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New basses and beating the Credit Card system...


ZenBasses
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I know this might sound daft but

In theory......

Could I make a largest purchase on a 0% on purchases credit card.. You can get 0% deals upto 27months though typically 12-18months.

A month before the 0% ends couldn't I just do a balance transfer to a new credit card with 0% on balance transfers..

If this period was say for 12months couldn't I then repeat the process?

Transfer balance to a new credit card.

As long as I cut up each new card so no spending occurs it would be a relatively cheap way to buy new gear.

A new bass costing around 2500 for example could be had for very little a month...

Thing is as I've always been careful with what little I've had I've never used a credit card before... So not sure if what I've proposed is legit.

Hmmmmmmm

Gas makes you think of random things...

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Don`t cut the card because it will still be active and open to fraud, and the more credit cards you have, a better chance of getting turned down. You should transfer the money, then cancel the card after.I do it all the time, so it is possible.

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When I were a boy I used to save up for things. Still got lots of gear, no debt and never had the hassle of transferring balances or paying interest. Nowt wrong with credit cards but pay off the balance at the end of each month.

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Glad I am on the right wave length.

In terms off cutting the card up.. I am pretty self disciplined but just to ensure payments can't be made. Even though the card will be kept in bits at home whilst it's active.

I get the point of saving.. However in this current economic climate I'm saving for things such as a deposit on a house and the like.

Just recently got promoted and now on a 12 month intensive management training. Things beforehand hand were as many people can appreciated.. Tough..

It's not a massive increase in wage but it's allowed me to start saving for mine and my partners future.

However I wish to reward myself with something tangible and which gives me contemptment :) and 60-70 quid a month is easily doable on top of what I am already saving for.

I've saved and have 3-4k of bass gear. However that money is technically 10years old as I've never lost any money from selling (you win on some and loose on others) nor have I put a single extra penny in.

Added to this I'll be shifting one my basses probably along the line once the selling market picks up. This will then go straight into the repayments.

Plus having a credit card would be good for my credit rating :)... Obviously if I'm a good customer.. Hehe

Edited by ZenBasses
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You are hardly the first person to come up with this idea. The industry has a name for it: Churning.

It will work, provided that you make sure that you always keep ahead of the end of your 0% period and that you always have a new card available to transfer the outstanding amount to. What isn't so good is that you need a decent credit rating to qualify for the 0% deal in the first place and every subsequent "churn" will damage this rating. Also there are only so many card companies for you to rotate. Many banks won't issue a new card if you've held and cancelled one belonging to them or their subsidiaries within a certain time period. There's a danger that you'll eventually run out of options and your card will revert to the full interest rate without being able to transfer the amount.

The damage that this practice does to your credit rating will also affect your ability to get bank loans or a mortgage.

TBH unless you are very organised and have a really good credit rating (in which case you are probably better off shopping around for a really good low interest bank loan instead) you are likely at some point to come unstuck and possibly end up paying far more overall.

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sounds to me like a daft idea - it's not going to take much to go wrong or BOE base rates to go up (as they're going to), or your circumstances to change, job lays you off, you get pregnant, you get ill, etc etc and you'll regret it. You're talking 3.5 years to pay this bass back?

If you want something save and earn it. Save up - it may take you 2 years or more, sell something you've got first (the market might not pick up for a long time!) it may not be as fun to begin with but when you get the bass at least you can say it actually yours and an actual reward for your hard work.

mind you having said all that I am wondering what 2.5k bass you're after!

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Or buy on the credit card pay monthly during the 0% and when near the end get a loan from Tesco's or bank to pay the balance off at a lower rate than you'll pay on the CC each month?

A happy medium?

Edited by yepmop
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About 15 years ago I gradually took out around 10 credit cards and took "interest free loans"/churned making sure I paid them all off when appropriate. It takes a great deal of discipline to get it right ( I guess a spreadsheet or d/d payments will help) and once I stopped doing it probably made around £60 on about £8k borrowed in total. It hardly seemed worth it in the end for the hassle and worry of getting it all right ( and sometimes I messed up the payments). So unless you are dedicated don't do it!

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My wife did this for a while. Until some idiot at MBNA messed things up & caused a load of hassle. Ended up with them popping on a silly amount of interest onto the monthly payments & we spent 6 months sorting it out. They ended up worse off & not getting all their money back & the Mrs won't have a credit card again.

Not a good idea.

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[quote name='BigRedX' timestamp='1372179999' post='2122563']
You are hardly the first person to come up with this idea. The industry has a name for it: Churning.

It will work, provided that you make sure that you always keep ahead of the end of your 0% period and that you always have a new card available to transfer the outstanding amount to. What isn't so good is that you need a decent credit rating to qualify for the 0% deal in the first place and every subsequent "churn" will damage this rating. Also there are only so many card companies for you to rotate. Many banks won't issue a new card if you've held and cancelled one belonging to them or their subsidiaries within a certain time period. There's a danger that you'll eventually run out of options and your card will revert to the full interest rate without being able to transfer the amount.

The damage that this practice does to your credit rating will also affect your ability to get bank loans or a mortgage.

TBH unless you are very organised and have a really good credit rating (in which case you are probably better off shopping around for a really good low interest bank loan instead) you are likely at some point to come unstuck and possibly end up paying far more overall.
[/quote]

It is possible to do it - and I'm sure many people on here will be using the like to move small balances around.

However, in the long run you'll run out of options. There are a finite number of providers, and the credit agencies have a long memory. It's only worth doing if you're fully intent and capable of using the interest free period to really hammer the borrowing.

