Can I use a 0% balance transfer on a CC to pay down my mortgage.

[jules63]

I was browsing credit card products this afternoon. I started wondering if I could use use a 0% balance transfer on a CC to pay down my mortgage.

I currently have a line of credit with Bank A (with nothing owing). And a 55K mortgage.

Bank B is offering 0% interest free transfers for 12 months.

My thoughts are to maybe move $10k from bank A into my mortgage offset account. Then open a credit card with bank B and transfer to 10K debt onto it.

At the end of the 12 months I can move the money back and pay off the mortgage. But wouldn't have paid the interest on the 10k owing for the year. This could potentially save me around $650.

Is that how it would work ?? Or is there some catch I don't know about?? I don't have a good understanding of how a lot of these financial products work.

Thanks a million.

 

[ilovejesus777]

@jules63 There is a way to do this with any Citi cards that have the PayAll feature - it used to be 0% fee but could no longer be the case now. Other banks may have similar features but don't know them off the top of my head.

Basically the PayAll feature on the card allows you to transfer the money into another account, it's meant to be used for paying certain bills etc. I have heard of many people that have used it to pay off a loan and then balance transfer the balance from the Citi card to a 36 month interest free balance transfer card.

 

[ronadiscipleofchrist]

@ilovejesus777 Are there any Australian Citi cards left?

I thought they were all transferred to NAB.

 

[ilovejesus777]

@ronadiscipleofchrist NAB acquired the consumer banking division of Citi, they are still operated as their own brand in terms of credit cards it seems. Citi Prestige Card

 

[mositohm]

@jules63 People are clueless. Yes this works

 

[jonnytrumpet]

@jules63 Before considering a balance transfer, it's essential to be mindful of additional fees involved. Typically, there's a cash advance fee, usually around 3.00% of the transaction amount from Bank A, and a balance transfer fee from Bank B, which can be as high as 5.00% of the transaction amount. So, unless your current interest rate exceeds these fees, it might not be a wise move.

Balance transfers are primarily designed to help manage high-interest debt, such as credit cards carrying rates of 20-30%. It's a strategic tool for paying off such debts more efficiently. Always crunch the numbers and consider the fees before deciding whether a balance transfer is the right option for your financial situation

 

[jules63]

@jonnytrumpet Thanks a million. Good advice.

 

[jenny30]

@jules63 A lot of people saying you can't do this, but you absolutely can.

Balance transfer issuer doesn't know the balance of the account you are crediting,

So, a super common way to achieve this is balance transfer from one credit card to another, both with zero balance, then withdraw from the now in credit credit card account

There shouldn't be any reason this shouldn't work for your LOC with bank A. You could just call them to check what their process for an in credit account would be.

 

[jules63]

@jenny30 Thanks so much.

 

[jaychristian]

@jules63 Pretty sure the only somewhat difficult thing would how to pay your mortgage with Credit Card A. If you can do that, there’s no reason why you can’t do a balance transfer to Credit Card B.

 

[warriorforchrist94]

@jules63 No, you wouldn’t be able to. Read the T&Cs for the details of what you can/can’t do.

 

[boxnes]

@jules63 If I understand correctly, it could work in a way, being a cash advance that goes towards your mortgage.

However, being a cash advance it would come with the usual cash advance things, being an associated fee and instantaneous interest being charged on that higher amount. It causes the potential gains which are minimal in the first place to be decreased further.

 

[episkopos]

@jules63 Yes it will work... but you need

1. Credit card with Zero owing (most balance transfers need to go against a credit card, Citi used to allow bank accounts)
2. Apply for new card with 10k balance transfer (banks will generally only allow balance transfer for 80% of card limit). So 10k card, 8k transfer
3. Balance transfer from 2. new card to old card in (1.)
4. Transfer funds in credit from 1. to mortgage offset
5. There is no cash advance fee from 1 to mortgage as its just transferring your own funds. If you get charged ring your bank to refund it.
6. When applying for 2. make sure you account for any annual card fees or balance transfer fee's in your own calculations.

 

[jules63]

@episkopos Thanks so much. I really appreciate your insight and the steps. Thanks.

 

[rimmel2]

@jules63 Yes. In the olden days of the glory of Citibank "cheque to self" and "Payall".

Nowadays, not so easy. But if you can find a good 0% transfer option with no fees, then you can use it to dump a bunch of money onto your primary spend credit card and can zero expenses for the period of the balance transfer.

Money is fungible so it's almost as good as having the money go straight into your offset or mortgage. Just be careful to read the T&Cs of your target credit card. Some have problems with going into credit balance. I know Amex will shut down your account and send you a cheque for the credit amount for example.

 

[truthinmyheart]

@jules63 Yes did this once with a citibank cheque to self for 70k, just make sure they don't charge a one off fee and it is truly 0%.

 

[lindseym1013]

@jules63 That’s not how it works.