Introduction and Warnings About 0% Balance Transfer Offers

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

[This is Part 1 of an ongoing series. I am going to break it up into several smaller segments due to time constraints, and keep track of them in this index of posts.]

Most likely you have seen these offers shower your mailboxes, credit card companies enticing you to use their cards with incredibly low interest rates, many even as low as 0% APR. Borrow money for free? Too good to be true. Must be a catch. Well, yes and no. It’s like cooking outdoors over an open flame. If you understand the hazards take the proper precautions, you won’t get burnt and you can get some tasty results.

What tasty result? Simply put – Free Money. You can make major bucks off of other people’s money. So that’s what this series of posts is going to be about. Sure, you can get $100 for a quickie signup bonus, and I do that too. But with this strategy, you can make hundreds if not over a thousand dollars with just one card. I am personally going to make over a thousand dollars this year.

What? Huh? Give me the Big Picture.
There are plenty of reasons for borrowing money for free. The most obvious is to pay down debts with high interest rates – car loans, home-equity loans, even other credit cards. In each case, you would be saving the interest you would be otherwise paying on those loans. That saved interest is money in your pocket.

But what if you don’t have any debt? Well, these days even big banks like Washington Mutual are paying you 5% a year or more on your idle cash. If you were to get your hands on a $10,000 free loan for a year, that’d be roughly $500 at the end. You borrow $10k, keep the $500 interest, and then repay the $10,000 back. Nothing to buy, nothing to sell, just shuffling money around between the credit card company and a bank. You don’t even need to use any of your own money.

I currently have almost $30,000 of borrowed money sitting in the bank right now. I don’t know about you, but making more than an extra grand a year for paying some bills sounds good to me!

What’s the Catch?
Borrowing money from credit card companies is not for everyone. As I’ve been told many many times, credit card companies aren’t stupid. They aren’t highly profitable corporations because of their love of philanthropy. They are enticing you with easy credit for the sole reason that if you don’t pay off your balance in time, they will start charging interest. And lots of it.

Therefore, there are mainly three types of people I’d recommend staying away from credit card companies:

#1 – You Have Poor Credit and/or Carry Balances Regularly – First of all, if you have poor credit, you probably can’t get a really low interest rate anyways. Second, you probably have shown that you can’t handle credit responsibly and very likely may just pile on additional debt by doing these activities.

Then there are people with great credit, but carry balances. Here’s a straightforward rule: If you don’t pay off all your statement in full every month and regularly pay credit card interest, this may not be for you. Check out my Frugal Living section and pay off that debt first. Now, you may consider a 0% balance transfer to lower your interest rate on that debt – that’s probably okay. But I wouldn’t recommend getting any more than that; You might just accumulating more debt.

#2 – You Need A Top Credit Score Soon – These there are some things that require a decent credit score, and some things you want a tip-top credit score for. The best example of this is if you are shopping for a mortgage. Having some balance transfers will not necessarily hurt your credit significantly, but in order to get the best loan rate you’ll want to keep your credit score as high as possible. I am going to probably shop for a mortgage in about a year, so I plan on paying off all my balances a couple months before then. That will give my credit score time to bounce back and peak.

#3 – You Forget To Pay Bills. Here’s another easy rule: If you’ve paid more than one bill late within the last year, this may not be right for you. Credit card companies love when you pay late. They get to charge you late fees and jack up that nice 0% rate to 20%+ instead. You can probably get one late payment forgiven once in a while, but I wouldn’t push it. Now, there are lots of tools to remind you about payments and such which I will cover later, but some people just don’t keep up with their bills all that well. And some people are pretty militant about it, like me.

Going back to my fire analogy, if you’re a pyromaniac or really clumsy, maybe cooking over an open flame isn’t the best idea. Stick with Outback Steakhouse 🙂

Now, I do not claim to be the inventor of this activity, in fact my own mother used low-interest credit cards to help finance my education before I even knew what a credit card was. I will try my best to present helpful and accurate information possible based on my own experiences and research, but I am not perfect.

For those ready to break out the charcoal, the next step is Scouting For 0% Balance Transfer Offers, including how to read the fine print to find a truly good offer. Read on!

Skip To Another Part
I. Introduction and Warnings About 0% Balance Transfer Offers
II. Scouting For 0% Balance Transfer Offers
III. Application Tips and Getting Cash From 0% Balance Transfers
IV. Setup And Management of 0% APR Balance Transfers
V. Best Pre-Screened No Fee 0% APR Balance Transfer Offers

My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

User Generated Content Disclosure: Comments and/or responses are not provided or commissioned by any advertiser. Comments and/or responses have not been reviewed, approved or otherwise endorsed by any advertiser. It is not any advertiser's responsibility to ensure all posts and/or questions are answered.


