What are the negative consequences (if any) of moving from one 0% introductory rate credit card to the next, every 12-15 months (whatever the rate period happens to be). This is for someone with great credit, who will properly use those cards during that time and leave with no balance.

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    Define "properly use those cards". Because my cards have a very high APR, but I don't care since I pay them off every month. – RonJohn Aug 30 '19 at 16:58

One huge risk is that for some reason (lost job, unplanned expenses) you can't pay off the balance when the intro period ends. Many cards will retroactively charge interest on the balance, leaving you with a massive interest charge.

This type of risk is called "picking up pennies in front of a steamroller". When it goes well you get a little benefit, but when it goes bad you get crushed.

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Some of the usual suspects here: If you have a history of running up balances on credit cards, opening new ones fairly constantly seems like a poor idea. If you are also not a fairly meticulous records-keeper, a constant changing of accounts is a lot of work -- especially if you have a large number of accounts charging your card every month (subscription services like Netflix, cable bill, phone bill, etc.)

If you have a long-standing relationship with a financial institution, you may not want to be cancelling an account with them. There is also probably some hit to your credit score in terms of more frequent inquiries and checks and shorter than usual age of accounts.

But, all that said, a fair number of people do activities like this. There is a subreddit dedicated to discussions on it, see reddit.com/r/churning.

My personal opinion is that it is not worth the effort -- mostly because I almost always pay my balance in full each month and get a pretty decent set of rewards as is -- but to each their own.

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I think this depends a bit on what you meant by someone "properly using" the cards during that time frame.

All cards essentially give you a grace period during which you pay no interest, regardless of the APR on the card, as long as you pay the balance off in full before the grace period ends. So, if you are going to "properly use those cards" and pay them off in full every month anyways, you have nothing to gain by having a zero percent promo rate, since you're getting zero percent anyways by paying it off before the grace period ends.

But, if what you meant was that you will carry a running balance and transfer it from card to card, that will likely not work after the first few transfers. When a credit card issuer is asked to do a balance transfer during the process of opening a new account, they typically perform some validation on where that balance is coming from. If they suspect that you're trying to game the system by constantly shifting balances from card to card, they may reject your transfer (and even refuse to give you a card).

As a third potential plan, if you're intending to use the cards for single major purchases and then treat them like a zero percent loan for the duration of the promo, it may be an OK idea depending on the size and scope of the purchase. If you're talking about a $500 dishwasher - the kind of purchase made through a "normal" retail outlet (who isn't going to get upset over losing interchange) and it's a small enough amount that you're 100% positive you can pay it off during the promo - it's not a bad idea. You just really need to be sure you understand the terms of the promo and you're completely confident you can pay it off before the period runs out.

But if you're talking about a $20,000 car, it's probably not a good idea. Dealers or other merchants selling large items may refuse cards for large payments (they lose a significant portion to interchange) and you have a huge risk of suddenly being hit with a heap of interest if something happens and you're unable to pay it off prior to the promo being over.

Finally, it's important to note that many "promos" aren't as good as they look, when you read the fine print. Few cards that offer zero percent rates for any significant length of time, or zero interest on transfers during a promo period, are actually "free." They may have annual membership costs, or other fees or methods of extracting income from you. And the banks will be very aggressive at those sources of income on those cards.

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  • No balance transfers; as it stated, I'd leave with no balance. The purpose would be to basically use a 0% credit card like a 12 month long free loan for single major purchases, initiated at the beginning of the card. – Vermont1981 Aug 30 '19 at 16:52
  • I wrote a comment to respond, but I'm going to edit it into my answer based on your comment. – dwizum Aug 30 '19 at 16:54

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