Jessica Wong
5 min read
One New York City man thought he’d gamed the system when he bought an $11,000 engagement ring using a 0% interest credit card offer from Bank of America.
With $25,000 sitting in a high-yield savings account earning 4%, Nick figured he could carry the balance for two months, earn a little interest, and make the most of the promo window.
“I have no intention of putting anything else on the credit card,” he explained on The Ramsey Show. “It’s just a cash outflow question as far as managing my monthly payment.”
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But personal finance guru Dave Ramsey wasn’t impressed.
“Write a check today and pay off the card,” he said bluntly. “You did a sweet, good thing in a dumb, bad way.”
Ramsey's point? The math simply doesn’t work out. The interest earned over 60 days would barely cover a fast-food lunch.
“You made enough to buy a biscuit,” Ramsey quipped. “You don’t beat Bank of America. The only way to beat them is to stay away.”
Nick’s hesitation came from the fact that dipping below $25,000 in his savings account would drop his interest rate from 4% to under 1%. But as Ramsey calculated, 4% of $10,000 is just $400 a year, less than $40 a month. “You can’t buy a pizza [with that],” he added.
“You’ve spent hours screwing with this in your mind,” Ramsey explained. “It paid you about $1.16 an hour.”
The Ramsey Show co-host John Delony chimed in with a dose of real-world forecasting. Once the wedding planning starts there will be unexpected expenses, some of which may require cash deposits, and it’ll be all too easy to “float” just one more month. That’s exactly how banks make their money, by getting people comfortable with debt.
At the end of the call, Ramsey wasn’t sure if Nick was fully convinced.
“You don’t want to put that ring on her finger and say, ‘Thank you, Bank of America,’" Ramsey said. “That’s gross.”
Nick may have had good intentions, but Ramsey’s message was clear, when it comes to major life moments, avoid playing games with debt — no matter how sweet the introductory offer sounds.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
While 0% APR (annual percentage rate) offers can seem appealing, they can come with hidden risks.
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