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[quote name='BigRedX' timestamp='1372179999' post='2122563']
You are hardly the first person to come up with this idea. The industry has a name for it: Churning.

[/quote]

I'm more familiar with the term Stoozing. I used to do a lot of it some years ago - free money really.
Not as easy and attractive to do now due to balance transfer fees etc.
It is a worthwhile way of spreading the repayments of a large purchase over many months on a 0% introductory offer.
REMEMBER to pay off before interest charges start though.
Credit card interest rates are the work of the devil.....

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Some very informative replies and I've taken them on board.

I wasn't suggesting I was going to do it just pondering on the idea and, since the wealth of knowledge around these ere parts is vast I thought I'd offer up the idea as a muse...

Maybe saving a deposit which I guess will be 30-40% then offering my bass up for sale + build time = probably not much saving to be done.

If I had 2.5k in my pocket (not that I'd probably spend that much) I'd be torn between a Shuker custom (I have a Shuker horn bass atm.. This is one I'd be offering up) or a GB Spitfire. (I have a GB IV circa 1998 and it still beats anything I play)

There are pros and cons to most decisions in life....

Better buy a bigger piggy bank...

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you will never run out of credit cards. I currently have a Barclaycard that I had 18 months interest free from a Tesco card, who used to be RBS , but Tesco own outright. I have a Halifax card waiting which has a 25 month balance transfer. I also have used Virgin and MBNA.I cycle through them I have had interest free cards for years with no problem. It doesn`t wreck your credit if you pay off every month, it actually helps if you are careful. When the card is near the end, get a months free trial with Experian.By the time you have gone around, the first credit card company will issue you with a new one. I do have a fallback of having shares if the 0% interest does go wrong to pay it off though
By the way, to make it work, you need 2 cards initially. One to buy it, and one to transfer to straight away

Edited by timmo
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If you have an offset mortgage like I do, get a 0% (for a period) card, put the money to pay off your purchase in a bank accoutn linked to your mortgage (or save it into there) and then pay off the card when the time comes. That way the mortgage gets the beneift

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I'd also add to those urging caution about such an approach. You have to remember that every time you apply for a credit card, they will do a credit check on you. Part of your credit rating is impacted by how many credit checks have been carried out - the more credit products you apply for in a short period of time, then the more desperate for credit you may be and the higher the likelihood of you having lots of other oustanding unsecured debts. Thinking ahead to your plans for a mortgage, or even buying a car, you'll want to keep your credit rating in the best possible shape.

Another point to consider is that you may not be given a credit limit high enough for you to transfer your existing balance on to! Banks tend to offer low credit limits to new customers to minimise their exposure.

Finally, the other benefit of having a credit card is for emergencies. Say your car breaks down and you need to pay for repairs - credit cards can help to plug short-term cash needs while you put in place more appropriate longer-term borrowing.

Hope this helps.

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[quote name='Geek99' timestamp='1372241751' post='2123184']
If you have an offset mortgage like I do, get a 0% (for a period) card, put the money to pay off your purchase in a bank accoutn linked to your mortgage (or save it into there) and then pay off the card when the time comes. That way the mortgage gets the beneift
[/quote]

I have used this approach in the past, pretty much perfect if you can pay off the instrument in 1 year.

I have also bought on a 0% card , paid off half the amount over a year and then transferred the rest (at 3% fee) to another 0% card
so thats like 1.5% loan over two years.. it does'nt get much better than that ... as Greg Wallace would say.

It would definitely be possible to just pay the minimum each month and keep tranferring the balance to spread the payments over as long a period as you want.
now if the item were to go UP in value in the mean time (unlikely in the current climate) you could in theory sell it without ever having actually paid for it .. but thats another game.

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Wouldn't it be easier to go for a finance option other than a credit card? I mean, if the facility is available? I just tend to shudder whenever I hear of credit cards, I've had them in the past and got myself into a whole heap of trouble! But I guess if you can be disciplined, then hey. I personally would feel a lot more comfortable with a fixed finance deal, and some stores offer a 0% facility, but, like I say, all depends on whether the dealer you are using offers it!

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[quote name='timmo' timestamp='1372196321' post='2122848']
you will never run out of credit cards. I currently have a Barclaycard that I had 18 months interest free from a Tesco card, who used to be RBS , but Tesco own outright. I have a Halifax card waiting which has a 25 month balance transfer. I also have used Virgin and MBNA.I cycle through them I have had interest free cards for years with no problem. It doesn`t wreck your credit if you pay off every month, it actually helps if you are careful. When the card is near the end, get a months free trial with Experian.By the time you have gone around, the first credit card company will issue you with a new one. I do have a fallback of having shares if the 0% interest does go wrong to pay it off though
By the way, to make it work, you need 2 cards initially. One to buy it, and one to transfer to straight away
[/quote]

All that activity is going on your credit reference, however. Even the Experian trial, if they run a check. You might be comfortable with that, but it can give people issues - hence urging caution.

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You still have to meet the minimum payment each month. On £2500 that's going to be around £50. Which would take about 5 years, although the more you pay off the less the minimum payments are and the less you pay and the longer the loan lasts. So set up a DD for that £50 don't just pay the minimum.

Then the c3% charge for balance transfer every year. The first year it'll be about £60 which will extend the time it takes to pay back.

Essentially doing this after 4 years you end up still owing £500 for a bass that's 4 years old, would it still be worth £500?

Are you getting £50 a month worth of pleasure/work out of it?

Edited by TimR
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