0% Balance Transfers Questions & Answers: 3rd Half

Here is the 3rd half of questions submitted to me. Yes, 3rd half. I thought I could finish last time, but some of the comments had 6 questions within one comment ;) Not a problem, just took another post. This should just about finish my series on How To Make Money From 0% APR Balance Transfers (index of all posts).

You show how to “just get a cheque” for the CitiBank dividend card offers. I know that balance transfers normally cost 3%, or 75$, whichever is less. I also know that the Citibank card comes with a “free” balance transfer.

Can I make that “free” Balance transfer online, or do I have to do it on the phone with a less-than-fully-informed CSR? If I can make it online, how long after getting the card do I have?

Please see Part 3: Application Tips and Getting Cash From 0% Balance Transfers. How long you have depends on the offer on the card.

I know that citibank allows to take balance transfer as personal check.. but for discover, one needs to transfer the money to other credit cards and then take extra cash back from those.. Do all cards (e.g. chase, bankone, american express, citibank) allow to take extra cash back as personal check? ..

Also can one request the balnce transefer of say $X to card A, when card A limit is less than $X.

Please see Part 3: Application Tips and Getting Cash From 0% Balance Transfers. As for your Card A scenario, that should be fine. I’ve done it myself with no problems to American Express and Citibank.

I work in the credit card industry and I remember reading sometime back that you were trying to improve your credit score (pardon me if I’m incorrect). Even though you are good at paying all your 0% loans on time, what also gets reported to the bureaus is your total remaining balance(along with the type of credit – revolving in your case) and you are interpreted by the statistical model as someone who has undertaken a lot of debt and that works against your score to some extent.

Yep, your utilization (percentage of total credit limit used) does matter, I think I talked about this in another question already (2nd Half I believe). I’m not trying to maximize my credit score right now, it’s plenty good for what I need it for right now. I’ll pay off all the balances completely when I want to max my score.

1) How does opening up another account for this affect credit report, & credit score / fico? 2) Will the credit & fico score drop once you use the BT for that acct (since you will utilize most of its line)? By how much? How long? Does your score ever increase back to where it was prior to opening the acct & using the BT to almost max of your credit line? How?

Discussed earlier in the Questions.

3) How do you request a large line of credit for opening up a new account, if each of your accounts are like only 3k x 4? Do you inflate your income/& other income sources on the new application?

Maximizing your income is one way. You can also combine credit limits from cards from the same issuer. Sometimes you just have to keep building your credit history if you’re just starting out.


4) Have you or anyone else done this BT’ thing with any existing accounts? (If yes, then how do you avoid the 3% BT fee (and while many cards have a max limit of 60-75, i saw oon almost all mbna agreements that have no max limits for BT’s)? Is it worth doing this for 6 months, 0%BT? ( i havent seen any deals where the 3%transaction fee is waived for existing accts; have you?)

For existing accounts, the deals vary widely. You may get targetted offers. MBNA hardly ever waives their fees, but it has happened. If you call to cancel you may also get a good deal. Or they may just cancel your card :) If you talk diplomatically you may be able to feel out if they can waive your fees or otherwise give you a good deal.

I’m about to start my last semester in college and would like to take advantage of the high current interest rates. I just got my first credit card about a month ago. Wachovia gave me $1500 in available credit. I applied for a Citi rewards card. It’s in the mail and all I know is that I have $3000 in available credit. With available credit this low it would not make much since to do the balance transfer thing as 5% effective interest on $3000 would only work out to $150 per year. Some questions I have are…

1) What are some things I can do to get them to lend me > $20,000 at 0% interest in a relatively short time frame (before interest rates go down?)

2) If I do a balance transfer into a high yield savings account that pays 5% effective interest will it pay this amount the entire year? In other words, can the bank change the interest rate change during the year?

3) What is the most $ these credit card company’s are willing to lend people? I’ve heard of people with really good credit getting $100,000 before.

