Is this a terrible idea???

[Greg34]

Okay, so I've already posted the thread about applying for my Citi card. I got the limit I needed (10,900), now its time for me to ask the real question.

I got this card specifically for the Zero Interest rate for 21 months. I've recently put down $2,000 on a $7500 (after tax price) engagement ring for my girlfriend and plan on putting the remaining $5,500 on this card. I'm going to throw $500/ month at it for 11 months and pay it off. I don't plan on using the card for anything else over those 11 months and will probably throw it in a safe deposit box just to be safe. Essentially I'm treating the credit card as a term loan with 0% interest. Is this a terrible Idea?? I'm sure that it will initially ding my credit because I am spiking that utilization way up. But I don't plan on buying a house or buying a car over the next 2 years.

What I'm really worried about is how Citi will look at this. The last thing I want is for them to decrease my credit limit because I made a huge purchase the first month of having the card. What do you guys think? I'm very fiscally responsible and have never had any money issues, my credit score is in the mid 750's. I actually have more than enough cash now to pay for the ring, but I want to take advantage of this zero% rate.

Also, my other credit card is an Amex Blue with a $15,000 CL. So I have $25,900 in available credit. My Amex normally reports about a $1,000 balance every month (I pay in full after the statement cuts). Running the citi up to $5500 will really only bring my total utilization to just over 20%.

Anyway, I just wanted to see if this was a terrible Idea or not. What do you FICO guru's think?

Thanks in advance!!!

[bichonmom]

I'm not a credit guru , but if you're concerned, you could probably call the CCC and let then know what you want to do and see if that would cause a problem with your acct or trigger AA. 

BTW: Congrats on your engagement!

[Walt_K]

It's not a horrible idea at all.  I wouldn't worry about it.  Your score will take a bit of a ding for utilization but it will come right back up.  I can't imagine Citi will have an issue, especially if you are making $500 payments.  I wouldn't even call them, but if it will make you feel better you could.

Congrats on the engagement. 

[drsmith]

You should be fine

My revolving lines total about 20k and I had about 5k total balance because I too bought an engagement ring. I just paid 2500 off a few days ago, and when it reported my score jumped back up 13 points.

[Wolf3]

Credit idea is sound, assuming you can pay it off in time.    They expect you to use the 0%APR, hoping you will not pay it off in time and they make lots of money.

Not at all convinced you should use credit for an optional luxury item.

[Walt_K]

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@Wolf3 wrote:

Credit idea is sound, assuming you can pay it off in time.    They expect you to use the 0%APR, hoping you will not pay it off in time and they make lots of money.

Not at all convinced you should use credit for an optional luxury item.

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You and my wife might have different ideas about the meaning of "optional."    (All kidding aside, she's wonderful and I'm sure would have said yes without the ring).

I don't see why it makes any difference if the OP uses the 0% for an engagement ring versus any other purchase.  Especially since he says he already has the cash on hand and wants to take advantage of the financing. 

[pastnow123]

No. Not a bad idea at all.

They offer you 0 interest rate because they really want you to take advantage of this. They charge swipe fee for the amount you used.

Also, they have normal expectation that people won't pay back all the amount they used when the introductory period ends. They can charge crazy interest for the unpaid amount.

[john398]

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@pastnow123 wrote:

No. Not a bad idea at all.

They offer you 0 interest rate because they really want you to take advantage of this. They charge swipe fee for the amount you used.

Also, they have normal expectation that people won't pay back all the amount they used when the introductory period ends. They can charge crazy interest for the unpaid amount.

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I think usually iif you dont pay it back in the alloted time they go back and collect intreast from the begining, someone correct me if  I am wrong

[Walt_K]

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@john398 wrote:

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@pastnow123 wrote:

No. Not a bad idea at all.

They offer you 0 interest rate because they really want you to take advantage of this. They charge swipe fee for the amount you used.

Also, they have normal expectation that people won't pay back all the amount they used when the introductory period ends. They can charge crazy interest for the unpaid amount.

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I think usually iif you dont pay it back in the alloted time they go back and collect intreast from the begining, someone correct me if  I am wrong

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That is not how most 0% intro offers work for credit cards.  That is how deferred interest deals work at places like Best Buy, furniture stores, etc.  But a typical bank card doesn't normally work in that fashion.  Doesn't hurt to check to be sure, but I doubt if the Citi card is deferred interest, it is 0% interest. 

[Trondul]

I have the same card with the same limit even.  I had the exact same idea as you only I'm using it for about 8k worth of furniture for my new house.  I lived in an apartment and didn't have much.  Like you I'm looking at it as a short term zero interest loan.  I know my score will take a beating from the high util until I get it paid down but I'm not looking at any new lines of credit for the next few years so I should be alright.  That said, running my Util up that high still gives me the heebee jeebees and I probably won't feel good about it until I have it paid off.