Friday, March 2, 2007

Moving Debt Around

I have been thinking about this, and I finally did it. I currently have about $1,200 in debt on one of my CitiCards. Normally, I wouldn't hold credit card debt, but they had a great offer. For 10 months, all purchases were 0% APR if I paid the minimum $20 a month.

For most purchases, this doesn't make sense. A general accounting principle is to match the payment of something to how you use it. Most of the time, you use a credit card to buy something you use immediately, and that item has no real future value. My purchase however was for registration and books for CFA Level I (Chartered Financial Analyst). This was something I figure I could pay for when work started, for which I had no real purpose paying it off now.

When the 10 month free money deal (that's essentially what a 0% APR deal is) came along, I jumped on it. However, as I get closer to the end of the free money period (10 months is over in August), I've been thinking about moving the debt around, and seeing just how long I could keep $1,200 in debt constantly floating out there.

Yesterday, Bank of America sent me an offer that was 0% APR for 12 months on balance transfers and purchases! Normally, if you transfer a balance from elsewhere, they will charge a 3% fee (hidden in some small print on the back side) to do it. BoA explicitly said it wasn't charging any fee for it. So today, I signed up for their card online, obtained $3,000 in credit, and transfered my $1,200 over.

Total Debt Time Left Before I have to Pay: 12 months
Max time debt can be unpaid: 17 months

If I do this enough times, maybe I'll never have to pay!

Update: My initial link for the CFA Institute went to another organization with the initials CFA, the Cat Fanciers' Association. Whoops! :-)

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