Comments on: Are 0% interest Loans Really Free Money?

By: Adam

Adam — Wed, 17 Mar 2010 23:17:14 +0000

@Jonas, this kind of thing *can* work but are increasingly rare and if you make any mistake, missing a payment etc, any benefit is lost. Seems like a lot of work and increased financial complication for the sake of $400.

By: Jonas

Jonas — Mon, 15 Mar 2010 20:02:28 +0000

Back in 1999 or 2000, I took 0% no-fee cash advances against my Bank of America credit card.

I took that money and let it earn on the money market, and then repaid it when the 0% period ran out.

By then they had sent me another offer, and raised my available credit, so I turned around and did the process again.

Eventually the market changed and the offers stopped coming. By the end of it I had earned maybe $400 before taxes.

The only ill effect I noticed was a hit to my credit score from the high utilization, which didn’t really affect me at the time. It bounced back in about 6 months after I ended the scheme.

By: Adam

Adam — Sun, 14 Mar 2010 23:30:03 +0000

Hi Rightly Knightly:
My views on higher education and student loans certainly are more positive than yours although I’m certain we both developed our views as a result of very different university experiences.

Thanks for commenting though: just as an aside my disclaimer about using 0% for arbitrage was meant to include savings accounts too.

By: Rightly Knightly

Rightly Knightly — Mon, 08 Mar 2010 13:38:00 +0000

You miss the obvious arguement that any savings made on 0% loans would be inflationary only.

Whereas if you put the money in a savings account you will get above interest %.

The difference between the two would be additional cash.

But, you also ignore that if a purchase is absolutely necessary and 0% loan is on offer sometimes it can be the better option.

I do like your admission:

‘Because the student loan would make it cost ‘nothing’ to access the money I never considered the option of taking less than the maximum amount of student loan. And because I had not worked for the money I could spend it without any feeling of pain. It wasn’t real to me. It was just a form that I could tick and money would appear in my account.’

Another arguement in my book against the loan in its current state. You’re too positive to it!