If you read this blog, even once a week, you know that I am obsessed with growing my net worth -- $1,000,000 by age 29, baby.
Well, the other day, I got an email from Citi... they were offering, on one of my credit card accounts with them, a 0% APR balance transfer offer.
Ignored the first email. But the second email got me thinking: why not take their money and use it to buy more of the handful of companies I plan to invest in next month?
It's a 0% APR until January 1, 2011 (1/1/2011, which looks pretty) -- but there IS a 3% balance transfer fee that is taken immediately. Still, a 3% fee to use and invest someone else's money for the next 8 months... that's not bad in my opinion.
So I did it. Did not go crazy, but took out a $9,500 balance transfer earlier this evening, plus the transfer fee, which came out to $285.
I've done this before and it was a mistake. But I'm a much smarter investor than I was a year or two years ago. If I can even get a 8% return on this money before I pay it all back on January 1, 2011, it will be worth it to me -- that's a 5% gain.
Where else can you see that kind of return in 8 months? Certainly not in an online savings account (1.10% APY or so). Of course, I could end up choosing a bad stock and being DOWN 8% -- or even much more than that. That's the risk I'm taking.
Luckily I have an emergency fund set up for just this possibility, because I don't want to be in a situation where I am in debt to the credit card company over a stock market gamble gone bad.
Anyway, if you are looking for a 0% APR balance transfer offer of your own to take advantage of, pay very close attention to the fees. It seems like 3% is pretty standard right now for the transfer fee, but some cards have 4% or even 5% in some cases. Plus, look for a "cap" -- some credit cards have a maximum balance transfer fee of say $50 or $75. Unfortunately, mine did not, but a cap is always preferable if you are taking a large balance transfer.
Good luck, and don't do what I did. It's pure stupidity unless you are prepared -- mentally and with a back-up emergency fund -- to handle the results either way.
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