Today I received a credit offer so sneaky that I just had to write about it. But while sneaky, it’s one you can use to good advantage if you’re clever.
The offer is from Washington Mutual, a bank I generally have a lot of respect for (I even have a home equity line with them). But they too have been caught up in the sub prime loan mess, their stock having dropped from the mid 40′s to about $10/share, and I suppose they’re trying to chase revenue along with every other troubled bank.
The problem is, it’s your revenue they’re after.
Here’s the deal:
0% FIXED APR on Purchases until October 1, 2009 when you Transfer a Balance NOW!
Now, I have to admit, 0% for a year and a half is a nice offer. The catch? You have to do a balance transfer of at least $100 within 90 days of opening the account. This transfer has no fees attached (which is good), but any payments you make will be applied first to the lowest interest balance.
What this means is: if you transfer $1000, then start using your card for purchases, payments you make will be applied first to the finance charges, then to the purchase principal. That $1000 will stay on your card building finance charges until you’ve paid everything else off first. At 9.99%, that’s about $100/year in finance charges.
But here’s a trick that should work (as I read the term sheet). Get the card and do a small balance transfer. Then pay it off completely. After that, you should be able to use the card for purchases at 0% until October 2009. If you save the money to pay off the card, you can effectively earn 3% or more on 18 months worth of purchases – If you spend $500/month and put them on the card that’s a free $200.
But don’t try this unless you are very disciplined and can:
- Save up the cash to pay off the balance in October 09 (earning interest on the balance in the mean time).
- Make every payment on time (if you’re late on this or any other Washington Mutual account, they can raise your interest rate to an astonishing 21.74% over the prime rate – currently 28.24%).