HELOC vs. convenience check

[gap55u]

So,  I have a credit score in the 820's... We are doing a remodel and I was going to put a portion on HELOC.  Then I got an offer for 0% APR no fee convenience check/balance transfers until Jan 2019 for two of our existing cards.

This could be $41K total if maxed out; we have an additional 35K or so available credit limit.  We always pay off in full and usually our utilization is oh, say 5% of all that.

 

 

So what do you all think? We anticipate no other significant purchases, so if our credit score dipped into the upper 700's I don't feel bad.

 

Thanks!

[MPMD]

Why the ************************ not?

We got a very large zero interest loan amortized over 3 years in 33% installments from my wife's department when she started her job. Basically just spent it on house upgrades. Why not let her dept float the cost of lost interest while we have the nice bathroom and the increased resale?

It basically eats her year end bonus for 2 more years but we don't need bonuses to make the budget work.

[MPMD]

I would also say that I think this is one of those scenarios where we weirdos on the WCI forum just aren't like other people.

I notice a lot of people on this board are not quite as partisan about things low low interest car loans as others.

But we're also the people who are ACTUALLY investing the difference or using it to pay down debt, rare birds for sure.

Sounds like you're doing this for convenience and you're not trying to justify doing something you can't afford.

[Antares]

I used the same method to pay over time for 40K of home remodeling some years ago. I had a HELOC available, but you can’t beat 0%. I was happy with the arrangement.

[adventure]

MPMD wrote:

Why the ************************ not?

Click to expand...

Because most convenience checks, even with a 0% APR have a 3% fee.

(that might still be better than a HELOC rate, although not tax deductible...) but be wary, lunch is rarely free. Just double check!

[Antares]

When I used the method, the fee was 0%. But adventure is right to caution about this. I have not used it since 2008, because since that time I haven’t seen offers that didn't have a 3% charge up front. Which would have ruled it out for me. But I’m taking gap55u at face value, assuming the transaction is in fact free. Make sure though!

[gap55u]

Thru USAA.  Until mid Oct, it's no fee, no interest til 1/19. After that, the convenience/balance transfer fee is 3% cap at $75.

 

The big gotcha is, if you use the card for anything, the no interest part goes away.  So those cards are going into cold storage.

 

I was curious if anyone had thoughts on what % of the credit line I could use?  I figure if I max it out, my credit score takes more of a hit, but again, I don't expect to need any more borrowing anytime soon.

 

[adventure]

gap55u wrote:

I was curious if anyone had thoughts on what % of the credit line I could use?  I figure if I max it out, my credit score takes more of a hit, but again, I don’t expect to need any more borrowing anytime soon.

Click to expand...

Don't worry about it. We maxed ours to 100% and took a hit to 791... then it start climbing the next month because you are a great citizen and you are "paying back on time!".

[Donnie]

Be aware that some of these plans have no interest for a certain period, but if the loan is not paid off within that period, the higher interest rate becomes retroactive to day 1.  That means you get no real benefit from the 0% interest rate unless the loan is fully repaid, and you will have to pay interest as if the higher rate was in effect the entire time.

[Antares]

Along the lines Donnie is addressing, I made several balance transfers to new 0% cards to avoid the end of the 0% interest periods.