4) What would keep a person with good credit from doing balance transfers on like 10 or 20 of these cards. It seems like to me that you could find enough cards to do balance transfers for a year totaling $500,000 easily. 5% effective interest on a $500,000 would be $25,000 in free money every year! Why don’t more people do this?

5) Most banks are federally insured up to $100,000. In the case of the bank defaulting, how long would it take to get your deposit back?

6) Would you for someone to try this without having enough cash on hand to pay the card off in case of some unforeseen problems over the course of a year?

1) Increase household income on apps, combine credit limits.
2) Yes, savings accounts can change interest rates. Certficates of Deposit can be used to lock in rates for various amounts of time
3) It’s harder to get above about $30k on each card, but not unheard of
4) You’ll stop being approved for credit cards and/or limits after a while, but some people DO apply for 10-20 cards on the same day (discussed previously).
5) From the cases that I have read, it was about a month? I can’t recall exactly.
6) I always recommend having a backup plan to pay off the balance in case something happens. You can break CDs if you need to, just have a way to pay it all off quickly.

you are still paying the bills for these cards each month. So do you simply pay the minimum payment? And if so, do you pay it out of the money that you borrowed?

If that’s the case, then 20K would yeild slightly less than 1K in a year, right? Because you would be taking money out of the principal amount to pay off the minimum each month.

Also – How does this affect your credit report?
I imagine that your score would go down showing that much debt.
I’m curious as to your thoughts on the long term … with each one of these balance transfers you are having to open up a new credit line. Doesn’t having that many cards on your record lower your score?

I’ve been debating doing this – but my wife and I, like you and yours, and preparing to buy a house soon and I don’t want to do anythign that is going to lower my score at the moment.

On another Note Jonathan, I just want to thank you for the blog.
Ever since I found it I haven’t missed a post – on top of that I now have my wife reading it, as well as one of my sisters (who called me one day with some questions about online savings accounts – I immediately sent her to your blog).

Yes, still paying the minimums + $1 each month. Yes, the yield would probably be less. Credit score questions previously discussed. The raw number of credit cards has little effect on your score. Thanks for the kind words, thanks for reading my blog!

What does this do to one’s credit rating and credit availability? I have one kid in college and another in two years and will probably need to do a home equity loan. Will all the outstanding debt hurt?

Credit questions addressed previously.

Also I was wondering if you knew anything about combining cards to increase my credit limit. I currently have 5 citi cards can I combine all the credit limit to one large one? Would it be best to leave the other cards open or close them? Everywhere I look they say leave them open cause the avg age on the credit score. But the accounts are generally less than one year old so is there a real benefit to leaving it open vs closing? It seems like closing would allow me to reapply in 60 days and get the promotions again plus have more credit to combine into the main CL. One last thing, on my oldest card does the limit matter on my credit score? ie say I have a card from 98 with a limit of 3K but my card from 05 has a limit of 25K , would i get a bump to combine my 05 and 98 cards onto the 98 card? Any thoughts on the best way to manage this to make my CL get LARGE FAST would be great.

You could combine your Citi limits, if you have really young cards I would go ahead and close them. Try to keep the oldest card open. I don’t think the limit on your oldest card matters very much if at all, but combining limits overall may help.

I used your advice about the free $ in the form of a balance transfer (From citi for %5500)- I always pay off all my charges on my card in the month they come due so for July my balance is $5581.11 and my current minimum payment is $83 which of course I will pay-but I am told this amount will serve to pay down the $5500 and I will have interest charges on the $81.11 since any payments go against the amount with the least interest. Maybe if you could mention something about how this works would be good.

Payments always go toward the balance at the lowest rate. This is why, if only the balance transfer is at 0%, you should have a zero balance before asking for a balance transfer. Since it seems you already have a purchase balance not at 0%, you may have to do some math to see if it would be worth it for you to continue.


