No. of Recommendations: 3
<<<They offered a nice line of credit (over 50K) at 0% interest for 7 months for a one-time fee of $50 and make the monthly minimum payments of $15. At the end of 7 months I need to fully repay or switch to 10.65% interest. The hooker is that if you are late with a payment the loan immediately converts to 10.65% from day one. I am looking for a safe place to park funds for 6 to 7 months that will earn 4% to 5%.>>>

Guaranteed 4-5% is not going to happen. Anything that high and you could lose the principle. Worst case senario, borrow money with expectation of 5+% return thinking it's easy money. Buy a bond or bond fund or anything. Investment tanks, lose principle, or most of it, and now have a loan to pay at an incredibly high rate.

Best possible outcome. Buy a 6 month CD, can find rates around 1.7% online right now. So, $50k at 1.7% would give a return of $425 for the six months. Assume a 28-33% tax bracket, yield now down to $306-284 range. Probably not worth the hassle.

Then you have to think about future complications. What happens when you apply for a mortage, or some other big loan, and you now have a history of big loans, or multiple big loans? Might not get as good a credit score even though you've paid off the loans, and thus a higher interest rate.

There are a lot easier ways to "earn" $300. Like not having that Coke every day for lunch and substitute water. Over a year save about $300 and it's probably better for you.

JLC
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