My credit card offers a rate of 1.99% annual interest on cash advances plus a flat rate service charge of 1% of the cash advance amount in order to borrow money from the credit card company.
(E.g. $5000 loan is subject to $50 charge + 1.99% interest)
Therefore I was thinking of taking out a cash advance from the card and throwing it into a high-yield savings account (4-5% annually) for a period of one year.
I know people say you shouldn't invest with other people's money, but this is a secure investment that is guaranteed to grow - not stocks. I also would not borrow more from the credit card than I am able to pay back at any time.
It seems I would in all owe the credit card people roughly 2.99% of the principal in interest, whereas I would be earning interest at a 4-5% clip.
The earnings certainly wouldn't be vast, but considering the simplicity of the transaction I'm starting to wonder why not?
So - why not?
P.S. - no additional fees involved in opening the savings accoun
2007-06-14 03:00:48 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
I don't know why people are giving you so much grief. I've had (and have) cards like that that are guaranteed for life at certain rates.
For one year while the rate is that low, yes, the way you lay it out, it makes sense. Just be sure your gain (approx 1-2%) over that time is worth the effort.
Hope that helps!
2007-06-17 18:18:10 · answer #1 · answered by Yada Yada Yada 7 · 2⤊ 0⤋
I think you should read the fine print. Most of the time those are low introductory rates to get you hooked on the card and then after a certain period of time the rates will go up. Make sure you read everything included on the offer of credit it may suprise you.
2007-06-14 03:06:26 · answer #2 · answered by Anonymous · 1⤊ 0⤋
on the outdoors I could trust the different responders. pay off the mastercard debt then tear them up. yet relatively the right answer could be greater complicated than that. in case you pay off the mastercard debt and then turn around and rack up greater debt on the credit enjoying cards, you have no longer something to instruct on your issues. regrettably, many human beings fall into that capture. can no longer help spending the money they have not got. Now in case you place the money right into a Roth IRA account, that money is going to be fairly puzzling to get to sooner or later and is greater veritably risk-free from being spent. In different words it extremely is an investment on your destiny. the disadvantage is which you will nonetheless have that miserably mastercard debt racking up pastime at a fee that's lots greater than you may anticipate to acquire on any investment you will possibly make on your IRA account.
2016-10-09 04:43:55 · answer #3 · answered by lowrey 4 · 0⤊ 0⤋
NO-ONE loans money for 2% a year! Either that's a short-term "introductory offer", a monthly rate, a charge IN ADDITION to the card's purchase rate, or you just read it wrong!
Or it's a scam!
2007-06-14 04:44:11 · answer #4 · answered by Anonymous · 1⤊ 1⤋
Yes if you like 4% per year minus costs and tax.
If you are really scared of losing money why don't you learn more about how to make it.
I'm not trying to be rude..my last trading course cost me $3500. I'm not scared to prepare myself for some big wins in the near future.
Education will never go to waste and can make you easily 36% per year..and I learned how to do it!
2007-06-14 03:45:42 · answer #5 · answered by Anonymous · 0⤊ 1⤋