Could you describe how you monitor these 0% BT’s? I imagine you have to watch them like a hawk because little details (e.g. BoA having a Sunday due date, but no bank processing on a weekend) can trip you up. I know this sounds silly, but maybe could you describe a timeline describing what you do from account open to close?

Please see Part 4: Setup And Management of 0% APR Balance Transfers. For the duration of the BT, I just pay the minimum amount like any other bill. Get a bill. Pay the bill. Get the bill. Pay the bill. Nothing special, I don’t even set automatic payments. The only somewhat hard part is to remember to pay it ALL off by the end date, for which I use multiple online reminders.

Tip on due dates: many of us set up an automatic bill pay for the zero transfer loan monthly payments, BUT WATCH the due date! My Citicard bills have had due dates that range from the 24th of the month to the 3rd of the following month. The point is that if you set an auto date for payment and its late because the card company upped the date on you, you might lose your zero interest rate.

I included this tip in Part 4: Setup And Management of 0% APR Balance Transfers. Always give yourself some slack either way if you choose to go automatic.

Unfortunately it seems all of the really good rates have caught up with me. The best available to me right now is 4.9% on my Discover card. Any suggestions you can offer me to getting a 0% rate?

You can apply for a new 0% card online, or try and call your current company to haggle. Waiting for an offer in the mail is always hit-and-miss.

I have a high yield savings account with capital one that I planned to use for this but most credit card companies will not let you pay by savings account since it doesn’t have check writing ability. Do you pull the money out of you savings and move it to a checking account and then pay the credit card?

I use a high-yield checking account myself to avoid stuff like that, but see Part 4 and also the comments for some warnings.

I just got a chase card with a 12,000 limit, and they attached a ‘balance transfer’ check as well. Fees for the transfer are %3, but they specify in the agreement that the checks can be used ‘to pay for goods and services, to transfer balances to your account, or for other uses we allow.” What I want to do is deposit $10,000 into my vanguard money market account with this check. The back of the check specifically states that the APR for the attached check is the standard rate for balance transfer checks on my account (0% till 12/07).

You can always call them up and ask, but I don’t see anything wrong with it unless they explicitly disallow it. Just be sure you are okay with the fee they charge.

I’m sure you’ve had this question many times already…what’s the best way to get money out of a BT offer and into a personal account?
I know citi let’s you just request a check to yourself, and I guess you could also do the BT to your citi card and request a Credit Refund right? eg Chase BT to Citi, refund from Citi

But what about if the credit line on the card transfered to is less than the BT amount, is that gonna set off all sorts of red flags and hassles to get a refund?
eg Citi credit limit $10k, Chase credit limit $20k. Do a $15 BT from Chase to Citi

First part covered in Part 3: Application Tips and Getting Cash From 0% Balance Transfers. Second part – I’ve done it before with no problems.

And that’s it! Thanks for all the questions, it totally helped me make the posts better. In retrospect, it would have been better for me to go through all these questions and organize them all into something more palatable, but I took the lazy way out this time. If you still have questions after reading all of these first, you can leave a comment below. But please please read through to see if it’s already been answered – thanks!

Comments

  1. Hi Jonathan! I think I am going to take the plunge after reading through all your great advice and comments. Ive spent days reading over it and this seems like a great way to use free money!

    This might seem like a simple question. But I was wondering, how do you report and pay taxes on a savings account? I assume you only pay taxes if you withdraw funds. Does this just go under investment profits on your tax return? The am a new investor and the only time I have ever reported investments were from a mutual fund withdrawl, and they did all the work for me by giving me an end of year tax statement.

  2. Savings accounts will send you a 1099-INT at the end of the year with the interest that you earned, whether you withdrew any money or not. You will include this interest as unearned income on your tax returns, and pay any taxes accordingly.

  3. jonathan. thanks so much for the bt q&a!

