Financing on a credit card

[dkostel]

Hi,
I've read some posts where people say they used a courtesy check from a low interest credit card to finance their DVC purchase. Isn't this a different kind of interest? Couldn't this end up costing more than disney's 9.9% financing. Sorry, I don't know much about finance but I was under the impression that the compounding of these types of interest was different.

Thanks-
Donna

 

[OneMoreTry]

I think the Disney Visa is offering 2.9% LIFETIME on any such check. (One card is anyway.) It would be hard to beat that, even when you take into account tax deductions.

 

[Frozenfingers]

Hmmmm, I just shredded this months round of CC offers, including the one from BankOne (Disney Visa) so I can't confirm the 2.99% for life.. however, I do have in my hand an offer from CapitalOne for 3.99% for life on balance transfers.

When we purchased DVC, it went on the Visa and then I reorganized the debtload and got a home equity loan.. I think that most would agree that if one has to pay interest, one might as well be able to deduct it.. but it really depends upon one's individual situation. If you have some tax software, you can download an amortization program (freeware) off the net and play with the numbers a bit.. it just might be more adventagous to go with the lower rate rather than the deduction.

Personally, I wish we hadn't put it on the Disney Visa, had I used the worldpoints card, my "reward" would have been more than double.. We have been very disappointed with the Disney Visa and haven't used it since..

 

[pumpkinboy]

Originally posted by OneMoreTry
I think the Disney Visa is offering 2.9% LIFETIME on any such check. (One card is anyway.) It would be hard to beat that, even when you take into account tax deductions.

I checked with BankOne on this and this is in fact correct.
However, and this is a BIG caveat, if you have any interest bearing charges on the account (either new or pre-existing), they will continue to accrue interest charges, but all your payments will be applied to your lowest interest items first (or zero-interest items, if you use it for a vacation package). So if you have $500 of regular interest bearing charges on your card, plus say $10,000 in a convenience check, you are gonna be paying maybe 12%+ on that $500 (plus any new charges) until all other items are paid-off.

If you have no balance on your card and make no new charges on the card, this would be a good deal. Otherwise, run away!

 

[CarolMN]

Originally posted by dkostel
Hi,
I've read some posts where people say they used a courtesy check from a low interest credit card to finance their DVC purchase. Isn't this a different kind of interest? Couldn't this end up costing more than disney's 9.9% financing. Sorry, I don't know much about finance but I was under the impression that the compounding of these types of interest was different.

Thanks-
Donna

IIRC, the poster who did this planned to pay off the entire amount as soon as the credit card bill came due. He/She was using the credit card just to get the reward points and already had the cash (or maybe it was a Home Equity Line of Credit) to do so. He/She was not planning to make monthly payments on a credit card balance.

Personally, I wouldn't even consider using a credit card to finance DVC unless I could pay it off immediately. But that's JMHO. YMMV.

 

[RoyalCanadian]

We put the entire cost of the 150 SSR points on our credit cards -- the 10% downpayment went on 1 credit card and the balance of the cost went onto a separate credit card in two installments (solely due to credit limits). The first installment on the credit card was repaid almost immediately (prior to receiving the bill) to free up more room on the card. The second installment was then made on the credit card -- but due to the nature of the credit card billing period, that payment won't be due for another month. No interest charges at all -- especially not at the going rate of 19.5%. What do we get? The downpayment gives us a few points that can eventually be redeemed for "free" travel or groceries while the balance of the cost on the other credit card will give us a significant number of frequent flyer miles with Air Canada. (or other Star Alliance partners)

 

[AnnaS]

We did same as Neil more or less. Original and the three add-ons were all put on our cc first. Original purchase they charged my cc twice back to back because of credit limit (of course I ran to the bank and paid first charge so they could charge again balance). I also did this to get rewards so that we could use travel mileage with airlines.

 

[nursetink]

Our balance for SSR points will be paid by credit card in the next few days. We made the downpayment in 9/03 and applied for financing. This allowed us to hold onto our cash, receive reward dollars toward my next suburban, and have an interest free transaction. Worked great for us!