Comments on: Make Money From Credit Cards: 0% Balance Transfer Profit Calculator Tool

By: Credit Cards Are Good

Credit Cards Are Good — Mon, 04 May 2009 16:59:12 +0000

[...] Free money – credit card arbitrage: (Note: this is only for experienced credit card users and not recommended unless you completely understand what you are doing, and are responsible enough to follow through with it). Credit card arbitrage entails taking a cash advance on an introductory 0% interest credit card offer, investing the money in a bank account to earn interest, and paying minimum payments until right before interest kicks in, then paying the card in full. Some people are able to do this to the point of having $100,000 in credit card debt, but the debt is actually cash which is earning them money in the bank. Use this calculator to determine how much you could earn from 0% balance transfers. [...]

By: Emil

Emil — Sat, 26 Apr 2008 00:36:03 +0000

It’s absolutely true that this strategy can hurt your credit score, which goes down if you have maxxed out your cards. But not necessarily by that much — I am an extreme example, but I had up to $20-30k of maxxed credit cards when I got my mortgage last year, but otherwise had stellar credit — and my FICO score was still 729 even with the credit debt. I do not recommend this if you are trying to get a loan (ie. buy a car or house) soon. If your credit score is not as high — the drop in points could dramatically affect you. But you should be able “fix” this immediately by simplying paying off the credit cards and allowing the FICO credit score to increase — about 3-6 months in advance of trying to get a big loan, etc.

By: Emil

Emil — Sat, 26 Apr 2008 00:28:02 +0000

I’ve been doing this for 5-6 years. My cousin did not pay rent for a year while I was in college, and I ended up with $4k in debt. Since I had stellar credit, I kept using 0% offers (albeit usually w/2-3% balance transfer fees). It’s still the equivalent of the best loan you can get — it matches inflation. Now I’m out of school and working — but I still use this strategy and it’s worked amazingly well — saving thousands.. NOTE that THIS strategy only works in the long run if you have incredible discipline and don’t overspend what your expected salary will be. For example if you accumulate $20k in debt and make $20k per year, you are going to be in deep trouble over the long run. I’ve invested all my savings, and never turn down 0% financing or credit.

By: Angela

Angela — Wed, 12 Dec 2007 16:33:15 +0000

I have two credit cards that are maxed out and on one I’m paying 24.9% interest and the other 20%. It’s disgusting. I make payments of $500 to each of them but it only goes towards interest so I never pay my balance down. I have tried getting approved for balance transfers to lower interest rate cards but I get denied because I’m maxed out on them both. It’s a vicious cycle that I feel like I’ll never get of. Does ANYONE have any suggestions? Are there credit card companies out there who will cut me a break? Making monthly payments is not the problem as I can easily do that…

By: Joe

Joe — Wed, 21 Nov 2007 17:04:28 +0000

I just learned that Citi doesn’t report business cards to the credit agencies. About 9 months ago they switched my citi personal card into a business card when it came up for renewel. I really didn’t think much about it until I found out that my 5 years of credit history with this card was wiped clean from my credit report. I obviously took a hit on my credit score but it allowed me to take out a balance transfer which doesn’t affect my credit score. Some food for thought.

By: christy

christy — Thu, 27 Sep 2007 01:37:48 +0000

Is the 50 bonus still good for the AT&T Card? I did not see that on their site.

Thanks!

By: Kevin Spring

Kevin Spring — Wed, 15 Aug 2007 00:25:58 +0000

I don’t have to worry about my credit score. I don’t borrow money to buy things. I don’t understand why anyone would finance a depreciating asset such as a car, boat, or electronic device. I can understand buying a house but when most people finance things they buy more than they can really afford. I am going to buy a house and car the same way my grandfather did, with cash.

By: savingeverything

savingeverything — Tue, 14 Aug 2007 02:25:52 +0000

SanDance… not all the time will “most banks give you at least one strike before you are out.” In my situation (when i was was exactly 71hrs late, ) I called, and tried to get Chase to waive both the late fee and finance charges on my balance and even said that they will lose my business if they dont. However, the only thing the lady said was they will waive the $39 late fee; and they apologized that they wont do anything else and hope i still stay with them. Unfortunately, I was not doing a BT thing, and was charged almost 17.99%.

