There has been a little bit of static going around the blogosphere today about a Visa card that “gives” you a “free” laptop as a reward. Better yet, it gives you the laptop up front. There is a catch of course. You have to transfer $5000.00 to the card, or you can transfer $2500.00 to the card and take a $2500 cash advance to fulfill the $5000.00 requirement. You then have to keep $3500.00 balance on the card for 18 months.
This guy sat down and did some figures on it.
Your total fees each month (assuming you maintain this minimum balance) would be $49.97. So over the next 17 month you’ll pay $849.50, plus the original month fee of $62.45 so the total you’ll pay for the computer is:
So the $850 computer ends up costing you over $900. Not quite as good of deal as it originally sounded. In addition the rates are variable (they are based on prime rate) and right now they are probably at the lowest they will ever be. It is very likely that the $850 computer will end up costing well over $1,000 by the end.
Now the problem with his figures is that he assumes that you only transfer $2500 to the card and take the $2500 cash advance. And if that is the assumption, he is for the most part correct. However, if you were to take that $2500 advance and invest it, the cost goes down. It would be silly of someone to take a $2500 advance at 19.99% and invest it at 4.00%, so that’s not really a feasible idea.
The true benifit comes to people like me who already have at least $5000 in credit card debt on cards that have high interest. For the sake of argument, this is anything greater than 9.99%. So I transfer my $5000 balance to the card, and thereby reduce my interest rates. Now, there isn’t really a high chance that I would pay off more than $1500 of that $5000 in 18 months, so I do meet that criteria.
I win. Not only do I save money on the interest rates, but I get a $850 laptop in the deal.
The argument could be made that I could transfer that same $5000 to even lower interest rate cards(0%) and eliminate the interest cost altogether. In my experience, this can be true for a portion of people, however, the 0% offers generally are introductory and only apply to people of certain credit strata.
Overall, if you’ve tried getting ahead with the 0% offers and it just hasn’t worked, or you can’t get away from using your credit cards, this deal could be a real humdinger for you. Very worst case scenario, you’re paying the interest anyways, might as well get a laptop out of the deal.
The credit card deal is here. (now includes a desktop as one of the choices)