0% Credit Card transfers to make money

[2moretrees]

I read several threads where people use 0% credit card offers to get out money ans invest it in a higher paying interest account to make money. I am interested in this concept, but it sounds risky. What are the risks involved and would you recommend it?

[Optsol]

YMMV, I wouldn't touch this kind of stuff. I'm probably wrong, but it smells of "damaged credit report" to me.

[dealsaver]

Originally Posted by Optsol

YMMV, I wouldn't touch this kind of stuff. I'm probably wrong, but it smells of "damaged credit report" to me.

If you know how to manage your credit score and are a disciplined, responsible user of credit, there should be no fear in "damaging" your credit report. My score has been near 800 while investing 0% credit card offers in the past.

[Optsol]

Originally Posted by Optsol

I'm probably wrong....

Nope, I'm definitely wrong

[twins0203]

I'm looking into this right now.

I have found a card w/ 0% on balance transfers and cash advances for 1 year. It has a credit line of up to $100k. Here's the url of the one I am probably going to use https://wwwa.applyonlinenow.com/USCC...;mc=A000001VAD

My idea is to apply for this card and a few others at the same time. Take advantage of the 0% on cash advance & balance transfers. Once I have a balance on this card, and the money in the bank, do smaller balance transfers from this main card to the smaller limited cards. Then do a second BT/CA on this main one. Then just pay the montly payments while the money that is owed on all these will be earning interest. The only thing I have to find out is if you can do a 2nd BT or CA on this main card after the first one is "paid off" onto the smaller cards. If not, I'll just work with the initial credit line and BT that they allow me.

And before I do any of this, I will read and look at each CC company's terms to make sure I don't get owned by them with any charges.

[Ima saver]

A few years ago, I kept getting 0% on balance transfers on about $2000 worth of credit. I kept transferring it and making the payments til I got it all paid off. I did not charge any more so they made no money on me and it did not hurt my credit rating, mine is 816. I never thought about taking a cash advance and putting it in the bank to earn interest.

I don't know if you would earn enough interest to make it worth your while? On $10,000, you'll only be making about $1 a day.

[twins0203]

Yes, on $10k you'd make $1.11 daily in an account that earns 4% APY.

Of course, depending on how much you can get will determine if this would be worth doing or not. An extra $5-10 adds up pretty nicely

And if you are good at managing your money, you could also lock in the borrowed money in a CD for a little bit higher interest rate and make a little more each day.

[Ima saver]

I guess it would bother me more to owe $10,000 than to make $1.11 a day. I really don't like debt even with no interest payments. but I can see where it might be a good idea.

[twins0203]

Yeah I guess knowing you owe like $10k or more would always be in your mind, but on the bright side, your savings account or whatever you place it in would look alot better, lol.

[Ima saver]

I think the older you get, the more you worry about owing money. I use to wish that I had a million dollars in the bank so I could just live on the interest. Now, it would be a little hard to do.(but it can be done)

[dealsaver]

Originally Posted by Ima saver

I guess it would bother me more to owe $10,000 than to make $1.11 a day. I really don't like debt even with no interest payments. but I can see where it might be a good idea.

I'm particularly debt adverse myself, but only when it comes to debt incured without good reason. I don't mind carrying debt that is attributed to an asset, particularly when the asset throws off a greater income than the interest attributed to the coresponding debt. This strategy really pays off when you're able to acquire large initial credit lines or consolidate existing lines into new 0% offers.

[DivaJen]

Originally Posted by twins0203

I'm looking into this right now.

I have found a card w/ 0% on balance transfers and cash advances for 1 year. It has a credit line of up to $100k. Here's the url of the one I am probably going to use https://wwwa.applyonlinenow.com/USCC...;mc=A000001VAD

My idea is to apply for this card and a few others at the same time. Take advantage of the 0% on cash advance & balance transfers. Once I have a balance on this card, and the money in the bank, do smaller balance transfers from this main card to the smaller limited cards. Then do a second BT/CA on this main one. Then just pay the montly payments while the money that is owed on all these will be earning interest. The only thing I have to find out is if you can do a 2nd BT or CA on this main card after the first one is "paid off" onto the smaller cards. If not, I'll just work with the initial credit line and BT that they allow me.

