Dear Debt Adviser,
I work for an organization and routinely front for expenses and am later reimbursed. Recently, I charged more than $75,000 on credit cards for expenses. My question: Is it worth it to transfer the $75,000 to a zero-interest card and deposit my reimbursement money into a high-yield savings account? Or am I playing with fire at that level of debt? Thanks.
– Jared
Dear Jared,
For most people it takes years and many mistakes to accumulate $75,000 in credit-card debt. You are jumping headfirst into what could be not only playing with fire, but without the benefit of a fire department, fire extinguisher or a bucket of water anywhere in your ZIP code.
I understand the temptation to earn some money on the $75,000 float. However, it would be a huge risk on your part. Let’s take a peek into the future and see what could possible be. …
You are traveling for business and forget that the credit-card bill is due. You return two days after the due date and make a payment or you mail your payment from the road and it gets delayed in the mail. Too late! The interest rate could go from zero to the default rate of 29.9 percent. Your interest charge for the month is $1,744. Ouch! And that is giving you the benefit of having paid the balance down to $70,000 due.
MoreMerchant: Scary to think of pputting out a fire with out a fire extinguisher or anything else isn’t it? This is a scary situation. I have heard of similar situations where the borrower lost most of the money and couldn’t pay the card off when it was due. This is definately playing with fire. I would think this over and play it safe.
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