  4. I wish you hadn’t written all this out. The party won’t last, but why hasten its passing?

  5. Some info from my experiences:
    1- A couple years ago I did a 0% BT with no fee from Capital One (before I found your Blog – make sure you know when you they start charging their APR and doublecheck in writing) Months after paying off the balance and not using the card, they send me all these purchase checks with no transaction fee. Note that these are Purchase Checks, and not Cash Advance Checks, which I shred as soon as I receive them. What I do is write a large sum (up to my Credit Limit) and deposit it to my checking account on the first day of my billing cycle and then not repay it until my statement bill is due. then repeat every two months. I get a free loan for two months and they keep sending me more no fee purchase checks.
    2- My AT&T Universal Card gave me some nice no fee balance transfer offers. I paid off any balance to avoid my higher purchase APR then transferred money to pay off my discover Platinum Card (which is the one I actually use for purchases) After a few days I talked to a DiscoverCard CSR and received a check for my remaining balance in my mailbox after about a week.
    Sometime it pays to open your junk mail!

  6. I don’t think this question has been asked yet… Does anyone know if the IRS gets suspicious of all this extra money borrowed on cards earning interest for you in a bank, especially if the borrowed money is substantial like $20,000+? I would think they would be more likely to audit someone with this situation.

  7. I imagine it’s barely a blip on the IRS radar. Plenty of people have $20,000 in credit card debt just from buying junk they don’t need. And just as many people have that amount of money in their bank accounts on a daily basis for whatever reason.

  8. The IRS doesn’t care if you borrow money from banks at favorable terms. Potentially it could increase your audit risk, but I have nothing to hide from an audit, and employ an expert accountant. No, the IRS doesn’t care. But the banks do! If enough of us start doing this, it will become much harder to do. And that’s why I regret this disclosure.

    Knock yourself out, kids. If enough amatuers try it, enough will screw up, and banks will continue seeing merit to the feature.

  9. Is it possible to get $1,000,000 credit line/balance transfer if you make $125,000 a year and have $650,000 in liquid assets? What is the max credit line you have based on your income? What is the maximum amount of credit you think I could get based on my profile?

    Thanks

  10. I imagine it is possible. Banks are in the business of giving you rope.

  11. Wouldn’t all the interest you earn in the high yield savings account have to be paid back to the credit card company in the form of minimum payments? Example: a $10,000 balance transfer from citi for 12 months at 0% APR into Emigrant would pay $41.98 in interest for the first month. The first month’s minimum payment on the card would be like $200.

  12. EDIT THAT

    In the above post at the end of year 1 you should have $8046 in principle and interest rolled up in Emigrant. The balance on the card at that point will only be $7600. $8046 – $7600 = $446 in profit for an overall rate of return of ~ 4.5% with virtually zero risk.

  13. Which cards offer the lowest minimum payments? Are there any that allow you to pay

  14. less than 2%? Less than 1%?

  15. Hey Jonathan, just wanted to say thanks for your advice on the 0 interest game. I think I am off to a great start. I got a offer from Chase for 18 month zero interest on balanace and purchase with no transfer fee…

    I applied for 18,000 (wanting 15,000) and they just approved me for 24,000….Wow. They actually have me more than I asked for. So now I have to decide if I want to max out the card or set my credit utilization at 15,000 as I oringially intended, thus not hurting my score as much. Do you think it matters much if it is already over 50 percent utilization?

    I have a question though. You seemed to suggest paying back the monthly minimum with the orginial ‘seed’ money. However wouldnt you make more interest if you just pay the monthly minmum out of your own pocket? I figure you get you money back in the end when you pay back the whole loan.

  16. Hi Jonathan,
    great summary of questions – I’m missing one answer though: When I do a balance transfer (e.g. $5000) with a fee of $75 and my offer only includes 0% APR on balance transfers (not on purchases) would I be charged interest on these $75? My initial balance on the account would be $5075. During a 12 month period paying interest on the $75 would reduce the profit made in ING.

