0 interest for 18 months

[whyzze]

So I want a new TV. If I get their credit card and put the purchase on it I get 18 months of 0% financing.

So I have a few questions. I did some math and came up with these figures if I invest the present value in fixed income. the total cost of the TV after tax and warranty will be ~2044. I did my figures based on 17 months with this corporate bond

- Corp AK STL CORP 102.12 7.875 15-Feb-2009 YTM =6.471 Current Yield =7.711 fitch = B Callable = Yes

It is B rated and callable...but I figured the period isn't very long and the duration is a pretty good match. (if I am actually going to do this i will do a real bond analysis)

here are my numbers...I know this is a coupon bond so I could be way off in my calculations unless I can invest my coupon payments at the same rate right?

How close is this to correct...I put in 17 periods.

PV =$1,549.10 YTM =0.06471 Payment = 10(minimum CC payment) Periods = 17 Lump payment after 18 months = 1874.94 Total cost = 2044.94

So by my math, if I do it this way i will save ~$500. How much will the transaction costs of my investing affect my value? Is my math close? Did I miss anything major?

More importantly - I have basically no credit...I am 22 and just finished school. I wont have a problem getting approved for the card. I am just wondering if carrying this balance on my CC for 18 months will do more than $500 worth of damage to my credit score for say when I am ready to buy a house or need a business loan.

Thanks for any input.

[onlinebeginner]

I'm in the same exact boat except i'm 20 and have 2 years of school left... I plan on buying a TV for around 2 thousand dollars in about a month... guess i'll be checking back for some responses.... sidenote: what TV are u getting

[Shoe]

If you invest the present value in NTDOY the TV will be free after 18 months. Buy a wii to go along with it.

On a more serious note though, you are definitely on the right track. Use free money to your advantage (as long as you are disciplined enough to avoid any fees/high interest rates once the introductory rate ends). The bond idea is debatable. You can get a guaranteed 5%+ return in an online savings account. There is some risk with bonds (but I am not familar enough with them to comment). I'm not sure if the risk outweighs the additional 2% you might be getting in this case.

[Nomad84]

I'd go with risk free investments so that the principal will be there in 18 months when the bill comes due. Also, is it 0 payments as well or will you need the money to make payments along the way? If so, a money market fund might be a good choice. Vanguard's VMMXX Prime Money Market Fund is what I use. It currently has a yield of 5.13%. It also may be worth trying to negotiate the price of the TV either along with the 0% financing or instead of the 0%. Paying $1 in 18 months is the same as paying about $.93 today (figured at 5%), so theoretically though should be willing to go down to $1900 without the 0% financing, but of course it probably won't work like that. Doesn't hurt to try though. It would save you some trouble and have the same net result. The downside of this is that you'd miss an opportunity to build some credit.

Also, I didn't really look at your math, but you've screwed up somewhere. You aren't going to make 25% in 18 months. That would be a 16% annualized return.

[emon87]

stop changing your birthday that was dumb 2 years ago

[gull]

Don't risk money that needs to repay credit card debt.

If you miss your target, you will be heavily penalized.

I would recommend sticking with risk-free investments, unless you have assets that can cover your losses.