Make money off a credit card?

[Blue Leader]

Hello all. My wife is in grad school and thankfully getting her tuition paid for by her employer. However, we have to foot the bill and then get reimbursed after they receive her updated transcripts every semester. This isn't a problem except for this semester.

One of her profs decided to take forever to give out grades so tuition is due before they will reimbursed us for the previous semester. Since we didn't have 5k sitting around we got a CC from our bank that has 0% for 12 months. They gave us a healthy 13k credit limit.

Here's the question (finally...once we get reimbursed the 5k, should I transfer any or all of the credit to a cd or high yield savings account up until the promo rate ends??? Is there something wrong with doing this? We will have about 11 months of 0% credit...

What do you think???

[safari]

Nothing wrong with your plan. I currently have $137K borrowed from credit cards at 0% sitting in CD's and high yield savings accounts.

[bjl584]

You're okay. Just don't miss a payment or you could get hit with late fees, back interest, etc. There is a link somewhere on this forum explaining all of this better. Can't remember who posted it originally.

[cptacek]

Nothing wrong with your plan.

As long as you are disciplined enough to stick with it and not use that money for anything else...

[Frugalicious]

Nothing wrong with your plan. I currently have $137K borrowed from credit cards at 0% sitting in CD's and high yield savings accounts.

Safari,
I have 1 card coming due in April. I will owe back around 17K.

Should I pay it all off at once? Online or by check?

Or in smaller increments?

I am planning on paying it back after the March closing statement.

That is 3 months from today.

Thanks for any advice!

[safari]

Safari,
I have 1 card coming due in April. I will owe back around 17K.

Should I pay it all off at once? Online or by check?

Or in smaller increments?

I am planning on paying it back after the March closing statement.

That is 3 months from today.

Thanks for any advice!

Continue making minimum payments until then, and before your 0% promotion period ends (in April), pay off the remaining balance in full. I pay all my credit cards online because it's convenient and I can schedule the payments in advance to be paid on the due date, so I keep the money in my savings account a few days longer. With a check you have to send it a week in advance; it could also get lost in the mail, etc. One advice that I have is if you're going to pay your credit card online, do it from the credit card's website instead of your online banking site. That way you protect yourself from a possible late payment. For example, if you schedule a payment on the credit card's site to be paid on the due date, it will be credited to you on the due date, even though the funds won't be withdrawn from your checking account until the next day. On the other hand, if you schedule your payment on your bank's site, you'll have to do it several days in advance of the due date to make sure that it will be received on time.

[Joan.of.the.Arch]

That's valuable advice, Safai. I've thought of doing this, but chicken out, afraid of forgetting to time it right.

[Hypersion]

Watch out for balance transfer fees. These can kill the deal since you have to pay taxes on interest you earn but you can't right off the fees.

SIS comes back with the App-O-Rama FAQ - AKA MAKING THOUSANDS OF $$ FROM CREDIT Link AOR stories and post your successes

[safari]

Watch out for balance transfer fees. These can kill the deal since you have to pay taxes on interest you earn but you can't right off the fees.

SIS comes back with the App-O-Rama FAQ - AKA MAKING THOUSANDS OF $$ FROM CREDIT Link AOR stories and post your successes

That's a good point. A lot of credit cards now charge 3% balance transfer fees with no maximum. The credit cards that I used to transfer balances to don't have a balance transfer fee.

[Frugalicious]

Continue making minimum payments until then, and before your 0% promotion period ends (in April), pay off the remaining balance in full. I pay all my credit cards online because it's convenient and I can schedule the payments in advance to be paid on the due date, so I keep the money in my savings account a few days longer. With a check you have to send it a week in advance; it could also get lost in the mail, etc. One advice that I have is if you're going to pay your credit card online, do it from the credit card's website instead of your online banking site. That way you protect yourself from a possible late payment. For example, if you schedule a payment on the credit card's site to be paid on the due date, it will be credited to you on the due date, even though the funds won't be withdrawn from your checking account until the next day. On the other hand, if you schedule your payment on your bank's site, you'll have to do it several days in advance of the due date to make sure that it will be received on time.

Safari,
Thanks for the explanation on repayment.

[Pleasenodebt]

You should not invest another banks money for your own personal gain. In addition to it being fraudulent the math/credit/risk/reward is very hard to achieve.

Safari mentioned that he has "137k" in borrowed credit cards at 0% in high yield savings and CD's. The only way that money could be earning money after taxes and fees and minimum payments that money must be earning at least 35% per annum in order to make to have a 3% ROI. The risks greatly out weigh the rewards. Keep in mind your credit rating will suffer during this time due to a huge DTI!

[safari]

You should not invest another banks money for your own personal gain. In addition to it being fraudulent the math/credit/risk/reward is very hard to achieve.

Safari mentioned that he has "137k" in borrowed credit cards at 0% in high yield savings and CD's. The only way that money could be earning money after taxes and fees and minimum payments that money must be earning at least 35% per annum in order to make to have a 3% ROI. The risks greatly out weigh the rewards. Keep in mind your credit rating will suffer during this time due to a huge DTI!

This makes absolutely no sense. When I borrow money from a credit card, I can do anything I want with it. I can either use it to pay off another loan or invest it. What's fraudulent about it? Where did you get the 35% number? As I said in my last post, I didn't pay any transaction fees. I can earn 5% without any risk whatsoever. Let's say, I borrowed $100K for a year, which will earn me $5K. After paying taxes (28% federal and 9% state) I will have $3,150 net income. The only valid point that you make is that my credit score will be negatively affected, but I am not worried about that because I am not planning to apply for any credit in the near future, and once I pay off my credit cards at the end of the introductory period, my credit utilization will drop below 5%, and my credit score will be high again.

[Frugalicious]

This makes absolutely no sense. When I borrow money from a credit card, I can do anything I want with it. I can either use it to pay off another loan or invest it. What's fraudulent about it? Where did you get the 35% number? As I said in my last post, I didn't pay any transaction fees. I can earn 5% without any risk whatsoever. Let's say, I borrowed $100K for a year, which will earn me $5K. After paying taxes (28% federal and 9% state) I will have $3,150 net income. The only valid point that you make is that my credit score will be negatively affected, but I am not worried about that because I am not planning to apply for any credit in the near future, and once I pay off my credit cards at the end of the introductory period, my credit utilization will drop below 5%, and my credit score will be high again.

Safari, I totally agree with you, and have done it (on a much smaller scale) and I have made money!!

I think some people, like my Dad, are curious, but are too conservative to move forward.

[Ima saver]

Safari, I agree with you also. I have done this on a small scale also. I just wish I could get more offers with no transfer fees.

[Pleasenodebt]

In most states you need a license to invest money that is not yours. This is the reason why online brokerage firms have consistently turned people that would not otherwise invest into small scale investors overnight. Being a licensed stock broker and long term financial planner I have studied and tried numerous times to use this credit card tactic for myself and other clients. We always made some money but a 3.15% return like you had is just not something you should be investing in considering the credit concerns for the future.

It would be a terrible shame to have to pay anything other than the prime rate on larger home loans or other borrowed monies in the future. There are plenty of mutual funds and ETF's that you could invest your return into that could earn a much greater sum of money for you.