    Steve

  17. This article from Smart Money talks about credit card companies jacking up interest rates when a persons credit score goes down (i.e. higher credit risk). Reasons they give – getting too close to the credit limit, applying for a new card, or having too much credit available.
    This can’t be true, can it?

  18. “I have a question though. You seemed to suggest paying back the monthly minimum with the orginial ?seed? money. However wouldnt you make more interest if you just pay the monthly minmum out of your own pocket? I figure you get you money back in the end when you pay back the whole loan.”

    It’s all the same money isn’t it? Yours, theirs, the only difference is the mental accounting.

    Steve – Yes, you’d have to pay interest on the $75 if you get charged a fee. But that would probably be something like $1 a month, not very significant.

  19. I know this question comes quite some time after the original post, but I hope it will still be answered.

    I have a Visa Check card and wondered if I sign up for a new card and make the balance transfer TO the Visa Check card account, would it just be automatically deposited into my checking account? Or would they just reject the balance transfer?

  20. Nathan – There is a good chance that it will be rejected by your bank. Otherwise, that would be the best way to get access to your balance transfer money by far.

  21. I haven’t read your posts regarding these balance transfers in their entirety, but one thing people need to be informed of is the tax on interest income. So depending on the invididual’s tax bracket, he will have to pay some $100 or more of the $500 in taxes. This is especially important to consider when you’re doing a non-0% APR balance transfer (i have 1.99% until paid off and 2.9% until paid off deals). The net income from the transfers may not be worth as much as we think.

  22. Dude from Texas says:

    Jonathan,
    I agree with everything you’ve said in this series. I’ve been doing this BT game (on my own) since August and now stumbled upon your site (a friend told me about stopbuyingcrap.com). Good site, good info! Thanks!

  23. Jerry from Ohio says:

    Great website! Question though for anyone who might have an answer:

    I applied to the Discover Miles card that was highly recommended. I applied for a balance transfer of 25K to my other Visa that only has a balance of about $1000 on it. I was simply denied and then offered some other card with less attractive terms. My credit score is 810 & my household income was maxed out according to the category choices. Did I do something wrong???

  24. Hey Jonathan,

    I just wanted to share my recent transactions with you and and the 0%BT community. Maybe you or someone else can suggest something useful.

    So I applied for three CC simultaneously and requested $12K balance transfers.

    1. Bank of America – $9K ($8K BT) approved and processed to a CHASE CC
    2. Discover Card – $6K ($5.7K BT) approved and processed to CITI

    3. Citi Card requested too much information: they wanted me to send them my bank statement, phone bill, pay statement or a tax return.

    I don’t think I will pursue citi CC besides I do not have a landline to prove my phone address. It is a cell.

    I requested a credit refund with chase of $8K they told me that they will notify me regarding the status of this refund within 8-10 business days. The problem is that my credit line on the card is $1.5K only and suddenly they got a check for $8K. Of course I am not doing anything illegal but I still feel they might capture the money for a long time.

    So you think they can even send the money back to Bank of America?

    I also wonder how to get away with not having a land line. I perfectly get around with my cell. I have no utilities bills except cable bill and bank statement which they require regardless. Any suggestions?

    Thanks.
    P.

  25. Cameron says:

    What happens if you incur an unexpected debt that is called and ranks ahead of the credit cards? Most common two possibilities: tax assessment or lawsuit damages. Forced liquidation will see this juicy pile of cash and seize it; they do not care that it offsets other lower ranking liabilities. Now you have a pile credit card debt and no offsetting assets. And thanks to new bankruptcy laws rigged by the credit card companies, even declaring bankruptcy may not save you. So now you’ll be working a long time to pay that off.

    Not a bad idea but for

  26. Cameron says:

    less than $1000/yr the risk/reward seems out of line.

