Leveraging Credit Cards

[Ed O.]

I have some decent offers on my credit llines in the pipeline and was wondering if anyone else is seeing / receiving good deals / offers.

one is 0% for 12 months (PNC), 1% transaction fee capped at $100 the other is 0% for 18 months with 3% unlimited transaction fee (Discover).

Shifting the balances away from private loans would yield a really good savings.

I'm thinking of putting a few apps in before tapping these lines. I have multiple contingency plans for transferring the debt before the clock runs out. I'm aware of the risks and have helped friends pull of various arbitrage schemes in the days where the rates were 0 and transaction fees were unheard of.

Thanks for any ideas and insights.

[John Chapman]

I've done this a lot in the past, not as much as I used to. A few observations for what it's worth. First, I think these make a lot of sense if you've got a decent job and can float the payments. I'd be a little more leery without a steady income. (Realize this is probably a really obvious observation) Second, you need to be careful to preserve your credit score so that you can refi or transfer to a new card if you need to. For example, business cards don't go on your personal credit report, which is helpful. Also, unless you're flipping and clearing each line after each transaction, keep each line below 50% of the limit. Even one card over the 50% make can drop your score precariously. Second, I'd identify a group of them and apply for them all on the same day. Third, I actually believe it is a great process to go through every now and then (adding access to credit.) It might ding your credit score a little in the short run, but adding more and more open credit in the long run I believe boosts your score (e.g. larger lines, lower utilization rate) and provides yet another safety cushion. (obviously, not suggesting use this as your sole safety net, as there's nothing more safe than a cash cushion) As an aside, I make it an annual thing to call all my credit card companies to ask them to boost my lines so as to lower my utilization rates. Fourth, even if something goes highly awry and you can't transfer or clear the line before the rate resets, it's my experience that particularly now the standard rates are pretty low (12-14%). Not a rate you'd want to carry long term, but not something that will kill you in the short run. In sum, I think they are like any other loan product; if your cost of capital is less than the return you can make (and you can adequately adjust for risk) then they are are very useful tool. Just my two cents.