While 0% credit card deals are often bad for those who overextend themselves, with a little planning you can make a bit of extra money. There is lots of talk about doing balance transfers, where you take out cash at 0% and then put it into some kind of interest bearing account. These can often be a little complicated, and so far I have avoided them since I don’t quite know the pitfalls.
But there is another method that you can use. Recently we purchased a mattress at Levitz to go in our new house. They offered 0% financing on the purchase for a period of 1 year. We immediately took it, but with one condition– we moved the total amount for the mattress into our ING Direct account. So when it comes time to pay the Levitz bill, we’ll have the amount required plus have made some interest. At $1100, that is an additional $33. Not a ton, but if you do this often it is a couple hundred extra dollars a year.
Here are a few caveats though:
- Make sure that you pay the bill before it becomes due. If you do not, then they will charge you interest from the very first day and the interest rate will often be over 20%.
- If you are planning to apply for a major purchase on credit (house, car, etc.) then you will have increased the amount of debt that you have showing on your credit card report. Realize that those looking at your credit report do not know that you have cash to pay these debts off immediately.
- You must move the money into the interest bearing account immediately. If you do not it will be very easy to forget about it and feel like you have more money available for purchases. It’s also good to move it into an account that you do not frequently touch.