Trump, gold bullion, and credit cards don't mix.

Question: My husband is very worried about President Trump crashing the economy. We have no more debt, having paid off our mortgage last year. We have only one credit card that we pay off each month. But we’re on a tight budget now that we’re retired.

My husband has this bright idea: Sign up for credit cards that come with no interest for a year and a half, then use them to buy gold. By the time President Trump is halfway through his term, business will be bad and gold will be worth more. Then we sell the gold and make a tidy profit.

My husband won’t listen to reason. Can you please tell him this is the dumbest idea you’ve ever heard? I don’t think anything else will convince him.

— Anita in Utah

Howard Dvorkin CPA answers…

I don’t know if this is the dumbest idea I’ve ever heard – I’ve been a financial counselor for more than two decades and have come across a lot of cringe-worthy concepts. However, it ranks right up there.

Let me explain what your husband is thinking. He wants to take advantage of what’s known as a zero-percent APR promotional financing offer. As has detailed, these offers are ideal for getting rid of high-interest rates on your credit cards, at least for a little while.

Here’s how they work

You roll over your high-interest balances onto a credit card that waives all interest charges for a certain length of time, usually 18 months. The logical question here is: Why would a credit card company give up all the money it can make from those interest rates?

The answer is depressingly simple: Many people who transfer their balances and think they’ll pay them off within those 18 months don’t actually do it. Instead of using those interest-free months wisely, they rack up more charges with the money they’ve saved.

So what happens after 18 months? Wham, you’re hit with interest charges, sometimes higher than you paid on your old cards.

Your husband is angling to use these interest-free offers as a way to invest instead of pay down debt. Needless to say, it’s a risky move.

First, 18 months isn’t a long time in the investment world. That’s more akin to gambling than investing. You can easily get caught in a down market.

Second, if you’re going to “time the market,” gold is a dangerous commodity to try it with. Over the past three years, gold prices have fluctuated wildly – up nearly 8 percent in 2016, down more than 11 percent in 2015, up less than 1 percent in 2014. No one can predict the price of gold 18 months from now. So, should you invest in precious metals? The answer, in this situation, is a definite no.

Third, you should only invest money you can afford to lose. From what you’ve described, Anita, you’re on a “tight budget.” How will you recover from losing thousands of dollars?

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched I’m glad you’re here.

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