends on the other specific circumstances of your situation.

For example, if you had 8 other cards with $10K limits, for overall credit of $100K, then going over $20K on one card only probably wouldn't be a huge deal. However, if your overall credit were only, say, $30K, then it would be a bigger deal.

As for what offers come your way. Keep in mind that it's impossible to have a very rigorous a-b comparison here, since no two cases are alike save for their utilization--there are always other factors at play.

Finally, I will, on occasion, do over 50%. But there needs to be a good reason. Moreover, I have over $1M in credit posting to my report, so my utilization %s aren't that much affected by any one thing I do. I would be even more careful if they were.

(Edited for typos only)

slimcustomer said:workingonit said:If you're at all concerned about your ability to make the minimum payments right on time, just determine what you'll need for all of those payments for the duration of the 0% period. Set that amount aside in your Presidential Internet PLUS checking account (which is now paying 3.5%), and have the CC company set up Automatic Payment from that account for the "minimum payment." (Make sure, of course, that you maintain the $1000 minimum balance in that checking account.) You can then invest the rest of your BT in one of those nice 7-month 4.16%-APY CDs from WorldSavings, assuming your BT is large enough (& lasts long enough) to do so. If it isn't, you'll still do OK putting it all in the Internet Checking PLUS account at Presidential. Sure beats ING!

Don't forget that if you set up a regular payment schedule based on your initial minimum payment, you could lose out milking your BT to the maximum. Many minimum payments will decline over time as your balance is paid off. Continuing to pay off your balance at the orginal payment rate could result in you paying off your balance sooner than necesary.(That being said, I always send in more than the minimium on low rate BT's)

The suggestion I made (above), to set up AutoPay for "minimum payment," would result in ONLY the current minimum payment being taken each month, and WOULD result in a maximum "milking" of the BT.

Actually it would probably be smarter to set up your AutoPay for a "set amount," specifying the amount of your INITIAL minimum payment. This would result in paying more than the minimum (after the first month, anyway), which is said to be better for your credit score. If it gets to the point where the excess payment is more than you want to do, you can always call the CC company and specify a smaller amount to be taken each month.

Slimcustomer, I wonder if we're talking about two different things. When I say Automatic Payment (or AutoPay), I'm not talking about doing a BillPay ("push") from your checking account; Automatic Payment means setting it up through the CC company so that they do a "pull" each month. Most CC companies offer a choice of three AutoPay options -- Full Balance, Minimum Payment or a Set Amount.

workingonit stated:

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The suggestion I made (above), to set up AutoPay for "minimum payment," would result in ONLY the current minimum payment being taken each month, and WOULD result in a maximum "milking" of the BT.

Actually it would probably be smarter to set up your AutoPay for a "set amount," specifying the amount of your INITIAL minimum payment. This would result in paying more than the minimum (after the first month, anyway), which is said to be better for your credit score. If it gets to the point where the excess payment is more than you want to do, you can always call the CC company and specify a smaller amount to be taken each month.

Slimcustomer, I wonder if we're talking about two different things. When I say Automatic Payment (or AutoPay), I'm not talking about doing a BillPay ("push") from your checking account; Automatic Payment means setting it up through the CC company so that they do a "pull" each month. Most CC companies offer a choice of three AutoPay options -- Full Balance, Minimum Payment or a Set Amount.

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Thank you workingonit, we were talking about two different things. You are correct that AutoPay for the minimum payment would maximize the "milking" of the BT. I'm glad we also share the same concerns about not making the minimum payment in regards to it's affect on one's credit score. Although I could see how AutoPay could serve as "safety net" I think I prefer spending the extra time reviewing my statements every month and "pushing" my payments above the current minimum payment. My concerns about excess payments are also not as important on shorter duration 0% BT deals, they really affect low rate life of the balance transfers much more dramatically.

I really wasn't aware of the prevalance of credit card companies offering AutoPay. Only a few of my cards make any allusion to it on their online bill payment section. I searched and found this link where this topic is discussed quite informatively by you. I think that this subject deserves a well written thread of it's own attached to the Credit Card FAQ, even though many people think of it as common knowledge. I for one didn't.

Relevent discussion of utilization ratios in Sunday's Washington Post (in a rare moment of disclosure from Fair Isaac!):

Text

The credit-scoring algorithm looks at the credit utilization rate for each active account and, separately, a person's credit usage for several accounts together, said Craig Watts, public affairs manager for Fair Isaac Corp., the company that created the FICO credit score used by many lenders to evaluate consumer credit risk.

According to Watts, here is what's factored into your credit score:

· Your credit utilization for each active revolving account, such as credit cards and some home equity lines of credit.

· Credit utilization across all active revolving accounts.

· Credit utilization for each active installment account you have, such as a mortgage, auto or student loan.

· Credit utilization across all active installment accounts.

"We have found that both factors -- individual credit utilization and aggregate credit utilization -- have value in predicting future credit risk," Watts said.

fotomaniak said:
Credit utilization for mortgage and installment loan don't seem to make sense to me. Any body cares to explain?

I thought the same thing. The only thing I can think of is that "utilization" on these types of loans would mean "how many payments you have left." Or what percentage of the total loan is still outstanding. Presumably, you're a better credit risk if you took out a $100K loan and now owe only $10K than if you still owed the whole $100K. However, I wasn't aware that credit reports had enough information to actually determine your "utilization" on these type of accounts (original loan balance doesn't report, as far as I know).

Auream has the right idea on installment utilization.

This as generally not nearly as important a factor as revolving utilitzation. But giving it some weight does make sense. I'll be a higher credit risk, all else equal, if I constantly (need to?) pull equity out of my posessions by refinancing them, then if the loan is more seasoned, or I'm paying to principal.