  27. The risks you are talking about seem unrealistic to me.

    What kind of crazy tax assessment are you talking about? I don’t know of any tax assessment that swoops in and freezes assets instantly. I can pay off all my cards in a matter of days. Besides, I pay all my taxes carefully. :)

    Liability – I pay $250 a year for $1 million of umbrella liability insurance. That’s already less than the $1,500/year in profit, and I would have bought it anyways.

  28. Cameron says:

    For you personally yes, the risks may be carefully balanced, but I see a lot of people here who think this is great idea but may not have the same risk balance. Consider:

    - people who live in a condo can be hit with capital assessments at any time in many jurisdictions. These assessments often outrank all other debts except taxes.

    - income tax audits/reassessments (not to mention property tax reassessments) can occur at any time no matter how carefully or honestly you think you have filed. These debts typically outrank all others.

    - depending on the jurisdication you live in, something as simple as a car accident can cause millions of dollars of damages assessed by court order.

    Any one of these liens may by themselves or combined with a failure to be able to pay, trigger default clauses in other debt covenants including credit cards that causes a domino liquidation of your assets.

    I’m not trying to be alarmist about life in general here. Anyone who chooses to participate in real life is at risk of such personal “black swan events”. It’s just a fact of life we need to deal with. But people should not be fooled that this plan, while clever and clearly working well for you, is somehow free of risk and equally risky for anyone who tries it. And given how small your gains are in real terms, the risk/return seems potentially out of line for many people.

  29. Forgive me, but such a scenario still doesn’t make any sense to me.

    Please give me any scenario where an entity can come in and take control of my bank accounts and take what they wish. Even a home foreclosure doesn’t do that. An income tax assessment won’t be in the millions, and would put me on a payment plan. Sure, one debt may “rank” above another in terms of a bankruptcy hearing when liquidating my assets for some multi-million catastrophe, but in that case the unsecured debt would disappear anyhow.

  30. Dear friends, I just wanted to update my post on:

    “Paul Says:
    April 18th, 2007 at 6:52 pm”

    Everything went smooth and even smoother than I expected. Both banks (Citi and Chase) returned my money within 10 day period. I also had another Bank of America credit card and I consolidated it with the new one. Thus I got a credit line with around $20K. Since the new account offered BT checks I was able to cash $20K. The only minus is that it is for 6 months only. But the same scheme should apply:

    I will get a new credit card with BOA. They will probably approve me for a little credit line. I will consolidate it with my old $20K account and wil be able to borrow $20K for the next 6 month term. You think it should work?

  31. Hey guys, this is probably not a question about the BT deal but it still concerns credit cards.

    Just let me know what you think about the following situation.

    You know how credit card companies offer free sandwiches or T-shirt if you apply for a credit card. I didn’t want to get another useless credit card on campus but desperately wanted a free sandwich. So I figured out a strategy. I give them all correct information about myself except my social security. I came up with this random number and kept giving it to credit card companies on different applications. It worked fine. I kept getting free food and receiving letter saying that they cannot issue a CC because my social is off.

    Except for the last time! I received a credit card from Chase with a fake social. $3K credit limit. I was shocked. I am not sure what to do now. there are few possibilities: either they included my new SSN in my old credit file together with my old SSN or I JUST CREATED a whole new identity.

    I was thinking of calling them an telling that my SSN is not correct.

    It just amazes me how hard it was to get a CC from Bank Of America. They had to call me back many times and verify my credit file. They had to call the phone number at my work to check if I am there. I had to answer all kinds of questions about my credit history. With Chase – I applied with a random SSN – and here we go! $3K credit card in my mail box assigned to an SSN that never existed!….

    Any comments on that ?

    Paul

  32. Paul:

    That seems, um, a little shady for me…what getting a fake social security number and all….

    Seems more like deliberate fraud and/or exploitation than a clever way to be a simple arbitrage game.

    I’d be very careful applying for credit with fake info.

