Credit Card Financing Possible But Risky

Theory's great and reality's scary.

The answer is "yes." But there are several big "ifs" attached.

The question? Oh, sorry and it's one I get asked so often I thought you might know what I was referring to. So let me back up.

People from all walks of life are inundated through e-mail or snail mail with long-term, low-interest credit card offers.

You know the type: 1.99 percent interest until the balance is paid off, or something similar.

Can you actually finance a car that way -- saving a small fortune in interest charges without taking a dealer's lowest rate and thereby letting you take advantage of any and all rebates?

Like I said, the answer is "yes." Yes, you can do it, and in theory it's a great idea. In practice, however, using credit cards to buy cars is fraught with pitfalls. Here are only a few:

Sometimes the fine print points out the offer is for an "introductory rate" that can rise after a few months and can hit 24 percent or more.

The "life of the balance'' offer often applies only to balances you roll over from competing credit cards and not to new purchases or cash advances. Of course, you could make the purchase on one card and then quickly transfer the balance, but things could go wrong there, too.

The "life of balance'' promise can change without warning -- if you're late with one payment, for example, the balance then can be jacked up to the highest rate allowed. Or, thanks to a common clause called "universal default," the credit card company can raise your rate sky-high if you are late with a single payment to some other credit card, or perhaps even to your cable TV service.

So, unless you are especially astute in managing your money and fastidious in paying your bills, a conventional auto loan, secured by the vehicle financed, is still the best and cheapest way to go. Short of paying cash, that is.