Maximise the benifits of free debt on a new CC account ?

G

GreatDane

Registered User
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Hi

Just wondering if anyone has done some work on maximising the benifits of the interest free periods offered on new CC accounts ?

I know this is done regularly in the UK, with far more lenders than offer CCs in the Irish market, but wondered if the principal was still sound.

In a nutshell, one would:

- Open as many new CC accounts as possible (legally), assuming the CC provider offered an interset free period

- Drawdown the entire limit approved, placing it on deposit in the highest yielding (capital secured) deposit account

- Benifit from the interest rate earned on the deposit rate for the period of the CC providers free rate

- Drawdown the deposit & repay the CC account in full, upon expiry of the free interest period on each CC account

- Servicing minimum periods on each CC account along the way

Granted, such considerations as very careful debt management, the stamp duty of €40 pa etc must also be considered.

Thoughts ?

Cheers

G>
 
Garrettod said:
Just wondering if anyone has done some work on maximising the benifits of the interest free periods offered on new CC accounts ?
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As far as I know most or all of these interest free periods only apply to balance transfers and not new transactions. Also, as long as there is any balance outstanding further transactions will attract interest charges immediately. Basically I don't think that your scheme is a runner.
 
ClubMan said:
As far as I know most or all of these interest free periods only apply to balance transfers and not new transactions.
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Actually there are cards out there that offer interest free periods, e.g. Bank of Ireland offers 0% for 6 months provided that you don't already hold a BOI Credit Card - I'm currently in the process of getting one.

The chances of your scheme becoming a reality is VERY slim, as cards that offer 0% interest, generally only apply it to purchases and not cash transactions. There is of course a work-around... though probably it isn't legitimate and probably bordering on money-laundering.

-soc
 
My past attempts to make money from such schemes floundered when the credit limits given on such accounts proved to be fairly measly (€3k).
 
RainyDay said:
My past attempts to make money from such schemes floundered when the credit limits given on such accounts proved to be fairly measly (€3k).
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But are you saying that there are/were cards that charged no interest on cash advances for some period of time in contrast to what I thought and what soc says is the general case?
 
ClubMan said:
But are you saying that there are/were cards that charged no interest on cash advances for some period of time in contrast to what I thought and what soc says is the general case?
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Not for cash advances, but for purchases. I messed around with prize bond purchases (which have a minimum 3 month retention period), so you could effectively get cash in your hands for 3 of the initial six month free period, but the quantities were so low as to make it not worthwhile (given the €40 tax).
 
Would this sort of scheme also have a negative impact on credit rating?
 
This practice of stoozing wouldn't be financially feasible in Ireland because of the very low real interest rates. Even if you managed to generate 100k through various cc's and place it on deposit an inflation rate of around 2.5% would see to it that the effective return would be negligible.The higher deposit rates in the UK and the absence of stamp duty on cc's there makes stoozing a more attractive proposition if you are a UK resident.
 
Re: MBNA and move!

At 0% interest for six months?

No. MBNA's introductory offer for 6 months is 1.9%.

It's not impossible to switch this as a balance transfer to a company offering 0%.

But, as you say, in general, the credit limits are small.

Marion :hat
 
Interesting comments folks, thanks

In particular, interesting to read about the Prize Bond purchases Rainyday, very interesting indeed

It seems to be that the CC market is starting to get more competitive, so with more zero percent offers etc available, this maybe worth revisiting ... assuming you get a decent credit limit etc.

Anything else we could consider besides Prize Bonds perhaps ?

Interest stuff this

Cheers

G>
 
I am in the process of attempting this type of maneouvre, as follows:
I have got my CC limit increased to 15k.
I am applying to Ulster Bank for a CC which will offer me balance transfer at 0% for 9 months.
I will use a CC cheque to clear a personal loan of about 14k and transfer that from my existing CC to Ulster Bank, hopefully for 0% for 9 months. I have been charged €40 by my current CC provider for this year so will not be hit by another by Ulster bank. I am hoping this will save me the 8.4% interest I would otherwise be paying on the loan, for 9 months at least. See any holes in this?

Slim
 
Are there any limits on the size of balance that UB will accept or give 0% on?
 
Hi Slim

Similar thoughts to those of Clubman, me thinks ... two fold infact, firstly will UB give you the same credit limit (I've heard of them offering limits half the size of existing accounts on occassions) & secondly, is there a restriction on the amount the zero rate will apply to (my guess is that it's available for the entire approved UB limit).

I'd also be very interested to hear what happens regarding the bloomin' tax, after all most CC providers still seem to be charging it regardless of the recent announced changes in legislation.

Very best of luck with the above, the theory is solid. I wonder if we went for cards like Tesco Visa, would we get Tesco points on our first balance transfers, or a 1% cash back if we went on Amex Blue etc ?

Cheers

G>
 
I was wondering what is meant by the 56 day interest free period on a tesco credit card when its meant to be 0% for 6 months? I thought you would basically be getting a 0% loan for six months as long as you didn't go over your credit limit?

Any responses much appreciated,

Col
 

When you open a credit card with Tesco, you will be entitled to purchase goods at 0% interest for the duration of the deal - 6 months. For example, you decide to buy an Armani suit for €3000 which also happens to be your credit limit.

Each month you will receive a statement which shows you the minimum amount you must pay - this is determined by the credit card company. Let's say that Tesco has determined that you must pay €100 minimum balance each month.

You pay this amount each month - it is the minimum balance that must be paid. You have a potential 56 days in which to pay this miminum balance - ie from the date of your last statement to the payment date on your next statement.

In effect, you have borrowed €3000. If you don't purchsase anything else on this card for the duration of the deal you will only owe €2,400 at the end of the 6 months. Tesco has given you €3000 at 0% intererest, but they expect you to pay some of the money back during the period.

The clever thing to do in my example would be to pay off the entire €3000 over the 6 months.

Marion
 
Are there any limits on the size of balance that UB will accept or give 0% on?


The banks will not be in a hurry to give high credit limits to new customers. It is likely that they will offer a credit limit in the region of €3000.

But, from experience, I know that this is very flexible if you present your case.

Marion
 
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