  33. Oh, no Nick, I am not doing it for this game. I just wanted a free sandwich and didn’t want another CC. therefore I gave them a fake SSN. I never though it would go through….
    Paul

  34. I did a quick spreadsheet for after-tax returns, assuming I started out with $2500 in my ING savings account, got 12-month 0% balance transfers, paid the monthly 2% minimum out of the same account, and am in the 15% bracket. The results are a little depressing: as you increase your loan, your percent return goes down.

    BT amount, after-tax gains, percent gain (on loan)
    $5,000.00 $251.24 5.02%
    $10,000.00 $413.17 4.13%
    $20,000.00 $737.02 3.69%
    $30,000.00 $1,060.87 3.54%
    $40,000.00 $1,384.72 3.46%

    So between 30k and 40k, 10k more on your balance transfer, seems to just get you $300-ish more. But $300 is $300 eh? :) Thanks for the informative post.

  35. I wouldn’t recommend this for 99.999% of the people out there. Bad idea, even if you keep your hands off the money while it collects interest if something happens to you your family is going to get left in serious debt if they don’t know what you were up to. If you want an extra $1000 over the course of a year ask the boss for a raise, have a garage sale, carpool etc. Certainly easier ways to make/save $1000 than this without putting your credit and family at risk.

  36. Hi,

    I have few questions regarding closing of cards and number of cards. I posted these questions in another blog but no answer yet.

    I want to close some of my credit cards. I have 10-12 credit cards. some of them are 5-6 years old and some are 1-2 years old. Which one should be closed? what is the effect on my credit history for closing a card? How many cards should a person have that won?t affect the credit hisory i.e. Is there any criteria in FICO score that says you should not have more than X number of cards?

    Is there a hit on credit history if I open a card and don?t close it and never use it? what is the safe number of credit cards?

    Thanks

  37. If you want to close then, you should close the younger ones. There is no criteria that there is too many credit cards.

    As long as you open a card, the age of that card will average into your average credit line age. So if you open a new card, the age will decrease. But if you have a lot of older cards, then the average won’t change that much. This is why I don’t really close old cards, because I want my overall length to be high.. Sooner or later my young cards will be old cards.

  38. Just received a new ATT Universal card with 15k limit. I tried to move my 11k credit line over from a Citi Simplicity card. Citi said that policy right now is not to allow the combining of credit limits on balance xfr cards. Confirmed this with a manager. Obviously this hurts those of us trying to maximize our O% offers,

  39. Should i transfer a credit balance to a new card for 0% 12months, and transfer it back? 1st transfer would be 3% 99$ max…but to transfer it back, it will be $0

  40. Rupen Patel says:

    There is some great information here. Thanks! But in real terms if you put this money into US government T-bills with inflation averaging 2.5% you are only making 2.5% on your money. Currently inflation is just below 2%, but the Fed has dropped rates and will likely do so again this year. This will be inflationary.

    It’s probably better to put your money in South African bonds which are currently yielding 9.5%, or even New Zealand bonds @ 7%. You should be able to buy them through an Interactive Brokers account.

  41. Fernando Ruiz says:

    I want to apply for a Citi Professional MasterCard, but the agreement reads, The Account established and Cards issued hereunder shall be used only for business purposes and shall be governed by the cardmember agreement (“Card Agreement”) provided when the Card is issued, and as it may be amended from time to time. Citi ProfessionalSM Card is considered a business purpose credit card and not a consumer credit card. Please note that certain consumer rights do not apply to this account? Do you think, this mean that I cannot use it to buy living room furniture or any item that is not business related? On the other hand, do you think it means that those items do not qualify for thank you points?

  42. Hi Jonathan – you’re missing some beautiful weather in Portland:)

    I have two young children (one is 3 years old, one is one month old) and was thinking that if I could get balance transfer cards in their names, it might be a good way to supplement their college eduation. Is it possible to get a card that young, and if so, can you think of any pitfalls? One I can think of is ending up with an 18 year old with the ability to get an enormous line of credit. Thanks.

