“Good” Credit Card Debt – How-To Play the 0% APR Game, Part 1

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How To Make Money From 0% APR Balance Transfers

I have credit card debt. A lot of it, actually – over $23,000 of it right now. But I’m not worried, because a) I have the cash to pay it off and b) It’s in no fee 0% APR balance transfers, so my debt is not growing. In fact, I am making money off of it because I am storing my money in an interest bearing account.

Before I go any further, I need to write this:

Do NOT do this without first reading and understanding all of the conditions of the credit card agreement and all of the potential pitfalls. I will try my best to describe them, but I may not remember them all or correctly convey their importance. Getting in debt is very easy and getting out is not. Credit cards lend you cheap money because they are counting on you to spend it.

Still interested? Basically what you are doing is arbitrage – borrowing money at a low interest rate (ideally 0%) and at the same time earning interest on that money.

Here is Part 1 of a brief How-To Guide:

1) Scouting for offers: Credit card companies often offer introductory rates of 0% or 1.9% for a certain length of time. Look for the good ones in your junk mail, be very careful in reading the fine print. First, you need to note the introductory APR and the length of the introductory period. Also be sure to note whether it applies to purchases, balance transfers, or both. A low rate on purchases are good if you can actually charge that much. It is usually easier to get cash from a balance transfer.

Personally, I only go for it if the card offers 0% on balance transfers for at least 9 months. More on why later.

2) Applying: When you apply for the card, you can very often state how much you’d like to transfer. This is the same as asking you what you’d like your credit limit to be. I say go for the moon – at least twice your current highest credit card limit (up to about $20,000). Again, if you’re going to blow it on fast cars or faster women (or men), skip it. The credit card company will give you what limit they want. I’ve asked for a $15,000 limit, and gotten a $4,000 credit limit from one bank, and a $15,000 limit from another. But if I didn’t ask for that $15,000 limit initially, I probably wouldn’t have gotten it.

Also, when they ask you for your “household” income in the application, this is a very vague question. I would include your income, your spouse’s/girlfriend’s/boyfriend’s/roommates’ incomes. You want to make it as large as possible in order to get the largest credit limit possible. Bigger is better.

3) Getting your money: To be continued in Part 2.

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  1. Is there a good strategy for using credit cards and savings accounts together to make some money, even if you have NO balances on your credit cards?


  2. Umm… well if you have no balances on your cards, doesn’t that mean you’re not using them? Not sure I can help ya there.

  3. Scouting is the key to any application for practically any credit card so I am glad you pointed this overlooked aspect!

  4. Balance Transfer says

    > Is there a good strategy for using
    > credit cards and savings accounts
    > together to make some money, even
    > if you have NO balances on your
    > credit cards?

    Yes. It’s called “stoozing” and it’s a very popular thing to do over in the UK.

  5. Actually what I’m talking about here is stoozing, and it does require you have a balance on your credit cards, you must borrow money cheap to earn interest off of it.

  6. taking out cash advances on multiple credit cards could deal a sucker punch to your FICO score- not good if you want to buy a home!

  7. I had about 10-15k in credit card payments to be made. I got this opportunity to go out of the country for a job. I was out of the country for 2 years. I didn’t pay the credit cards (because i had no money with me)

    What would be the status of my credit history is what I would like to know. No doubt it would be bad but would there be a charge off, how do I start repairing the history etc.

  8. Here is another interesting way (reason) i have played the 0% credit card game.

    In the past, i have been investing in my Roth IRA on a monthly basis. So, i would invest maxAllowed/12 every month for 12 months…
    Well, after i started getting all these 0%APRs for 12 months in my mail box, i started to wonder, if i shouldn’t just … take the maxAllowed from the 0% credit cards, invest it in my IRA right away, and make the monthly payments to my credit card instead …With a little bit of stock market savvy (example, some good divindend paying stocks/mutual funds/etfs) one can make a good amount of money… taxfree…
    Something to consider …


  9. I guess you know about the Fatwallet Finance Forum, which seems to be a very good source of the current offers like this?

  10. Fantastic blog! I stumbled across it about a month ago and now check it daily. Anyways, does anyone know if Bank of America accepts transfers? I have a zero balance with them and Jonathan metioned MBNA does not and I think they are affiliated. Free money is great thing, I mean what a easy way to make a couple extra bucks!

  11. Over the last year, I have borrowed $82,000 on 0% credit card offers and parked it in a money market fund at eloan.com at a rate of 5.25%. This is a great country.

  12. SimpleTechie says

    I have a 0%APR credit card offer for 12 months. As long as I only paid the monthly minimum, I should not have any fees right? I could then pay off my debts before the 0% APR term ends … and I could have earned interest (bank or money market) on this debt. Correct? Is there anything amiss?

  13. You all should do 2 things.
    #1 Google search Dave Ramsey- he teaches financial peace and the only way to get rich quick is to not get rich quick.
    #2 Read the Bible- The borrower is slave to the lender.

    I ain’t nobody’s slave.

    Good Luck and God Bless

  14. Amy,
    A little naive…but innocence is good. Dave Ramsey is a great guy, but these techniques are beyond his teachings. When you borrow money from a credit card for free and lend it to a bank at 5-6%, you now become the lender! I make a few thousand each year…its quite a concept – you should look into it!

  15. Great Post , I agree and thanks for the great information

  16. Jessica Zee says

    I am 12k in debt and have been managing to save 1k into a 4.85% money market account I hope this helps me out in the long run pay off some of this 12k!

  17. This is no longer as good an idea as it was in 2005. I had a fixed rate loan “until the balance was paid off’ that the credit card company just added a HUGE ‘service fee/finance charge’ to. They said “this does not affect your APR” but it effectively raised the finance charges I am paying to 8 percent of the balance. I paid it off immediately.

    You must be extra careful to have sufficient available cash to pay off the credit card at any time. I still have a zero percent balance with Discover but I am watching it carefully. The interest rates on money that has to be tapped very quickly has dropped to the point that it might not be worth the risk to carry the balance and invest it.

    It was good while it lasted. I think staying away from carrying any balance on credit cards is the best advice for the next year or so.

    I saw a 0% offer on AMEX that stated in the fine print ‘fixed rates can be changed at any time at our discretion.” Isn’t a fixed rate that can be changed at any time a variable rate? These guys are BEGGING to be regulated.

  18. also doing a cash advance – depending on issues can be problem.

    example; my 6% interetst (mortgage tied) visa is 25% on cash advance but was zero on initial first time transfer.

    I never use the above for cash advance except for ‘INSF’ backup.
    and I pay that backup asap.

    I have only a regular Edwardjones debit card only used for investment related or bigtime purchases when necessary.

    Whats better for me is CARECREDIT (GEMONEY) which I use as a zero % medical credit card… usuall 1-2 years in lenthg.

  19. I have been contemplating playing the game for sometime now. I have 4 cards that I have not used and they keep sending me checks for BTs with 0% for 12 months. I am nervous and wondering if it is such a good idea anymore in todays financial market. Some friends have received letters from the credit card companies having their limits lowered if not closed all together. Of course I don’t know their financial history with payments but it has made me wonder if I max out four cards is it just the sign of the times that they would soon send me a letter of dismissal or worse a lower limit and then attach over the limit fees. Is there anyone still playing the game in this market and if so is there any complications that you are encountering with the credit card companies? Would love any feed back….

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