By: Dave

Dave — Tue, 14 Aug 2007 00:49:00 +0000

I would strongly advise against this strategy for those who will soon be seeking credit (auto loan/mortgage). Depending on your credit limits and situation of course, this could drive up the utilization of your revolving credit… dropping your credit scores. Not really that big of a deal if you’re not shopping around. At would say at least try to keep your utilization below 50%. Thoughts?

By: SanDance

SanDance — Mon, 13 Aug 2007 15:52:28 +0000

Thanks for the correction TW. I see noe that you meant moving credit limit, not balance. Sounds like CitiGroup is getting wiser to this play. I need to do a Credit Limit move at Chase soon and wonder if I will be able.
Note to all the skeptics, like Shak, who say: “If you make one mistake, you will pay a heavy price.” My wife forgot to make the first payment on a new BT card recently. She got hit with late payment fee and all that. She just made the payment as fast as she could, called Bank of America, got the fees refunded, and even got the 0% back for the full term of the offer. (Most of ) These companies would much rather keep you as a customer than lose you for a $25 late payment fee. Most banks will give you at least one strike before you are out, all you have to do is pick up the phone or go to a local branch and ask nicely.

By: Mark

Mark — Mon, 13 Aug 2007 10:50:42 +0000

Regarding Credit Score and Insurance Companies.

I just recieved a letter yesterday saying my insurance company (American Family). pulled my credit score resulting in my “premium being higher”….

I had borrowed about 24k from CITI (at 0%) for the last year ending in July having paid all of this back to CITI…. however AMFAM pulled my report or score? in June. I have viewed my credit report every year since the annualcreditreport.com site went up and as far as I know AMFAM has never done this before.

btw, my credit should be perfect; it was around 750 when I did my last mortgage three years ago as I recall.

I am calling AMFAM today..!

word to the wise; consider calling your insurance company before you do the arbitrage.

By: random

random — Sun, 12 Aug 2007 06:49:18 +0000

TW Says:
August 10th, 2007 at 7:40 am

“I must correct you SanDance. I was talking about credit limit moving, not transferring balances. This is the first time they have denied me moving limit amounts. I?ve done limit moves once or twice before”

I work at Citigroup, it’s a new policy that started about a month or so ago, Cards can’t consolidate limits at all if the account that is having activity moving has an offer for a 0-3% BT offer on it. Nor can limits be moved, There is no way around it as a system will automatically stop you, i’d suggest asking for retention or a supervisor next time you call in to speak with someone about an important move.

By: nisha

nisha — Sat, 11 Aug 2007 14:48:44 +0000

Great blog , I have also created a lens in a same niche hope u like it ?.. ..Are you fed up with work? Maybe your boss is a grade-A pain in the behind. Well, don’t fret about your current situation; it’s time to look for an alternative route to income. That company office cubicle isn’t the only way to earn a living. These days there are opportunities opening up all the time. With the World-Wide-Web in full swing, many individuals are turning to the Internet in search of a money making business. Have you ever considered this new-age road of opportunity?

By: Tex

Tex — Fri, 10 Aug 2007 21:37:55 +0000

Suze Orman on app-o-rama was just about the last straw for me. She acted like this was the worst idea ever because she just knew you weren’t going to have the money to pay it back, and she just knew you were going to be late on a payment. She seems to have no problem with car loans or student loans. But 0% credit card debt–with the matching savings account–revolts her.

I wonder if Suze’s position is also the official Fair Issac brand party line. I mean credit card companies want you to take out huge balances and accounts–that’s why they offer the 0% in the first place! If they are getting scammed, they would stop. Clearly they are making money somehow on these offers, just not on Jonathan.

By: Phillip

Phillip — Fri, 10 Aug 2007 18:47:53 +0000

I also find it hilarious that anyone would think this is a scam. Credit card, loan, and payday loan companies are scamming the ignorant masses by the millions. This form of arbitrage is completely legal and logical to any sane observer.

