MSD's Cash or Credit

Hackers,

MSDs on Cash or Credit card? Pros/cons for each?

Let’s say you do credit card balances transfers during the duration of a lease for people who just don’t want or have the Dough for 5k MSDs?

Your Thoughts?

Forgive the lecture please, but I am in the finance business. (Some of this might not apply to you, but could help some lurkers) If you don’t have the money, what are you doing leasing a new car? Leasing is a good alternative form of using a vehicle for people who can afford the vehicle in the first place. Have you thought about waiting a year, and saving up the $5k? Do you have $100k-plus saved in retirement accounts? If not, why are you choosing to burn money on a car instead of funding your retirement?

Carrying a $5k balance on a credit card will make your credit score drop while you are carrying the balance, even if it is initially at zero percent. If your score is now lower and you can’t get another card at zero percent, what are you going to do next? Pay 24 percent on the current card? You are inviting major risks into your life.

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Non taken I appreciate the honesty

There is not really a 0% balance transfer. You always (almost) have to pay 2-5% “transfer fee” of the borrowed amount. So, it’s effectively 2-5% yearly interest if 0% transfer promotion is for 1 year.

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You have to think about too - $5k in MSDs would mean a car payment of $600 - $700/mo. If you don’t have the cash available to do the MSDs, definitely DON’T borrow more money. Plus you min payment on $5k would probably add another $100 / mo. Now you’re at $700 - $800/mo with zero savings.

Go get 1 of the ultra cheap leases until you can increase income and save some $.

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I concur with the other posters. Get a cheaper car lease (sub-$100) at this point get your toes wet and get comfortable with the monthly cash outlay. As it comes to your question about how to fund your MSDs…well you know what they say “If you have to ask…”

I don’t even miss the $3,500 in MSDs tied up in my current BMW lease. I had $8,500 tied up when I had my M car on-top of this one. It’ll be probably a surprise when it comes back to me at lease turn-in because I forget about it. That’s where you need to be at to do MSDs without it impacting you financially.

Rule of life: Do not put anything on your credit card that you don’t have in the bank right that minute (unless somebody is dying). Treat your credit card like a debit card and you will come out OK.

So, that would be a NO on the MSD.

Listen to @Phantomcypher, he has a Maserati :slight_smile:

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Don’t think he/she is going for the sub-$100 lease (like the Equinoxes or the Highlander)

:smiley: you guys are great I was waiting on someone to keep me honest!!

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Some balance transfers have 0% interest and a capped fee (I just got an offer for one capped at $99). But I agree that revolving that chunk of debt across accounts for the duration of the lease is a bad idea. That said…

I’ll be putting all my MSDs on my credit card then paying it off, despite having the cash on hand for it. Together with the rest of my drive-off thats easily $5k of valuable spend that I can put on one of my points cards towards elite status, hotel vouchers, or airline miles.

That is the correct way to use a credit card – you have the cash on hand to pay it off today. You are using the credit card for the points/rewards

Completely agree - credit card should be treated like cash and paid off in full every month.
Carrying a balance is a very slippery slope.

I pay for everything with credit card including all drive offs but always, always, always (did I mention always?) pay it off in full when the bill comes. The only reason to use credit is for rewards and extra consumer protection - not to borrow.

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Same here, i put everything i can on credit and pay all off at statement time. Every other year i take a HI vacation curtesy of Chase Bank.

This year i paid the down on my eGolf lease with credit. I get to pay an effective 1K/year on that car after considering all savings and credits. Had solar i would have paid an effective of about $500/year…why I don’t have solar?! My wife and i are well into middle class with income above 150k and still opted for an almost free car ratther than a $1000 paiment which we could easily afford since our house here in SoCal is almost paid off. Talking to people around here you realize that these deals are made mostly by well off individuals rather than low incomers…sad. I just don’t get it, why would you buy an clunker for which you will pay for maintenance rather than a brand new car for probably even lower cost? Seriously, someone try to explain.

Back in the day, they let you pay everything by credit card – mortgage (with BofA), lease payments, everything. They started closing down those loopholes in the last 10+ years. I tried paying my lease (with Chase Bank) with by Business Chase credit card and they did not let me :frowning:

Of course they wouldn’t - you tried to pay off your debt with money from the same bank :slight_smile: It stated in their terms that you can’t do it.

Yeah, that makes sense (duh) … I should just ask them for the points/cashback then :slight_smile:

Ironically, I don’t really know how the points work, I just see hundreds of Starbucks cards at the house that I think my wife cashes them out into

You can use them on air fare, hotels, on purchases (not gift cards) at Amazon, etc.

makes no sense to do, you can do a lease without the MSDs if you don’t have the money. Like others have said, if you’re that illiquid don’t do it.