Investment U E-Letter: Issue # 640
February 14, 2007 Borrow Money Interest-Free: How To Get a $43,800 Interest-Free Loan… and Get Around the Credit Card Company "Catch"
By Dr. Mark Skousen, Chairman, Investment U
Last year at about this time, I sent a message to Investment U subscribers about an opportunity to borrow money interest free… up to $43,800, in fact…
I pointed out several advantages of this unique loan source: - Borrow large amounts of cash instantly with no-hassle "convenience" checks you can use to write yourself a loan.
- Maintain a loan that's personal and unsecured. Unbelievable, but true.
- Use the money for any purpose - pay off a high-interest credit card bill or a mortgage, invest in real estate, stocks and other speculations… you name it. There is literally no restriction on the use of these no-interest funds.
- Repay on an extremely flexible schedule, allowing you to borrow interest-free for months. Pay off as little as 5% a month.
Needless to say, such easy loans might come in handy after an expensive holiday shopping season. Or maybe you're interested in using the money for a sound investment. The surprising source for these interest-free loans are credit card companies: Chase Bank, Capital One, and now Bank of America offer these instant, private loans through their Visa and MasterCard programs. Company Visa and MasterCard accounts - such as airlines, rental cars, hotels and AAA - also offer these interest-free loans. Borrow Money Interest Free… But Beware of "The Catch" Since writing about this opportunity, I - along with some eagle-eyed Investment U subscribers - have discovered a "catch" to this unusual source of interest-free loans. Fortunately, you can still borrow thousands without incurring interest charges and other fees, but you have to sidestep a few land mines along the way. The problem is simply this: If you write a cash-advance check - at 0% interest - and continue to use your credit card for purchases, the credit card company treats any payment you make on your monthly statement as a payment for the cash-advance check FIRST. And if you don't pay off the loan in full, the bank assumes your payment is going toward the cash advance and not the purchases. This can get confusing (the credit card companies like it that way), so let's use an example: Suppose you write yourself a 0% interest check for $10,000, and also buy $1,000 worth of books and clothing using your credit card. Now, the credit card company has informed you that you can borrow the $10,000 interest-free for up to one year, and you won't be charged any interest during this one-year period. However, if you don't pay off the entire $10,000 the next month, they will start charging you the "average daily balance" on your purchases because they apply your payment to the cash advance only. Last month, that's exactly what happened to me. I made only one purchase for $30 last month, but I was hit with a finance charge of $98.50 based on my "average daily balance" on previous month's purchases, even though I made a large payment on my credit card bill exceeding the previous month's purchases. How To Borrow Interest Free… and Get Around the Credit Card Company "Catch" … Use your credit card for cash-advance checks only. Do NOT use it for purchases. The easiest technique is to have two credit cards: one for cash advances, another exclusively for product purchases. That way you will avoid finance charges on your cash advance checks during the 0% grace period. When I wrote about this last year, only a few banks were offering this service. But now I see practically everyone doing it, including Chase Visa, Capital One and Bank of America. Sign up to take advantage - just beware of "The Catch." Good investing, Mark Today's Investment U Crib Sheet - Saving and investing are always preferable to borrowing. Here's how to save and invest regularly in the stock market using an Automatic Investment Plan - Investment U #467: Powerful Financial Planning Tools.
- To invest in top-rated growth stocks, check out what Oxford Club Investment Director Alexander Green is recommending right now. He's found several companies about to receive heavy institutional support - roughly $15.4 billion. Read the full report.
Shock Stocks Shares of Novelis Inc. (NYSE: NVL) ran up 14% this morning after the rolled aluminum producer agreed to a $6 billion buyout from Hindalco Industries Ltd. - an Indian aluminum and copper producer. The Mumbai-based company will pay $44.93 a share, in cash, for each share of Novelis. The offer represents a 17% premium to Novelis' Friday closing price.
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