Background
Current income - $37,000 (changing to $65,000 in July) 
Credit Score - 845
Debt - $0 (I have some student loans that total under $120. I have paid them down to that level and they are not due until 2023. I've been letting them sit to increase credit length.)
Credit Cards - 3 (all paid in full each month)
Savings - $35,000
Credit limit - $45,000 total among the 3
I've been having issues with my current motorcycle and was thinking of getting a new one to hold me over. The new one would be something relatively inexpensive in the $3-5K range. Eventually, I'd gift it to my youngest brother in a year or two. Looking into things, I was surprised by how much higher in % loans were for motorcycles vs cars.
I received a flyer in the mail for a NFCU card with 0% APR for 12 (might have been 15, can't find it at the moment) months, and no balance transfer fees. I am already a member, I do not have a CC with them currently. I'm not sure I entirely understand balance transfers, and was looking for guidance.
The biggest question, could I purchase a motorcycle by using one of my credit cards, and then transfer that balance to the NFCU card; and then pay monthly before the time expires? Rather than paying for it all up front, could I use this option to pay for it over a year rather than applying for a loan?
Is this one of those technically correct, but real world dumb type things?
Are there any hidden consequences to doing this?
If I do a BT, how do they pay off your other card? Do they mail you a check and then charge you that amount on their card? Do they directly go through the other lender and discuss it? Can they turn down a balance transfer?
Thank you in advance!
Basically, yes, this is doable and not underhanded.
One key key point will be whether the motorcycle dealer will want to charge extra to use a credit card. Depending on the rewards, and because you intend to use a $0 fee, 0% APR BT, the extra fee may still be acceptable to you.
The card you charge the purchase will typically have a grace period, depending how soon the statement prints after your purchase, until the payment is due. That is your window to most easily complete the BT.
NFCU will need to approve you for the card if you don’t already have it, and the BT offers like that often have an expiration date, you must initiate the BT request before that expiry.
You request the BT and usually tell the bank which CC number and bank you want to pay off. Sometimes you can get a check to checking. I just did a BT through Discover, to checking, and they used the same checking account my auto-pay is on, did not ask me to input the account, and the funds were pending in my checking the next day.
Having gone through all that explanation, there are subtle differences how each BT will work. If you have never done any BT, read the fine print and methodically go through the steps. I recommend anyone who thinks they might ever want to do a Balance Transfer should go through a very small one first, say $200, just to go through the process. I can try to describe here, but nothing teaches as well as personal experience and a fee for a $200 BT is a good education investment.
I must be missing something here. You're in excellent financial shape from what you've written. I can't see a reason why you wouldn't just buy the bike out right in cash. Why bother with this strange 0% BT stuff?
@digitek wrote:
I must be missing something here. You're in excellent financial shape from what you've written. I can't see a reason why you wouldn't just buy the bike out right in cash. Why bother with this strange 0% BT stuff?
Credit is a financial tool. When a bank offers no fee to make a loan, and no interest charges for a year, that is a free tool you can utilize.
Sure, OP could probably pay with cash, but using this loan puts a balance on a card, and reflects in monthly payment experience over the 12 months. As a way to continue building a strong credit profile, with no interest cost, it has value as a strategy.
@NRB525 wrote:
@digitek wrote:
I must be missing something here. You're in excellent financial shape from what you've written. I can't see a reason why you wouldn't just buy the bike out right in cash. Why bother with this strange 0% BT stuff?Credit is a financial tool. When a bank offers no fee to make a loan, and no interest charges for a year, that is a free tool you can utilize.
Sure, OP could probably pay with cash, but using this loan puts a balance on a card, and reflects in monthly payment experience over the 12 months. As a way to continue building a strong credit profile, with no interest cost, it has value as a strategy.
+1000
This is what the average consumer doesn't understand. This is exactly how you use credit as a tool and to your advantage! Use the banks money instead of your own. Make those CCs work for you, not the other way around.
Bravo NRB, on the excellent post!😀
We Run Things Things No Run We
@NRB525 wrote:
@digitek wrote:
I must be missing something here. You're in excellent financial shape from what you've written. I can't see a reason why you wouldn't just buy the bike out right in cash. Why bother with this strange 0% BT stuff?Credit is a financial tool. When a bank offers no fee to make a loan, and no interest charges for a year, that is a free tool you can utilize.
Sure, OP could probably pay with cash, but using this loan puts a balance on a card, and reflects in monthly payment experience over the 12 months. As a way to continue building a strong credit profile, with no interest cost, it has value as a strategy.
Let's get something straight right away, you are stretching this right here. The advantage to putting this motorcycle on a 0% BT card over paying in cash is that it would give him 12 months of positive credit history on a card? He can do that without putting a single dollar on a 0% BT card or actually borrowing a single penny.
There is a reason banks give out 0% BT offers to pretty much anyone who will take one, it is an obvious trap that they hope you fall into.
The only real and tangible benefit I could see to doing this is that it would allow him to keep his money for 12 months instead of using the banks. If that money was invested in something with a guaranteed return over 3% then he would be making whatever the difference is over that 3%, because inflation is about 3% so after a year he ends up buying power neutral.
Still not sure why he wouldn't use the money he saved up for and has in his hand, and instead get a loan from a bank which carries all kinds of risk and contracts and goofy stuff.
I am sorry, but the benefit I see to doing this is almost completely negligible or fabricated, only reason I can see to actually do this is if it is some kind of risky deal and there is a chance you'd default and the bank would eat the loan instead of you, because the 0% BT thing is really just transferring risk to the bank, but they'll want their money back in one way or another...
