Ok, there are some good thoughts about tax issues in priuschat, let me see what you all think about this: I was sitting in a doctor's office waiting room last week and read a short article that said as follows: given recent higher rates on home equity lines, you can transfer a home equity line of credit (HELOC) balance to a 0% introductory rate/balance transfer credit card and save some money. I have about 80k on a variable rate HELOC that I end up paying about $500 in interest on each month at today's rates. I would love to be able to transfer some of this balance to a 0% credit card as the article suggested. But in checking out various credit card offers online, I can find plenty that will charge you 0% interest on balance transfers for 12 months, but I can't find any that would actually allow me to transfer the HELOC balance to the new credit card...they only allow you to transfer another credit card balance for the 0% rate. What this article suggested seems too good to be true. If you could transfer HELOC balances to 0% cards, you could pay no interest for the period of time that you get the 0% rate, and then just find a new card to transfer the balance to and do the same thing. I guess I'll try to make this appy to Prius owners as well: if you have a loan that you took out when you paid for your Prius, could you transfer that to a 0% card for a year and save yourself some interest expense? Any thoughts? Was what the author suggested possible? And if so, any idea of which CC company might offer a card that lets you transfer other loan balances, not just other credit card balances.
Not precisely an answer, but a warning about how balance transfers affect your credit score: http://www.faqfarm.com/Q/How_often_should_...transfer_offers If it's going to save you a lot of money and you can live with the impact to your credit, then just be careful to not use the balance transfer card for anything other than holding the balance of your debt.
<div class='quotetop'>QUOTE(4chi @ Sep 5 2006, 03:43 PM) [snapback]314794[/snapback]</div> That's because they're not giving anything away. Banks are in the business of making money by charging interest (and in the case of credit cards, obscene interest). They'll give a short period of zero interest on transfers of credit card balances, because they know that if you are carrying debt, you'll continue to carry debt, and when the introductory offer ends, you'll be paying them the interest you were formerly paying to the other bank.
NOT a good idea. If for any reason you miss or are late on a payment, the credit card company can raise that 0% interest to over 20%. And I doubt that 0% is forever. Probably just a few months to a year. Then you'll be paying higher than your current home equity loan. Better to refinance your house than put $80,000 on a credit card.
<div class='quotetop'>QUOTE(Godiva @ Sep 6 2006, 01:57 AM) [snapback]315035[/snapback]</div> Well, this approach would certainly not be for someone that can't manage their bills or credit cards. But if I don't miss any payments, and if we assume the 0% rate was for a year and that it then kicks up to 20% at the end of the year, I'd just pay it off, with my HELOC, at the end of that one year and then cancel the credit card. Thus, I should have been saving whatever interest I would have been paying on the HELOC for one year (less the amount I'd save on the tax deduction). I think the CC companies offer these 0% introductory and balance transfer rates to get people to switch over to their card so they can zing them on interest once the 0% rate expires, but it seems that if you carefully pay attention to everything you could zing them back by just cancelling once the 0% expires.
<div class='quotetop'>QUOTE(Godiva @ Sep 5 2006, 10:57 PM) [snapback]315035[/snapback]</div> I agree 100%, and keep in mind the banks and credit card companies have a couple of dozen ways to make sure you will do something to get your rates raised. Such as making your payment due on a different date every month.
<div class='quotetop'>QUOTE(4chi @ Sep 5 2006, 06:43 PM) [snapback]314794[/snapback]</div> I did exactly that. It worked like a charm. I never paid interest. I took out a loan for $26,500 to buy my Prius and in a week I transferred that balance to my credit card. I didn't pay it off completly in 1 year so I just transferred the remaining balance to another 0% card. I will be making my last payment next month. They never changed my due date and I never missed a payment
I don't know to what degree this affects the bottom line on your tax return but I believe that one is able to write off their home equity interest that's paid throughout the year on their year end tax return. You can't write off personal credit card interest paid throughout the year so if you transfer your balance to a 0% card and then the interest kicks in after the introductory rate, you're probably going to be in worse shape down the road.
<div class='quotetop'>QUOTE(4chi @ Sep 5 2006, 06:43 PM) [snapback]314794[/snapback]</div> You can do this. For a specific credit card, Discover did this for me, but I had that card for over 10 years and have never carried a balance. They didn't change the payment date or anything else. Also, I had the 0% interest for over 12 months. Just pay attention to the fine print.
