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Making My CC's Work For ME - Please Read


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Hey Guys,

Ok I just got the final card I applied for. The card is AT&T universal with 4000 limit. I called to get the card activated and the rep stated that if I ever need cash, AT&T would transfer the cash to my account and they would treat the transaction as a balance tranfer. Mind you AT&T has promotion going on for balance transfers 0% until April 2005. My mind started working at this point.

What if I had AT&T transfer $1200 into my account and two more CC companies to the same (they all have similiar offers with balance transfers). After the $1200 initial deposit from each credit card, I will throw the cards in the back of my drawer and not charge them again until they are PAID OFF IN FULL (APR 2005). I will have $3600 (1200x3) at my disposal to invest in an interest bearing account. From this account, I would make the min monthly payment for each CC until March 2005. Apr 1st 2005 I will pay off each CC in full and the remaining balance is strictly profit for me. Is this a good idea or not? Please give me your opinions..

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Yes you can pull this off if you are really careful. Even one slip up, one day late, for whatever reason, reinstate the regular interest rate (9%-14%), and a second late payment will put your interest rate at default rates (23%+), and those late payment charges or overlimit charges will wipe out any savings you think you can get.

For this very reason, I am not tempted by the 0% balance transfer offers. The risk is too high, and the potential return is just pennies -- what interest rates are you going to get on these deposits? 0.25%? 0.5%? I bet it's not more than that.

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It's probably not worth it for such a small amount of money and for such a low yield. I think the best way to go is to have a home equity credit line instead of a mortgage. Then using the free loan to temporarily lower the monthly payment of your existing mortgage at least yields (in my case) a 3.75% return. Much better than I could get from anywhere else that's as safe. My credit limit is fairly high, so it's well worth it for me to take advantage of such offers, and I do.

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