Financial Literacy

How To Borrow Money Interest Free: The Best Way To Get Zero-Interest Loans and Cash

How To Borrow Money Interest Free: The Best Way To Get Zero-Interest Loans and Cash

by Mark Skousen, Chairman, Investment U
Tuesday, August 8, 2006: Issue #570

I was just informed that one of the most popular Investment U columns this year is How To Borrow $43,800 Interest Free. And it really does work…

Despite the Federal Reserve raising the Discount Rate to more than 5%, you can still take advantage of your very own “discount window” at a national bank and borrow thousands of dollars and pay no interest. (I can borrow $43,800 – my credit limit – virtually interest-free.)

Who offers these incredible, if not irresponsible, loans? Most banks charge 10% or more on personal loans; margin accounts at brokerage firms are now up to 9%-10%; banks are charging more than 8% to their prime corporate customers; heck, even the Fed charges 5.25% on its short-term overnight loans to commercial banks, and plans to raise them again soon.

When I tell you how to borrow money interest free, you may think I’m joking, but believe it or not, a selective few credit card companies – famous for their outrageous fees that would make a loan shark blush – are still giving away money.

No, you don’t have to subscribe to my newsletter or a special report to get the details I’m going to give it to you here, right now.

Borrow Money Interest Free…

No, I’m not talking about “Balance Transfers,” although they are a good course for interest-free loans with certain limitations. For example, Capital One Master Card is offering 0% interest on balance transfers up to $30,000 on non-Capital One cards, personal auto loans, home equity loans, gas cards and department store cards. The interest rate stays zero until July 2007, then rises to 8%. There’s no annual or transfer fee.

But it does not apply to the most flexible loan out there: the cash advance checks. For those, they charge 19.8%.

Here’s the one and only credit card that gives you interest-free loans on cash advance checks: Chase VISA and its related cards, such as the one I use through an airline – United Mileage Plus Visa. I’ve been using it for years, and practically every month now, Chase/United Airlines Visa sends me additional “convenience” checks that allow me to write a check to anyone, including myself, up to $43,800. (Subscribers to Forecasts & Strategies have taken advantage of these interest-free loans for years.)

The Perks of Interest-Free Credit Card Loans

Here are the advantages:

  • Borrow cash instantly with no-hassle “convenience” checks where you write yourself a loan.
  • The loans are personal and unsecured. Unbelievable, but true.
  • Use the money for any purpose: Pay off a high-interest credit card bill or a mortgage, or invest in real estate, stocks and other speculations. There is literally no restriction on the use of these no-interest funds.
  • Te repayment schedule is extremely flexible, allowing you to borrow interest-free for months. Pay off as little as 5% a month.

To get these Visa checks, all you have to do is contact United Airlines, or Chase Bank, and sign up for their credit card. In no time, you too will be getting offers to borrow money at very low rates. In the past, I’ve received offers for 3.99%, 0.99%, and 0%. Chase varies these offers month to month.

A Word of Caution to the Borrower

There are some restrictions. The 0% APR promotional checks must be posted by a fixed date, and you can borrow interest-free for six to seven months. After that, normal interest rates apply. Or you can borrow at a 3.99% fixed APR for as long as you have an outstanding loan balance. (That’s better than the Fed gives commercial banks!)

There is a “transaction fee” of 3%, but the credit card company can’t charge more than $75. So it pays to borrow as much as you can on one check. On a $10,000 loan, the $75 fee is less than 1% of the outstanding loan. That’s as close as you are going to get to an interest-free loan.

Warning: This kind of liberal loan arrangement can be dangerous to consumers who can’t control their spending. I do not recommend you use these interest-free loans for consumer purchases, which lose value the minute you buy them.

Saving and investing are always preferable to borrowing money and overspending. You should continue to save and invest regularly in the stock market and other investments. But I’ve found these convenient checks to be an excellent, cheap way to manage my “cash flow.”

Good trading, AEIOU,


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