<div class='quotetop'>QUOTE(Somechic @ Sep 6 2006, 12:17 PM) [snapback]315204[/snapback]</div> Thanks for the info...I called Discover and just applied for their Platinum card. 0% APR on balance transfers from now thru Oct of 2007, and I can make balance transfers with no fee thru the end of this year. Plus, they will take a balance transfer of anything with an account number: car loan, HELOC, medical bill, what have you. So I'll see what they approve me at and transfer it over. Wish me luck.
<div class='quotetop'>QUOTE(4chi @ Sep 6 2006, 05:24 PM) [snapback]315414[/snapback]</div> why wouldn't they? I do that all the time
<div class='quotetop'>QUOTE(maggieddd @ Sep 6 2006, 05:47 PM) [snapback]315428[/snapback]</div> You do what all the time? Most cards i could find would not transfer anything other than other credit card balances.
<div class='quotetop'>QUOTE(4chi @ Sep 6 2006, 08:32 PM) [snapback]315509[/snapback]</div> and all cards I used told me that as long I have an account number they can transfer a balance, doesn't matter if it is another cc or a loan. As long as I can provide them the account number than can do the transfer. There hasn't been a single one that told me I couldn't do that. I've used Capital One, Citi, Chase, First Bank of Omaha
http://www.fatwallet.com has a decent (used to be better, really, but still a valuable resource) finance section - the 0% balance transfer idea works well for people who can be damn sure they will be able to make the payments, and make them on time. If you've got the HELOC and have no intention of closing it, then you've got appropriate backup - go for it!
I think the other key to this plan is to make sure you don't charge anything else to the card while you are letting them carry you on 0%. It would seem that if you charged a tank of gas or dinner out after a month or two, all your payments apply toward the 0% portion of the debt while that new charge begins to collect interest every month. They only pay off the new stuff after you clear off the whole balance of the 0% transfer. It's an exciting day in America when you can get a new credit card, transfer $80k to it 0% for a year, then repeat, repeat and repeat. One nice big shell game. The best part of the equation is the fact that the CC companies are willing to risk not getting your interest for this time on the bet that you'll spend yourself to the point of not being able to continue in your plan.... and that one day (on average in America), you will succumb to paying high interest rates on a large balance over a lot of years.. aka, getting caught in the snare they've set.
<div class='quotetop'>QUOTE(daronspicher @ Sep 7 2006, 08:39 AM) [snapback]315648[/snapback]</div> Absolutely, I agree... this card is never going to be used except for the balance transfers prior to the end of this year. Maggie, that is interesting. I've never done this before, I've always paid off my CC balance monthly, and the online offers I saw all talked about transfering CC balances only. And another thing I realized, reducing the deduction I take from paying HELOC interest may make it more likely i get the full Prius tax credit and won't be subjec to the AMT/TMT, (assuming, of course, that my freakin' Prius ever arrives)! Let the shell game begin.
<div class='quotetop'>QUOTE(4chi @ Sep 7 2006, 11:25 AM) [snapback]315724[/snapback]</div> Don't just read online, you call them and give them account number and bank name. Whether it's a credit card account number or loan account number it's still with a bank. You borrowed money either way and all they want is transfer money to that account so you have a balance with them. They don't care what it is as long as they gain you as a customer.
<div class='quotetop'>QUOTE(4chi @ Sep 7 2006, 08:25 AM) [snapback]315724[/snapback]</div> Do they have a limit they will let you transfer? May have to get a couple of cards in order to transfer the entire amout and that will take some amount of juggling to get those paid each month. Wildkow
Man, as I look into this further, it seems like there are people that use this 0% balance transfer game to totally cash in. Check out Stoozing Not for the faint of heart of those without attention to detail, but intriguing nonetheless. Basic idea: get a 0% introductory rate card, take money from that card and invest it in a completely safe investment (CD, savings account), at the end of the introductory rate, take the money from the investment out and payoff the card, or transfer it to another 0% balance transfer introductory rate card.
4chi, I have been playing this 0 apr game for years, as have 100's if not thousands of others. One hotbed of discussion you may want to check out is FatWallet. Search the forum and read. The **are** pitfalls to be aware of, so go slow in the beginning. And yes, although it has been a couple of years since I carried a home mortgage, I did exactly what you are considering. The link you provided is a really good basic tutorial. The experts at FWf carry it to amazing lenghts. One guy has 500,000 in 'debt'. Lots of people carry $100,000 - 200,000. I'm kind of lazy, so often have 50,000 - $100,000.