And before I do any of this, I will read and look at each CC company's terms to make sure I don't get owned by them with any charges.

I found this language at that link:

Transaction fee for Balance Transfers and Cash Advance Checks: 3% of each such cash advance (minimum $10, maximum $75).
See 3 below for explanation.

So I'm wondering - how do people borrow against 0% cards and still make money, given it seems they all have hidden fees?

[dealsaver]

Originally Posted by DivaJen

So I'm wondering - how do people borrow against 0% cards and still make money, given it seems they all have hidden fees?

The maximum $75 fee would easily be compensated for by the interest you could earn over the course of a year on a single $10,000 balance transfer into a high yield savings account earning 4%+. You might even be able to find a local credit union paying 5% on a one year cd. You could then deposit the minimum payments required over the course of a year into a high yield savings account and deposit the remainder into a one year cd. While keeping your individual and total credit utilization ratios in mind, you could stack a number of these deals together and put together the equivalent of a nice part time income.

[twins0203]

Would anyone care to explain the part in bold text? Is writing the CA check out to yourself considered this?

The Introductory APR is effective upon the opening of your account and does not apply to Purchases, or to Bank and ATM Cash Advances.

[Optsol]

I looked up a few things on this scheme this afternoon. Seems that you can leverage lines of credit as well to sweeten things out. The information that I dug up from people who have supposedly done this for years and years do indeed state that it does affect your credit rating, and that it's a continuous game of payment management. They also state that the Credit card companies have added things like bank transfer fees etc. to make this practice less profitable.

That's all cool, but it's not my cup of tea for a pre-tax $1.11 a day (or whatever is capable of making). Schemes like this are one piece of legislation away from being eliminated (bankruptcy reform ring a bell for anyone?)

[flash]

There are two different approaches to this.

If you consolidate/transfer existing debts to one card, but don't generate additional debt, it does not impact your credit. Most banks who offer this incentive provide a "no fee for transfer" to get your money into their system, and they pay off your other cards, so it's okay. They WILL NOT allow you to transfer the debt a second time, and interest DOES still usually accrue, it is just not applied if you pay off the balance before the 0% interest period. Most banks will NOT allow you to open more than one or two accounts in a six month period, also, so you are not able to keep card hopping.

It is a LARGE RISK to borrow against ANYTHING to achieve a higher rate of return. I've journaled about my brother doing this, refinancing against his home equity to put the money into high risk high yield accounts and HE LOST EVERYTHING.

For cc's, the credit bureaus will look at how many lines of credit you have open, and how much of your open credit is used. There is a trade off, lines of credit are GOOD things, but old unused accounts, juggling balances between accounts, etc. are BAD things for your ratings. Anything that flags a RISK to your credit lowers your credit scores.

[dealsaver]

Originally Posted by twins0203

Would anyone care to explain the part in bold text? Is writing the CA check out to yourself considered this?

The Introductory APR is effective upon the opening of your account and does not apply to Purchases, or to Bank and ATM Cash Advances.

Every issuer is different. The terms can vary by issuer and even within a single issuer. MBNA will typically allow you to make a BT directly to your bank account at the promotional rate when you apply over the phone. They may also issue promotional checks like the ones I have sitting in front of me that you can deposit into your bank account with a maximum fee of $75. This is completely different than using your card for a cash advance at an ATM or a bank.

[dealsaver]

Originally Posted by Optsol

I looked up a few things on this scheme this afternoon. Seems that you can leverage lines of credit as well to sweeten things out. The information that I dug up from people who have supposedly done this for years and years do indeed state that it does affect your credit rating, and that it's a continuous game of payment management. They also state that the Credit card companies have added things like bank transfer fees etc. to make this practice less profitable.

That's all cool, but it's not my cup of tea for a pre-tax $1.11 a day (or whatever is capable of making). Schemes like this are one piece of legislation away from being eliminated (bankruptcy reform ring a bell for anyone?)

I don't think this is even on any legislator's agenda.