  1. I’ve never played this game before, but going to start playing this game really soon. I currently have 4 credit cards, which include
    1) citicard divident
    2) citicard proffesional
    3) 2% fideilty 529 rewards card
    4) providian credit card

    I use the providian only to keep a watch on my friend, since it shows your fico score or as many argue it’s a fako score. Even if the score is Fako it doesn’t matter to me I just use it to watch the number and if something changes drastically then I request a free copy of my credit report.

    Anyway I’m getting kind of worried that I already have to remember to pay 3 credit cards each month all around the sametime, but if I open a few more credit cards to get the 0% balance transfer I’m worried that after a certain amount of credit cards it’s too hard to keep track of them and remember to make the minimum payment. The 4th credit card I have I never spend anything on it, it’s just used to check out my score now and then, and I’m sure if I play this game I can see how doing the 0% balance tranfer effects my credit score.

    I do have one question, I was reading somewhere that most lenders have a certain limit to the amount they will end anybody over all. I see a lot of people including yourself recommend one citicard for the 0% balance transfers. Well I was going to ask to increase my limit on the citicard dividend and also the citicard proffesional, but I am starting to think that it just might hurt me more than help me. What I mean is that say that the most citicard will lend in creditcard debt is 25k and I already have two cards and I increase the limit to 10k for each card, does that mean now if I want to play this game that the most the 3rd card will allow me to borrow will be 5k?

  2. If you’re going to do this, you might want to make 1 payment ahead of time, then automatically set up payments from your savings account that you’re establishing. The reason being is if you miss just one payment for any reason, the whole thing falls apart. 29% interest charges can set you backwards quickly.

    But, I like your thinking. Very creatvie.

    BTW – Credit card companies know that for every 100 0% credit cards they issue X number will by a TV and not be able to pay it back in time. They’re like drug pushers as far as I’m concerned.

    – Bryan

  3. Jbo, You can move your credit limits around later on with many credit card companies. Here is an example, except that the Citi Professional card specifically is considered a business card and not a personal consumer card. But I’ve moved credit limit between other Citi cards before.

    Bryan, I don’t think you can actually make a payment ahead of time, if your goal is to be able to forgot to make a payment the next month without penalty. They expect a certain minimum payment each month as long as there is a balance. But automatic payments are a good idea that one can use.

  4. Hello Jonathan

    I wanted to ask a question and I am not sure where to ask..
    1. Do you have a place where user can actually ask questions even if it is not related to a particular topic you just covered?

    2. I always wanted to know “How many Saving account you have?” and How many CC you have”
    Here YOU mean you and all other Financial Gurus out there…

    Hope this is not totally irrelevant.
    Thanks in Advance

  5. 1. You can e-mail me (link on right sidebar). It may take me a bit to respond though.

    2. Me not financial guru. I have a lot of accounts, more than I would recommend to most people 🙂

  6. how many days gap i should wait between for applying 0% balance transfer cards?

  7. saving4best says

    Outstanding Article .

    Actually , i just stumbled upon ur site (thanx to Yahoo!) . Quite frankly you now so much about things ..its amazing . I suppose i would get more info on the personal finance aspect everyday now 😉
    I am goin to try making use of this idea and make some money i hv lost in stocks .


  8. One important “catch” that I learned the hard way – the “extra fine print” usually says that payments are applied to lowest interest balances first. If you borrow $20,000, and then charge ANY amount, when your next statement comes and you think you’re paying the charge (gas/food/etc.) in full, you are mistaken – you actually paid down the 0% loan by that amount and then the charge begins accruing interest at the much higer rate, sometimes putting the $20K into default status! When using your plan – keep the card for borrowing ONLY!!

  9. Great website- I came across your site by accident while researching credit card offers. I have been doing this for years, i have approximately $200,000.00 borrowed on 4 cards at 0% in a Caterpillar financial Powerinvestment account (corperate debt account) that pays 5.46%APY. I thought i was the only one doing this until i came across your site! The key to getting more credit is to fluff up your income and transfer your entire credit line on to the next card and keep closing out the old ones behind you.

  10. Jonathan-

    I am curious what you and your readers know about this. I started playing the 0% balance transfer game a few months ago, and as expected, my credit score took a major hit soon after I started. I know there has been a lot of discussion on how doing this affects your credit score, and the majority of the hit should bounce back when you pay off all of your balances. I am fine with that, but I heard something that bothered me today – this is coming from a friend of mine, not a mortgage lender, so I wanted to try to verify his claim.

    I will try to explain this as best as I can. Here it goes: My friend said that when you are applying for a mortgage, many lending institutions will not only pull your current credit score, but a several year history of your score. Then, using the current plus historical data, the lenders will calculate some sort of average score with respect to time. The lenders will use that average score in their algorithm to measure what level or credit risk the potential borrower is.

