It was not too long ago, we used to play the balance transfer game. We used to get the 0% APR promotional offer from credit card companies; there would be a transaction fee of $40 max and the promotional period runs for a year. We could transfer $10,000 from the credit card account to the checking account and put that $10,000 in a CD that could yield 3 to 4% per year. We used to get around $400 in interest for the $10,000 transferred from the credit card account with a 0% APR promotion. If you deduct the $40 transaction fee, you could still come up with $360 profit which is literally free money.
Now, the banking industry is getting smart… very smart actually. Many banks still offer 0% APR for one year. However, the transaction fee is 4% per thousand dollars. So if you transfer $10,000 from your credit card account to your checking account you’ll be charged $400 as transaction fee! On top of that, many CDs offer less than 1% interest. Effectively it will be a dumb move to use 0% APR because it is not really 0% APR. When you get the 0% APR offers in the mail or email, just trash them unless you are really willing to pay 4% APR.