By: Kevin Spring

Kevin Spring — Fri, 10 Aug 2007 17:00:59 +0000

I don’t see why people are calling this a scam or scheme. This is a very legitimate way to make money. Financial institutions do this all the time with currency fluctuations. Arbitrage is a way in which the market corrects itself. If someone wants to give out a loan at 0% interest then I have a right to take that money and do whatever I want with it. The credit card business is very competetive and this 0% interest will increase even more as the competition gets even more fierce. I’m sure for every app-o-rama person out there, there are 100 people that use the 0% interest cards and charge up things they could never have afforded. I on the other hand keep the money in a bank and make interest off of it. Credit cards are not losing any money as this is only a marketing gimmick to get me to use the card.

By: Shak JR

Shak JR — Fri, 10 Aug 2007 15:55:11 +0000

Shak – What’s the scheme again? Is it accepting the credit cards offer of credit? And how is Johnathan fooling the credit card companies? Again is it by accepting their offer of credit? Just curious

By: Shak

Shak — Fri, 10 Aug 2007 15:26:10 +0000

I guess I am going to sound like the bad guy here but this whole scheme sounds like it is extremely prone to error. If you make one mistake, you will pay a heavy price. I fear at least one of Jonathan’s “fans” is unknowingly going to jump in this pit and cause him or herself severe problems.

Also, I have to say this–Jonathan, I hope you are aware that you are not fooling all the financial institutions that you partake in this scheme.
I know for a fact that they all read this blog along with several others on the www and really do enjoy your ploy. With that being said, they are also not loosing money as it appears from some of your readers comments.

From reading your blogs, most people who do not live in the U.S. can tell a lot about the American person’s (both male and female’s) psyche.

By: TW

TW — Fri, 10 Aug 2007 14:40:26 +0000

I must correct you SanDance. I was talking about credit limit moving, not transferring balances. This is the first time they have denied me moving limit amounts. I’ve done limit moves once or twice before.

By: goldsink

goldsink — Fri, 10 Aug 2007 14:30:48 +0000

There are many ways to play the 0% game… I’ve posted this before but the ultimate way (IMO) is to use cash back or reward cards to INITIALLY fund new bank accounts or new credit union accounts. I did this with a CU in the Albany, NY area to the tune of $24,000 with a 0% APY on purchases for 12 months… once the funds were in the CU they got moved to FNBO at 6%. I make the min mothly payment and the cash sits and collects interest. Best part was that I got 24,000 reward points which I immeadiatly cashed out for a $200 check. I suppose even better is that the CU allows you to open more than one account so my plan is to do the same with about $26,000 from a Citi Pro Cash card that pays me 1% cash back (this card has no Intro/promo deals). So I PURCHASE my initial funding into the CU then move the money out, pay off the balance to Citi in full during that statement cycle… Citi cuts me a check for $260.

My advice in all of this is be very aware of the terms of all offers and new account openings. You will need a good credit score to build Limits within one family of card issuers. Always watch for fees associated with BT’s… somebody above mentioned BT’s with AmEx… watch the 3%. I have yet to do a BT offer but I will… just want to use purchases (like w/ the CU) before I tie into haveing to move money through a bank or make a request to have it deposited to my account.

And to comment on Alex… where is any of this dishonest? In all actuallity it shows attention to detail, above average intelligence and savvy financial manipulation. These cunning moves can fund your Roth IRA (and then some each year)… you’ve heard of compound interest right? I wouldn’t “use” an individual person like this but if Big Business wants to offer me a free ride I’ll ride that bus everytime. If you can elaborate on means to make 3-5K a year in free cash/gift card/merchandise I think everyone on this board is ready to listen.

My last comment would be to document EVERYTHING that pertains to your individual finacial manuvers. Since I began to play the game of card aquisition and strategic offer manipulation I’ve got over $1600 in bonus’s, gift cards and merchandise alone. And that does not take into account the interest I’m making on the $24,000 Chase deal or the move of my large amount of idle cash to higher yeild accounts such as FNBO, my previously mentioned CU (5.5%), or Amtrust Direct.

