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Want To Buy More Bitcoin? Here’s An Idea.
Warning: involves risk and is not for everyone.
Disclaimer: Not financial advice. Proceed with caution.
The following strategy is not for everyone. There is definitely a level of risk involved! Additionally, there are a couple of prerequisites before taking on this method.
What I’m talking about are 0% APR credit cards.
To obtain one you must:
Have a good credit score.
Banks will not give you a 0% APR credit card if you have a history of bad credit.
Have access to financial services in the United States.
I don’t think 0% APR credit cards are available in other countries, but it doesn’t hurt to check.
0% APR Credit Cards…How do those work?
Here’s a quick explainer video.
Unlike most credit cards, 0% APR credit cards won't charge you interest on your balance for an intro period of around 10-14 months. (depending on the card)
During the intro period, you pay off the minimum payment of your monthly statement balance to avoid fees. Minimum payments are usually around 1% of the overall balance.
Once the 0% APR period ends, the interest rate skyrockets to around 25% or more. You don’t want to get caught holding onto this debt! Make sure to have it paid off before that interest rate kicks in.
What are the advantages?
You are borrowing money that you don’t have to pay back for another year. This means many of your expenses can be deferred to buy more Bitcoin. Instead of spending $500/month on groceries, put it on the card and use that $500 to buy Bitcoin.
Hold on….sounds too good to be true. What are the risks?
The risks are simple. If you don’t pay off the balance before the 0% period is over you will:
Incur crazy amounts of debt from the interest. When the interest rate kicks back up to ~25%, you will owe the bank more money than borrowed.
It lowers your credit score. This makes it difficult to borrow money from a bank in the future.
But wait, there are more options to ride out this method.
Delaying payments for 1 year is great and all…but what if you can delay them for 2-3 years?
There are credit cards known as “Transfer Balance Cards” which charge you a fee to pay off a bill and give you a period of time to pay it back. This period can range from 12-24 months.
This means that combining the 12 months from the 0% APR card and 24 months from the Transfer Balance card buys you a total of three years to pay it back.
For “Number Go Up”, waiting three years has been historically rewarding. After those three years, you can shave off some of the Bitcoin to pay back the debt.
Also, who knows how devalued the dollar will be in three years…speculative attack!
IMPORTANT. Make sure the limit on the Transfer Balance Card is sufficient to cover the debt of the 0% APR Card. For example, if you borrowed $5,000 on the APR card, make sure the Transfer Balance card limit can cover it.
Remember this can be risky!
If you are uncomfortable with debt, this may not be for you.
If you don’t have the means to pay off the debt, this is definitely not for you.
If you have a good credit score, steady income, and the ability to pay off the card, squeezing out more sats over the next 1-3 years could be rewarding.
I guess I also have to disclose once again that this is not financial advice!
Stack hard plebs.