When NOT to apply for credit cards-

[sky121]

Recently a relative of mine referred someone to me to help them out with applying for credit cards.  They had big plans and big dream but quickly on in the conversation it came out they they have a few different cards with balances on them.

I ended up scratching all my recommendations and told them they should perhaps look into applying for a card with 0% APR for a year to help start paying off their debts.

I don't know what they ended up doing and I don't know how high their APR was but sounding from it I bet they were high.


I'd like to imagine that most of us here "playing this game" have good credit and are paying off their bills in full. But I do see questions being asked regarding if balances are kept and how to transfer them etc which opened my eyes to the fact that perhaps not everyone here has the best credit. Perhaps some of you are just carrying balances because of day to day life and maybe there are others out there that just don't have great spending habits.

I would hate for anyone to get in over their heads or just not make smart choices and a site like this could easily get you there so I though this thread could be advice for people about when NOT to apply for credit cards.

I B"H (thank G-d) have never been in a situation when I couldn't pay my balance in full and don't have much experience with the matter and with lower credit scores.

I was hoping those out there with more experience and knowledge could share their advice for everyone else out there who aren't paying their bills on time or have lower credit scores.

[sky121]

I'll start with a few random tips- ( and these are mostly things people should know but it can't hurt to be reminded)

1. If you do have balances on multiple cards find out which card has the lowest APR and see what kind of deal you can get to transfer your balances there.

2. You can always ask to have your APR lowered. Especially if you've been a long time customer and pay on time every month.  It never hurts to ask and every penny counts!

[Dan]

Get a 0% card instead of chasing miles if you're in debt...
http://www.dansdeals.com/go/slate
http://www.dansdeals.com/go/simplicity/

If you are paying 20% interest on your debt don't forget that with everything you buy, the cost of the item is a lot higher than the price tag as you're paying compounding interest on it.

[meshugener]

Access to available money is worth money.
I know someone who bought a rental apartment by churning 0% APR-purchase cards (redeeming the money via AP) for the down payment, + a mortgage.
He pays the min payment each month, and he has a free $50k loan!.

[smurf]

Access to available money is worth money.
I know someone who bought a rental apartment by churning 0% APR-purchase cards (redeeming the money via AP) for the down payment, + a mortgage.
He pays the min payment each month, and he has a free $50k loan!.

when banking interest rates were high. People made money like this

[sky121]

Access to available money is worth money.
I know someone who bought a rental apartment by churning 0% APR-purchase cards (redeeming the money via AP) for the down payment, + a mortgage.
He pays the min payment each month, and he has a free $50k loan!.

The problem with advice like that is that it DOESN'T work for everyone.

What happens if he stops getting approved for 0%APR cards one day and is stuck with a huge debt?

I'm not saying taking advantage of a 0% APR is bad but it's not always a good idea for many people.

[sky121]

when banking interest rates were high. People made money like this

But only someone responsible who won't use the original money so they can pay it back can do this.

[hocker]

I have have times when I was carry high balances. I called Citi and Discover and negotiated a 6.99% APR after telling them I would move the balance to a 0% APR card, although I probably wouldn't have been approved.

[meshugener]

Of course:
1) that person must be very responsible.
2) can forget of taking serious advantage of high mileage/points credit cards.

[sky121]

I have have times when I was carry high balances. I called Citi and Discover and negotiated a 6.99% APR after telling them I would move the balance to a 0% APR card, although I probably wouldn't have been approved.

Nice.

[milechazzer]

Don't ever apply for a credit card within a month or so before you apply for a mortgage or refinance, until after you close. 

[sim]

Don't ever apply for a credit card within a month or so before you apply for a mortgage or refinance, until after you close.

I agree with that rule, but the consequnce for doing so is not always drastic, like in my case they asked for an explanation for that credit card and that was it

[Yeki89]

Don't ever apply for a credit card within a month or so before you apply for a mortgage or refinance, until after you close.

I would say more then that

[milechazzer]

I agree with that rule, but the consequnce for doing so is not always drastic, like in my case they asked for an explanation for that credit card and that was it

I just finished refinancing, and I had no fewer than 3 conference calls with the credit card company, and 4 document requests and explanation demands regarding a new account that I had applied for a couple of weeks before my mtg application.

[Bettracker]

Access to available money is worth money.
I know someone who bought a rental apartment by churning 0% APR-purchase cards (redeeming the money via AP) for the down payment, + a mortgage.
He pays the min payment each month, and he has a free $50k loan!.

What do you mean a free $50k loan?

[DrDanny]

when banking interest rates were high. People made money like this

OT
But I have a wealthy relative who was building himself a house when theyhad subprime mortgages with zero interest for 5 years took out a large mortgage and got 5 percent on government bonds and paid back his mortgage in full right before the 5 years were up

[Saver2000]

What do you mean a free $50k loan?

He means interest free. . .