People who have put time into developling large credit lines and massaging their credit profile can clear 5 figures in a year. That's not bad for something you can do in your spare time without ever having to leave the house.

[dealsaver]

Originally Posted by flash

There are two different approaches to this.

If you consolidate/transfer existing debts to one card, but don't generate additional debt, it does not impact your credit. Most banks who offer this incentive provide a "no fee for transfer" to get your money into their system, and they pay off your other cards, so it's okay. They WILL NOT allow you to transfer the debt a second time, and interest DOES still usually accrue, it is just not applied if you pay off the balance before the 0% interest period. Most banks will NOT allow you to open more than one or two accounts in a six month period, also, so you are not able to keep card hopping.

It is a LARGE RISK to borrow against ANYTHING to achieve a higher rate of return. I've journaled about my brother doing this, refinancing against his home equity to put the money into high risk high yield accounts and HE LOST EVERYTHING.

For cc's, the credit bureaus will look at how many lines of credit you have open, and how much of your open credit is used. There is a trade off, lines of credit are GOOD things, but old unused accounts, juggling balances between accounts, etc. are BAD things for your ratings. Anything that flags a RISK to your credit lowers your credit scores.

What are you talking about? We're not discussing transfering existing debt around here(and btw, transfering existing debt can affect your credit score temporarily if you don't time the transfer properly. You can appear to have twice your actual transfered debt if you aren't mindful of the reporting dates for both your cards involved in the transaction). Plus there's nothing keeping your balance hostage once it's been transfered to a new issuer. You can transfer it to a new offer at a different issuer at any time. Also the nonsense about interest accuring and due at the expiration of the intro period applies to certain consumer credit card deals on purchases, not balance transfers from prime credit card issuers.

No matter how many times you use ALLCAPS, borrowing from 0% and low interest credit card offers to invest in FDIC insured accounts is one of the lowest risk things you can do with credit, as long as you are disciplined and well versed in credit matters. If for some reason your credit card issuer decides to ratejack you, you simply cash out your deposit accounts and pay off your credit accounts. No harm, no foul.

[flash]

Originally Posted by dealsaver

What are you talking about? We're not discussing transfering existing debt around here(and btw, transfering existing debt can affect your credit score temporarily if you don't time the transfer properly. You can appear to have twice your actual transfered debt if you aren't mindful of the reporting dates for both your cards involved in the transaction). Plus there's nothing keeping your balance hostage once it's been transfered to a new issuer. You can transfer it to a new offer at a different issuer at any time. Also the nonsense about interest accuring and due at the expiration of the intro period applies to certain consumer credit card deals on purchases, not balance transfers from prime credit card issuers.

No matter how many times you use ALLCAPS, borrowing from 0% and low interest credit card offers to invest in FDIC insured accounts is one of the lowest risk things you can do with credit, as long as you are disciplined and well versed in credit matters. If for some reason your credit card issuer decides to ratejack you, you simply cash out your deposit accounts and pay off your credit accounts. No harm, no foul.

The threads I have seen posted about this, that I thought were being referred to, were ones on transferring debt. Yes, you have to time it and be smart about it. BTW, for the major offers that were out in the last six months, Chase, Citi, AmEx, the ones that have been highly visible (and I am sure there are many others) but these offered 0% transfers without fees, but if you tried to move it before the period, six months in general, there was a fee to transfer out. The new offerers didn't have a fee, but there were penalties. There was a separate thread on this, and I just went through it myself. And some of the offers, not all, did apply the interest as a penalty as well.

Borrowing from credit cards to make investments is a risk. To quote you, "to invest in FDIC insured accounts...as long as you are disciplined and well versed in credit matters". I've seen people really lose money trying to do this who are not disciplined and well versed, and who have invested in things like commodoties and house flipping, where there is a high risk, high yield situation. To me that's a risk.

This was my response to what I thought the question was. No need to be hostile. I use all caps because I'm old enough to have been on bitnet before we had nice things like bold and italic, and that was the thing, like using DH etc. is now. I'm catching up, and meant no offense.

I will gladly bow out of discussions to those with other experiences and perspectives.