  43. I recently did the 0% first time, went quit high, but still, using only 2/3 of my credit line.
    After few months, suddenly Citi told me they closed all the 4 accounts I have with them.
    The reason- ?sufficient number of cards with balance near the credit line?.
    As they admit, the credit report is completely clean of any fault (and I verified it again), however, they evaluate it as high risk with the relative sudden change.
    They said I keep the 0% balance, and pay it by the original terms, but, the accounts are closed.
    Any suggestions?
    Should I fight it?
    One of their card was for regular use (12 month 6% cash back promotion). Do I have a case to say they offered me a special deal for 1 year and broke it suddenly, for absolutely no fault on my side? Should I do it?
    Anything I can do to make sure other banks do not follow?
    Thanks for your help.

  44. Hey guys,

    I applied to 6 cards at the same time for the BT deals. It looks like I am approved at least for 4 of them. I am about to get myself into $60K (sixty) debt. I know I won’t spent the money and will be able to pay it off as soon as 0% expires. However such a big sum makes me worry about some adverse actions my creditors might take learning I have such a big debt. Any thoughts?

  45. Word to the wise… I transferred $4200 from a Bank of America card to a Chase card that I hadn’t used for a few months. Chase says that it will take 30 days to get a refund of the overpayment. Why so long? Because they claim that the government requires them to file all kinds of forms and information to track possible money laundering and terrorist activities. So, I guess I’m on a government list somewhere now. Hopefully I won’t have any problems getting on an airplane because of credit card arbitrage…

  46. Jim,

    Don’t worry about this. It happened to me too, when I first overpaid $16000 on a credit card. There are two points I would like to tell you:

    1. They need to hold the money so they would know for sure that it has nothing to do with money laundrying and other illegal activities (refer to the Patriot Act – I assume you are not a terrorist so there is nothing to worry about)

    2. If the bank will get back to you, you can always say that you planned to charge you 120″ plazma screen TV on your old card and you just transferred the balance in advance. But then you changed to your mind – everything is legit here.

    PS Although they said that they will hold my money for 30 days, I got a refund check in less than 10 days.

    PPS A 120″ plasma TV doesn’t exist yet, I believe. But charging a car to a credit card is totally possible.

  47. Hello Everyone, I want to ask for your opinion.
    One year ago I charged $25000 in 0%APR BTs
    And Six month later I added another chunk of $13000. Now I am investing around $50K under 6%APR and the rest 3.85% APR. Both are risk free. The problem is the following. A bunch of my cards will have to be paid in May, the other half in November. I will lose the substantial amount of funds for the six months. MY cards are now paying a big part of my rent nicely… I am bitter to wait till ALL 0-BT expire so I can have a clean history.

    Would you suggest paying everything off and applying for new cards in 2 months. Or should I just try to apply for new cards after paying off the half of the accounts ?

    Here is my distribution: Amount and when 0BT is over
    1. CHASE $14K – OCTOBER ’08
    2. BOA $17K – MAY ’08 :((
    3. DISCOVERY $5.5K – APRIL ’08 :((
    4. CITI HOME $4.3K – OCTOBER ’08
    5. CITI PROF $7.3K – OCTOBER ‘ 08
    —————————–
    TOTAL: ~$47K
    TO PAID SOON: ~$22K

    I also have $8K in debt but this one is for 2% APR that never expires. I am not paying it off for next five years. By paying $22K I will lose around $80 monthly…. should I pay wait and apply again or pay wait a little bit and apply for new debt ?

    Any input from you would be appreciated.

Trackbacks

  1. [...] Ok, I think that’s the bulk of the walkthrough. I hope it was helpful. I know there are a ton more details that I haven’t covered. Don’t fret! I made a list from your questions and gave my answers. See Part 1, Part 2, and Part 3. Please read through it, I think 95% of questions should be answered by the end. If not, leave a comment. Thanks! [...]

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