On Personal Finance - Clever credit card strategy? Not so much
What would you tell this man, who phoned yesterday for my thoughts on his credit card strategy?
He is a retiree who has been carrying $45,000 in card debt for three or four years. Although he has savings enough to pay the whole amount immediately, he has been shifting the debt from card to card to take advantage of introductory offers that waive interest charges on "balance transfers" for the first few months.
This way, he has avoided paying interest on the card debt. Meanwhile, money that could be used to pay the debt has instead been earning 8 percent to 9 percent a year in a variety of investments.
Is he clever?
Or crazy?
Too clever for his own good, in my view.
The first warning sign is the size of the debt. No person of modest means, as this reader is, should rack up $45,000 in credit card debt - ever, under any circumstances.
He is a retiree who has been carrying $45,000 in card debt for three or four years. Although he has savings enough to pay the whole amount immediately, he has been shifting the debt from card to card to take advantage of introductory offers that waive interest charges on "balance transfers" for the first few months.
This way, he has avoided paying interest on the card debt. Meanwhile, money that could be used to pay the debt has instead been earning 8 percent to 9 percent a year in a variety of investments.
Is he clever?
Or crazy?
Too clever for his own good, in my view.
The first warning sign is the size of the debt. No person of modest means, as this reader is, should rack up $45,000 in credit card debt - ever, under any circumstances.
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posted by e-borneo.com @ 7:01 PM
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