Those balance transfer mailings gets pretty annoying but it’s not so bad when they offer 0% APR and 0% Fee. Let me show you how to take advantage of it. .
How’s it going everybody this is beat the bush today i like to talk about credit card balance transfers it seems like every once in a while the credit card like to send you these checks that has 0% apr and then maybe sometimes and 0% fees so it seems like you can write yourself a huge check whatever credit limit you have ten thousand twenty thousand or something
And you just write it to yourself you just deposit in your bank and then you can collect interest on it some people might just take this money and just spend it everywhere but at the end of the promotional period like this one it goes to sixteen point two four percent so you spent all this money and you don’t have any to pay it back and then suddenly you have to
Pay back all this interest it’s kind of like barring from a loan shark you get free money now yes but then you’re on the hook for a lot worse later so today i like to analyze if you get a zero percent apr zero percent interest should you take that chunk out and put it in a savings account and let it collect interest and then maybe at the end of the promotional
Period right before it expires you take that money and put it back then you get essentially free interest on the money that you took out of the credit card usually with these balance transfer thing you can skip to the part where it says interest and fee information it’s always going to look like this this little table box thing for what i do is i don’t even read
This is really confusing the read everything so i just go apr there percent to when okay and then i look at fee is is how much is the fee two percent if it’s anything other than zero i just kind of toss it oftentimes when you get a zero balance transfer check you don’t always get a zero percent apr and zero percent fee a lot of times you only get maybe 0% apr and
Then the fee is like two percent three or five percent even but sometimes you might get 0% apr and 0% for you which is kind of like free money because there’s no fee chart there’s no interest on it so you just get the money you get to hold it but then at the end of the promotional period yeah you got to give it back usually it’s not even the whole year these days
That i see the balance transfer is usually less than that about 10 months and the apr jumps up to something ridiculous after that like 16 1820 percent let’s say your credit-card limit it’s about $15,000 you take out 12,000 you write a check for 12,000 to yourself and put it in a savings account and i say you have a really good savings account one percent savings
Account and so if you had it in there for one full year you get $120 but you can only put it there for ten months and on top of that you probably have to take it out a little bit earlier than that in order to pay for the credit card just you know have a little buffer room so you might not even get ten months maybe nine and nine and a half you cut it really close
But let’s just say you do all ten months and you get a hundred dollars of free money and then you do know that this money here is an interest so you have to pay taxes on it on whatever tax bracket you are at it’s likely probably about 25% so $100 minus your taxes you’re really getting $75 now you have to know if you write a check for the full limit of your credit
Card you can no longer use that for your cashback let’s say it’s the chase freedom card you have a cash back on certain categories if you don’t have any card to replace with that then you’re essentially losing out on these cashback opportunities for example a full year it may not be very hard to spend $2,000 in those various categories that’s maybe like on like
$200 a month 5% on the 2000 it’s already $100 so if you choose to do a balance transfer into let’s say a chase freedom and you have no replacement for the cash back opportunities then essentially it’s a worse offer to just take the money out and not use the card because you’re not going to get any of this cash back anymore let’s say you think aha i’m going to get
Around this by leaving a little bit of room in your credit card because let’s say you have a fifteen thousand dollar limit and you only take out twelve thousand you have still a $3,000 to you know to spend so that you can get cash back but the part here is that the part that you spend you cannot pay off you have to pay off whatever you borrowed first this $12,000
That you borrowed you have to pay that before you’re allowed to pay off the extra stuff that you spend so all the extra stuff you that you spend gets accrued and it’s going to collect interest at the regular rate of your credit card so here’s a diagram to show that this is the limit of your credit card all all of sudden let’s say you carry zero balance boom you
Put 12 thousand dollars in here right and then you go i’m going to do some cash back spending so i can still get some cash back you put something here or let’s say you forgotten you wrote a balance transfer into that card and you spent something small like $100 or $50 here the thing is once you do that you cannot specify what you want to pay off once you put
That in there you’re going to collect interest on that purchase until you finish paying off this $12,000 so that means if you accidentally spend something on this card that you did the balance transfer on you’re going to know about this opportunity here because you essentially need to pay it all back just so that you won’t pay interest on this purchase over here
Because this whole balance transfer thing works on the first-in first-out principle first in here is the $12,000 sicken in here is your subsequent purchase of $50 right and then if you go and pay something it’s always going to pay this big thing here first before you can ever get to the 50 so if you ever make that tiny little mistake of spending something you know
A little bit on there you’re going to end up paying interest on that thing for the whole 10 months if you decide to not just you know cancel everything suddenly so it’s really easy to make that mistake if you have a card somewhere and you kind of forgot about it it’s in your drawer or maybe you put it in your wallet for some reason one of those days where you know
You’re not thinking right accidentally use the card then you’re going to collect roughly 13 dollars of interest on this $100 purchase thus reducing the savings rate trick that you’re doing where you transfer the money into your savings account just to collect interest so this seventy five dollars gets reduced by another thirteen dollars and you know this becomes
A worse and worse deal so what’s the moral the story here yes maybe you can collect up to $150 after taxes or something let’s say that’s like double that but the hassle that you have to go through you have to keep track of it um especially if you’re using a card that has cash back it’s really not worth it but let’s say it’s a card that has nothing it’s a really
Terrible card but suddenly they give you this great offer and it might be worth it to do that if you’re really good with keeping track with money and then you’re not gonna go every go-around spend that you can always going to keep that money in your bank account and then right when it’s due you pay it all off so you got to be really responsible if you’re going to
Take advantage of these balance transfer in order to earn free interest so that’s all i have for you for today i’m sure a lot of people think about the same thing when you get a balance transfer offer that’s essentially free money with 0% fees don’t forget to give me a like over here leave a comment down below if you ever done this writing yourself a check and
Collect interest on it and then pay it off right before it’s due and don’t forget to subscribe over here thanks for watching
Transcribed from video
Credit Card Balance Transfer Hack | BeatTheBush By BeatTheBush