Woman juggles 0% credit cards for home renovation

Decatur, GA - If you have a credit card, at some point you've most likely gotten an invitation to switch cards. And for those with decent credit, the lure is a new card offering a balance transfer at zero percent interest.

This is just the opportunity a Decatur woman used to do a $60,000 home renovation interest-free.

"Well this was completely unfinished," Karen Leff said giving me a basement tour.

But now this once cold, empty spot is busy. It's big enough for her husband's office, a kitchen, a bath, another bedroom and plenty of storage space. A basement renovation is not unusual, but how she did it is.

"I basically financed our entire basement renovation using credit cards and I purchased a car interest-free for a year."

Yep, the car that her youngest son now drives she also bought on a credit card. Now let's get down to the business of how she did it. And the reason she did it this way.

"We were younger then. We were just starting out. We'd just bought this house. We'd just started this business. Our cash flow was all over the place."

But they needed to create a real home office downstairs.  

In her mailbox kept coming regular offers for zero percent interest credit cards, so she took advantage. Karen juggled credit cards that let her transfer balances from other debt - again, at zero percent interest - to another card. But first, she created what she called her "safety net."

"I had a home equity line of credit for $50,000."

She would pay a contractor with a check from her HELOC - that's a loan where you can borrow against the equity in your home - then she'd take one of those interest-free cards, get the credit it offered and use it to pay back her home equity line of credit.  

"I had a flow chart. At one time I think I had eight or nine credit cards. I would basically write down when I opened them, how much I put on them, when the due date was, what the balance transfer fee was, if there was one," Karen added.

It can really work, but the devil is in the details.

"You have to read the fine print. This is one time you actually have to read that big, long document."

One late payment and you could owe the interest on all that money you transferred to that card. And you had to be sure to pay it off before the introductory period ends. If not, you'll owe interest.

It took, she admitted, a while to pay off the debt and that meant years of juggling balances.

"Oh gosh, probably four to six years. It took so long because, remember, we had just started our own business and had one income," she remembered.

But it worked. Today, young people use this method to pay down school loans. But be clear, this is not for everyone. It takes lots and lots of discipline.

"You can finance very good loans to yourself, interest free, as long as you know how to manage it," she told me.
 
Karen is very organized, and even for her, she said, it was hard and a bit stressful. But if you're thinking about it, here's another piece of advice.

Each card will have its own rules. Let's say you transferred $10,000 onto a card for 18 months with zero interest. Put it away until paid off. Don't use it. Karen found that one time she charged groceries on one of those cards and quickly discovered her payment that month went toward the balance transfer not the new charge. So, that $50 for groceries accrued interest for months before it was paid off.