How To Make Money From 0% APR Balance Transfers
So you’ve gotten yourself a nice credit card or two, and have already started or are thinking about playing the 0% APR balance transfer game. Now, there are two simple but very important things that you need to remember to do: pay the minimum balance every month on time, and pay off the entire balance when the 0% APR period is over on time. Here’s one tip/tool for each:
Pay the minimum each month automatically with Online Bill Pay – I love Online Bill Pay, I don’t know how I lived without it. Say I have a $20,000 balance at 0%. When you get the first statement, you’ll see the minimum payment is usually something like 2% of the balance, for example $400. As long as they don’t change this, then every single payment after that will be less than $400 as your remaining balance decreases. So, just set your Online Bill Payment to automatically pay that account $400 every month, and you’re set!
I do this and it works great. No fuss, no muss. You pay a bit more than the minimum after the first month, but the interest lost is small and it may even help your credit score to pay more. Alternatively, most credit card websites allow you to automatically suck out the minimum payment from your checking account each month. Whatever floats yer boat.
But, don’t rely on these things completely! I still look at the statement every month and make sure nothing funky happened. MBNA Bank recently raised their minimum monthly payments to a higher percentage, so don’t get caught off guard.
Set multiple automatic reminders for the 0% end date. I’ve tried several e-mail reminder services, but I’d found that Yahoo! Calendar is by far my favorite. This is partially because I use my Yahoo! personal e-mail every day as well, and I trust their reliability. There are lots of alternatives – just Google “e-mail reminders”. Or if you use Outlook or other PIM software set it up that way.
First, you must decide when you want to pay the balance off. Call your card issuer twice and double-confirm when the 0% period ends and the last day to pay off your balance before interest starts accruing. It’s usually right before the end of a statement period. Give yourself a buffer. I usually do like 2 weeks earlier. Once I’ve chosen a date, I set reminders for 1 month, 1 week, and 1 day before my deadline (I’m paranoid). I just add an event reminder to my Calendar, have it sent to both my e-mail and a text message to my cell phone. Very convenient.
Then, when the time comes, get your money out of Emigrant or whatever and set an Online Bill Payment for your deadline. That’s it, you’re done! Off to the next free money opportunity.
In the end, it’s just another bill to pay. But all of these things only take about 5 minutes to set up after you get your first credit card statement, and can save you hours of headaches later on. It also saves me from worrying “Is it due soon?” since I can just refer to the Calendar.
(Have you noticed? $25,000 at HSBC’s 4.25% for 12 months is over a 1,000 bucks interest! I hope the fun doesn’t stop.)