Using Credit Cards To Earn More Money

[gavinmccallister]

If you have a merchant account or know someone who does, charge the full credit line $10,000 or more. Take that money and put it in a high-yield savings account there would be no fees because it was a sale and you would pay your card off at the end of the month. That would earn you $500.00 @ 5%

[Haku]

Smells fishy.

[sweeps]

It can be done -- there are other threads on this topic. However, you have to watch out for fees and the potential hit to your credit score due to the higher debt-to-available-credit ratio. Also keep in mind the interest from the CD is taxable.

[Haku]

Hmm. Perhaps I've misunderstood something here.

Savings accounts offer interests in APYs right? As in, Annual Percentage Yields right? If so, and a Savings account offers 5% for 10,000, you do end up with $500, but that's per year. However, per month, you have to divide that by 12, and you have about $41.67 per Month.

$41 dollars is still a nice little sum, but probably not worth the hassles and fees involved of playing around with a credit card.

Either that, or my credit union has been holding out on me... in a massive way!

[Haku]

Waitaminute. Um, and again, feel free to correct me if I'm wrong, but Certificate of Deposits (CD) is not the same thing as a Savings account (which by the way is not always the same as a Money Market account while we're at it). Plus, I don't see any CD's that can be had within a month....

If I am confused, and I am, please feel free to clarify.

[sweeps]

Gavin is referring to earning 5% over a year. You're right, the monthly return on a $10K balance transfer would be relatively small after taxes and fees. Probably around $30 a month.

[Haku]

I see. In the original post, Gaving said, "you would pay your card off at the end of the month." By that, I had assumed that this was a one month venture. However, even IF it was a one YEAR venture, he would have to pay a small minimum on that credit card while it accrued interest... each MONTH!

It may have been a slip of a single word, but either way, it's still a lose-lose proposition to me.

[sweeps]

You have to pay the monthly minimum, but the interest accrued is 0%. It's very important that no purchases are made on the card while this is being done. Also it's important to pay off the balance before the 0% promo ends.

Profiting from balance transfers is an advanced technique. Research should be done before attempting it.

[Haku]

Forgive me if I sound conceited, but it's not really that advanced, is it? Just paying something off before it's due, and making sure you don't get hit with any hidden fees. However, to do so means that you have to have additional capital somewhere else to pay the monthly minimum while the original is either tied in CDs for a year, or having to pay with the borrowed amount sitting in the Savings. Either way, you still lose out....


Also, the original poster did not specify that the credit card is 0% in interest, which if you're by that point, hopefully one has moved on to bigger and better things than juggle credit cards.

Hmm. For a new guy around here, I don't think I'm starting off with a good impression. If I've stepped on any toes, I apologize. It's just that, I think the idea only sounds good in concept, but not in practice.

[sweeps]

Nah, don't sweat it. Gavin left out some critical details in his post. This topic has been discussed numerous times: here, here, and here for example. The reason why I consider it an advanced topic is it's very easy to mess it up for the relatively small reward earned. If you read on some of the other finance sites, you'll hear stories about how people messed the scheme up -- either by losing money on the deal or by hurting their credit or both. I didn't mean to imply that it was too advanced for you -- just that it's not for the average Joe.

[Ima saver]

I have to agree, it is not enough money to justify the time and trouble for most. Some people love stuff like that. I know absolutely nothing about computers which is why most of my savings and money markets are kept locally.