By: Teri

Teri — Fri, 10 Aug 2007 14:26:15 +0000

IT depends how you do it though (on the credit score). I took a card for BT and dh took one this year. We will earn a good $1k or so on $20k this year. It has not affected my score at all. If it was my only card it would fare worse. But I already had a score in the 800s and it didn’t really change much at all with the balance transfer. Now with the monthly payments it is going up (helps since I usually have little credit to up my score). Having an excellent credit score I have always found taking a loan and paying it off has upped my score considerably (I took a car loan for a month last year and shot up to the 800s all of a sudden). It will be different for everyone, but I wouldn’t assume one Balance Transfer would kill your score, particularly if it is already excellent and the percentage your borrow is less than 30% of your entire credit available to you. Which is what we are doing. (& if you have a good score you will be easily be approved for a higher BT from one card – makes the whole process easier).

That being said, I have another warning I haven’t seen mentioned here. We are not very spendy and I we have never paid credit card fees in our life so though I was initially a little nervous by the idea (which I did get from this blog) I decided credit card arbitrage was really perfect for us. I mean it seems easy enough to work the system (we have been for years with rewards and stuff) and to pay your bill on time, etc. BUT I did have my identity stolen recently – a month or 2 after my balance transfer. I found out right away and so far nothing looks like it will hit my credit report. But I just wanted to add a warning that you should check your credit report religiously when you do something like a balance transfer. I am writing a letter to my credit card company to let them know my identity was stolen and to please not apply universal default if something bad shows up on my credit report. This is just something I never foresaw and really sucks. So far I may luck out, but the whole point of doing this for me was because it was “easy” and no hassle. I would probably rather pay it back now than plead my case if stuff starts showing up on my credit report. I immediately thought of universal default when this happened – yeouch! Not much you can do when someone mucks up your credit – I have no idea how my identity was stolen, etc. Really not much I could have done. Also, when the first fraudulent card hit my account my credit score dropped 20 points because it pushed my outstanding credit ratio above 30%. The card was removed though and my credit score shot back up immediately. So yeah I was trying to control the ratio but wasn’t thinking about outside factors…

Just a general warning. Something I never thought of when running through all the risks…

By: SanDance

SanDance — Fri, 10 Aug 2007 14:09:50 +0000

TW – correct me if I am wrong, but most credit card companies won’t let you transfer money from on of their cards to another one of their cards. You must transfer it to a card backed or issued by a bank other than CITI. Jonathan describes this caveat in his series mentioned at the beginning of this post.
I also love my Capitol One pruchase checks! It is free money for two months at a time, but I can keep using long after the BT offer expired. They keep sending me purchase checks with every statement. (Note: just keep an eye on the due date! My CC statements just moved the normal date due earlier by a couple days than it had been.)

By: SanDance

SanDance — Fri, 10 Aug 2007 13:54:12 +0000

Good Calculator Jonathan, just one change to make it more accurate (and I know I am splitting hairs here): the minimum payment is always rounded up to the nearest whole dollar amount. In my Excel spreadsheets for my balances I use the function =ROUNDUP(2%*balance) It also helps to know that I have to pay $55.00 instead of $54.11 (don’t want any late payment fees or that will eat up the whole profit!)

By: TW

TW — Fri, 10 Aug 2007 13:33:39 +0000

BUSTED! I tried to transfer much of my CITI credit limit from a high limit card that I had already done a 12 month 0% on to a lower limit CITI card that I have not yet done a 12 month 0% on and they denied the limit exchange (first time they’ve done this denial) because they know that I can get a no fee transfer on the lower card!

The card companies are definitely getting more cautious since more people are doing the 0% money making deals. Any ideas how I can transfer the limit? I talked to a guy today and he only offered to try to get an increase on the lower card, but I didn’t want to do that.

By: Jonathan

Jonathan — Fri, 10 Aug 2007 05:56:03 +0000

I think all WaMu cards (formerly Providian) offer card issuers a free FICO score. It is only the Transunion FICO score, however, not Equifax or Experian.