Credit card advance. Is it worth it?

[Sobroke]

I was talking to MBNA today and they offered to deposit $8400 into my chequing account. The rate would be 3.99% until September. There is an $84.00 fee for doing this which they are willing to waive. Investment wise......is it worth it to embark on this? Can I make any profit? Thanks in advance.

[actng]

not a terrible deal but i wouldn't call it hot deal either. they always have 3.99% rates for 6 months... the key is to get the 1.9% for 6-12 months with $0 transfer fee. the best i ever got was 2.99% with 0.5% balance transfer.

[Hellfire]

Depends on what you use the money for... but 3.99% till Sept isn't very long. What's the rate after, and will you pay it off in full when the promo rate is gone?

[Sobroke]

I would be looking to invest the money and yes..I would be paying it off before the rate changed.

[ALsat]

... whether you can find an investment that'll not only guarantee the return of your capital at the end of 6 months, but will also yield over 3.99%.

So, at 3.99% your interest expense will be $167.58.

Let's say you want to make minimum $100 off this adventure, as I imagine any amount less than that would not really be worth the effort.

So, in order to make $267.58 from $8400 in 6 months, you'll need a vehicle with a return of at least 6.37%.

Currently I don't know of any instruments yielding that much in the fixed income universe.

In light of your time horizon, I don't think that it'd be wise to take a chance with equities.

So what would you do? :-0

[Sobroke]

Okay, didn't think it would be worth it but I just wanted to make sure. Thanks very much

[Hellfire]

Ask them for 3.5%. If they agree, borrow as much money as possible.

[actng]

some good analysis in this thread but i think you guys are missing the best feature of this opportunity.

the 3.99% for 6 months is really beneficial to people who already carry a balance at a higher rate of interest. a few years ago when interest rates were low this made no sense... my line of credit was about 4.25% and their balance transfer fee killed the deal. and even if it didn't the 0.26% difference over 6 months was negligible.

but now that interest rates are higher, i think my line of credit interest is close to 6% or maybe more, a 3.99% for 6 months is not bad, even if it's just for six months.

in fact, i've started signing up for a bunch of credit cards just to take advantage of this offering. to take full advantage of debt-leveraging, everyone should carry some debt. offers like these come in handy.