“Just pay $7 per $1,000 outstanding balance per month!”

I guess Capital One thinks Americans are too stupid to understand how interest works. Kind of strange when you think about the level of debt most people carry. Experience should have taught them by now.

Yet yesterday I got a credit card offer from Capital One (not in my wallet). The ad promised “No more confusing interest” and that I’d only have to pay $7 per $1,000 of outstanding balance. Per month. On top of the minimum payment, of course.

I did the math. It isn’t difficult. 7 / 1000 = .007 x 12 = .084. That’s 8.4%.

I don’t know if that was a fixed interest rate. I shredded the offer right after doing the math. I doubt it, though — I don’t think you can get a fixed interest rate credit card anywhere these days. But, at the same time, I don’t think it’s such a good deal, especially when you can still get interest free intro credit cards. I got another offer for .99% for five or six months the day before yesterday.

On related matters, I realized yesterday that if I took advantage of a credit card offer for $20,000 cash advance at 0% interest for a full year, stuck enough in my checking account bank to cover minimum monthly payments at $250/month (that’s $3K), and invested the rest in an ING CD at 4.5%, I’d come away with a $705 profit, even after paying a cash advance fee of $75. (Yes, I created a spreadsheet to do the calculations for me. I did write a bunch of books about Excel, after all.) There’s no risk of loss — ING accounts are insured — but timing is everything. You need to have the principal ready to give back to the credit card company before that intro period is over. You might want to stick with a 9-month CD to make sure it’s available when you need it; the rate drops to 4.35% and the profit drops accordingly.

Once an accountant, always an accountant. I guess.