I am a tax resident of USA and citizen of India. Lately, I have been receiving 0% interest balance transfer offers from credit card companies. The offer is - they will charge me 0% interest for 12 months and 3% fee for balance transfer amount. The balance transfer can be done as direct deposit to my checking account.
I plan to use this offer to get a direct deposit of $5000 in my checking account and later transfer the same to have a NRE FD account in India which is giving me 8% interest/annum.
My questions - Is this transaction legal (couldn't come up with a better word, I hope you get what I mean)? Are there any tax implications in US? From what I understand, there are no tax implications in India. Also, I will pay back $5000 within 12 months.
Adding one more question - I have a SBI MaxGain home loan back in India. Its interest is 9.7%, started in Jan'13 for 20 years. Will it make sense to use the balance transfer from credit card to park money in this MaxGain account? From what I understand, keeping money in this account is like FD as I will be saving money on the interest part of the home loan; in effect I will save 6.7% interest in one year (9.7% home loan interest - 3% fee). Is that how simple it is or I am missing something?