I logged into my TD bank account today and noticed that the balance on my Visa card balance seems lower than it normally is at this time of the month. Checking into it further, I noticed that an extra $5,000 payment was made to it. My first thought was, “Maybe this is me getting back for giving to charity?”
It turns out that the Citibank MasterCard I applied for went ahead and transfer the maximum limit of $5,000 from my Visa to the Citibank MasterCard. I thought I had missed the cut off date to do the zero interest balance transfer but it now appears not to be the case. When I went to check my mail today there was a letter from Citibank stating they had indeed transferred $5,000 of Visa balance into the MasterCard and that the zero percent interest will be good through December 5th, 2007.
This frees up $5,000 of cash that I would have used to paid the Visa. I’m going to put the $5,000 towards my RRSP. This will trigger a $2,000 tax refund that I can use to help pay back the MasterCard.
I’m still a little upset that Citibank only gave me a $5,000 limit. You really can’t do much with a credit limit that low. I had requested that they transfer $10,000 of Visa balance over. However, $5,000 of interest free money for a year is better than zero. By putting it into my RRSP, I make an instant 40% return and any gain grows tax-free. Can’t complain about that!
Related Link: 0 Balance Transfer is the best option for people who strive for getting out from debt as soon as possible.
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I took your advised and applied for the Citibank card. I didn’t ask them to transfer much from my RBC Visa, just $2000. My limit was also set to $5000 but that’s more than enough for me.
The only difference was that I had until May 5, 2007 unless I misread the date format. When I first read the other blog entry, I was curious as to why you weren’t eligible for the 0% interest because I thought you had applied before I did.
I find that your financial tips are very helpful. Thanks for putting it out there!
Hmm, my one say 12/05/2007. Would you say that is Dec. 5th or May 12th?
I just looked over the letter they sent me and you’re right, it’s 12/05/2007. I think it’s safe to assume that it’s December 5, 2007…
Yup, they write addresses properly in Canada. 12/5/2007. December 5th, 2007.
I am still getting used to the backwards way they do it in Hong Kong (based on the European way).
John: Have you tried asking them to increase your limit? What did they say?
One day I’ll get credit, though I don’t really want any more cards. My Visa is enough for me and its only $1500 because that is what I requested.
I hate using credit, but it’s nice to know I have it when I need it.
Instead of credit, people can just send me cash instead!
what is RRSP? is this valid in US too? Do they charge anything for the transfer? I know cards sends you checks to do transfer, but in the fine print they charge you quite a lot in fees for the transfer. 40% return sounds good, again only in canada? Sorry if sound somewhat clueless.
Whats your plan to withdrawl the rrsp’s while eliminating the entire tax bill?
Sort of on a related, but not so related topic: I was wondering for a small business like yours, John, how do you go about collecting GST? Google Adsense is a big part of your income and you can’t exactly charge them GST.
Jose - The US version of a RRSP is a 401K, or IRA.
Rob - I do not plan to withdraw it. I will use the $2,000 refund and then add $3,000 to repay the MasterCard when the time comes.
Michael - I only have to charge GST on Canadian advertisers who purchase direct from me. There are none.
Gdog - No, I didn’t ask them to increase the limit. It would be useless now. Even if they increase the limit, I can not use it because of the zero interest transfer. Were I to charge anything on the card, interest at 19% would be tacked on to those purchases and will compound until the $5,000 zero interest balance is paid in full.
My best Credit Card is from a small bank whose website stinks horribly, but they have continued to move me up over the last several years from a student limit of $500 to $15k or so.
You’re all welcome for the linky
Great promo. 0% is a hard rate to beat!
I don’t have even $5K total in Credit Card debt. I do, however, admit a bit of coveting of your tax write off.
The 5000 u put into an rrsp, eventually u have to take it out. 30 years from now it will be worth 87,000 dollars, which implies 30,000 of it belongs to revenue canada one way or another (direct withdrawl or upon death), was it worth to keep 2000 in tax to pay 30,000 later?
Why not implement an RRSP meltdown?
cheers
rob
[...] In my post where I transferred $5,000 of Visa balance to my zero interest MasterCard so I can use the saving to invest in my RRSP, I came across this very interesting question from Rob. Normally I answer questions right in the comments but this one requires more explanation than a few simply paragraphs. The answer also makes for a good blog post. One method I used to get new post ideas is by reading the comments left by readers. This is something to look at next time you’re wondering, “What should I post about today?” Anyways, on to Rob’s question. The $5000 you put into a RRSP, eventually you have to take it out. 30 years from now it will be worth $87,000, which implies $30,000 of it belongs to Revenue Canada one way or another (direct withdrawal or upon death), was it worth to keep $2000 in tax to pay $30,000 later? [...]