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Last edited by BohemianSiren; 10-30-2008 at 12:53 AM.
0% ??? If that's true, max it out and put the money in a high interest savings account for 10 months. I'm almost sure there's a catch somewhere in the fine print, otherwise your credit card company is giving out free money...
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
- Dr John Zoidberg





That's not stupid at all. it's what you SHOULD do.
Look like a woman
Think like a man
Act like a lady
Work like a dog
- My Great Grandmother Bessie's Recipe for Success
My credit card's interest rate is about 13% p.a. which is really low. I would bet there's some details about your credit card that I'm unaware of which prevents people getting free money by using the bank's money to earn interest in a savings account... I'd be glad to be wrong though![]()
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
- Dr John Zoidberg



Let me be the first to inform you that you are wrong. Unless you are living under a rock, you should know about 0% Balance Transfers for an introductory period (sometimes upto 18 months). Smart Savers have utiliized this feature to make free money for more than four years now.
There is no catch, except research have proven that when given free money Average Americans will spend it rather than do arbitrage (i.e borrow at 0% and save at 5%). So Credit Card companies do make plenty of money on this (Of course after the Introductory period, rates shoot up pretty high).
Also, if you miss a single payment, your rates resets to a higher level.
But, if you are diligent, this is actually free lunch that you are alluding to
If your interest rate is 0% and the money in savings is earning 5% its smarter to put the money in savings, earn interest on it and then use it to pay the CCs off. Youre making money this way - if you just use it to pay the CC off youre losing that 5% you could have been earning. Makes sense to me.
I say youre on the right track.



That only means you have a fantastic credit rating. You do know that banks currently borrow at 2% from FED and 2.6% from other banks right? So, even with someone with good credit, they are making the 10% minus 2.5% or 7.5% spread.
If you run the numbers and the average person's ability to miss a payment or spend that money, they come out ahead (At least in theoretical models developed by banks)
It's definitely a good idea to save. At least save enough so that you have a good emergency fund, so that you wont' have to use your credit cards once they're paid off (it took me 3 times of paying them off to finally figure this out, doh!)
And 0% is not uncommon. I had a 0% interest rate on my card (with no fees) for over a year for a balance transfer. That's how I paid off all my debt last year. And as far as the rates shooting up, mine is still only 9% even after the 0% expired (however, I have really good credit).
I believe you Dottie and you have my support
I too am trying to pay off my credit card, and saving at the same time. My mom keeps telling me to not save and pay the credit card off as quickly as possible, but I feel better doing it my way. Like someone said already in the thread, I paid my credit card off before and then had to use it again because I didn't have any savings, and got myself BACK into debt. This way, it will take me longer to get the card paid off, but I think in the long run, it is a much better idea to have some savings too.
Last edited by Starfire; 05-12-2008 at 07:48 PM.
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
- Dr John Zoidberg
http://www.news.com.au/feature/ranke...012587,00.htmlKEVIN Rudd and Wayne Swan have begun the Budget hard sell, saying that although it will help keep rates under control, subsidies for the duct tape which keeps the rocks Australians live under securely attached to their heads will now be means tested. "Across the board subsidies unfairly disadvantage low income earners since the subsidy is priced in to the cost of necessities by retailers, adding to inflation" said the treasurer.
Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
- Dr John Zoidberg
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