    The reason why this concerns me is hopefully becoming apparent. I hope to obtain a mortgage within the next year or so. As that time nears, I also plan to boost my score by settling outstanding debts, avoid hard inquiries, ect. It seems to me even the even if the balance transfer game made me a thousand and change this year, that would not even come close to the extra interest I would pay on a mortgage if I didn?t get the best interest rate I could get.

    In other words, is it possible for, as in my case, for a lower score in the not to distant past, to affect the credit score a mortgage lender will use in their calculation when you apply for a mortgage?

    Again, I am not sure of the validity of my friend?s claim, or maybe he?s right and a select few lenders do utilize this technique. Have any of you considered this or heard otherwise. I spoke to another friend who recently obtained a mortgage, and he claimed his lender only used his current score. I consider the readers of this blog highly informed in this area so I am grateful of any input I receive.

    Anton – NC

  11. Anton – I have never heard of that personally, but it could be possible. I kind of doubt it, but this is why I limit my applications and don’t go completely crazy. I maintain a credit score of 680+ at all times, usually above 700.

    I have only shopped for mortgage quotes once, and the officer only took a look at my current credit scores. I am not even sure the credit bureaus even provide a historical look at your credit score. Basically, unless you hear it straight from an actual mortgage broker, then I’m doubtful.

  12. Jonathan,

    Thanks for the info. I agree with you and that’s what I was hoping you’d say. Keep up the good work! 🙂


  13. Jonathan Hui says

    This may be obvious but I just recently learned a few things about the 0% APR/Balance transfers with Chase. This is a lesson in getting two credit cards from the same bank: I have a Mileage plus card and I got a Chase Freedom card to take advantage of the 0% APR/Balance transfers. Unfortunately I couldn’t get a very good credit limit on the new card because my credit limit was so so high on my Mileage plus account. Fortunately I could reduce one limit and raise the other. Second problem is that Chase won’t transfer a balance between 2 Chase accounts. What the CSR did tell me was that I can use their convenience checks and just make one out to myself. All the same transfer fees apply, only now I have to deposit the money myself and payoff the first card. Same apr, just a little more leg work. Good luck!

  14. Just wanted to say thanks for sharing all this knowledge. It helped alot in getting everything set up. I got my Discover Miles credit card and check last month and just got my first interest payment. Free money indeed!

  15. As I read, FICO score is generated only at request and is never stored. So histories of FICO score do not exist in Credit buerous archives.

  16. Avid Reader says

    Haven’t looked into the cards you mentioned but it’s worth noting some banks charge a 3% fee (with no upper limits on the fee) for your transfer, so if you socked the money away in a 5.05% savings account you just lost 3% to the fee UP FRONT. There are banks that have a self imposed limit of usually $75, so it’ll take two months to get it back on the same assumed 5.05% savings account.

  17. You’re very welcome, Mike. Thanks for reading it.

    Roman, everything I have read agrees with you. I have never heard of a person’s history of scores being stored.

    Avid – 3% is a common upfront fee, and it is address in the later steps. It’s also why I made this list of no fee + 0% APR credit card offers. 🙂

  18. How long before mortgage shopping should you have things paid off?

  19. I received an American Express Blue and Citi Diamond Preferred MasterCard, both at almost the same time. Both of them have no balance transfer fees for the 0% Balance Transfer offer.

    In such a case, without hurting one’s credit, how to take advantage of both these offers? or is there a recommended (by you) amount of time we should wait before applying for the second offer?

    My next question is, The applications ask for your “Card number” and Bank while applying. What should be done to get that money into my savings account instead of a credit card account as I don’t have any balance?

  20. DavidScubadiver says

    Read the fine print. Always. And don’t use the card carrying the 0% balance unless it happens to offer a 0% APR on purchases which expires at the same time.

    The wording is tricky on the expiration date. E-mail customer service and ask them for the specific date by when everything must be paid in full to avoid paying interest. Then save their response. That date “fluctuates” depending on the customer service rep who writes you. So if you have it in writing they will waive the finance charges if you paid “in time” as you were told in writing.

    I am earning over $900 a month on 0% money. Obviously, I have a lot of their money…

  21. Ted Valentine says

    This is NOT free money. You have to count the risk and the work required. I see how $20k of debt is worth the risk plus the money shuffle work for an extra $60 bucks a month after taxes.

  22. Ted Valentine says

    ^I don’t see

  23. I just bought my credit score for the first time and it told me only my vantage score!! Is 809 a good score on that

  24. Josephine says

    When Fico considers your average ‘account age’, does it consider both open and closed accounts, or only open ‘Active’ accounts?

    I ask because I’m paying a very high annual fee on the only credit card I have had for many years and I would like to transfer the credit line to my other amex, and then cancel it. Although I pay the balances in full and have excellent history, I’m worried closing this specific account will greatly impact my FICO since it is the only one i’ve had open for so long.

  25. It’s ok to have a couple credit cards open. Transfer the balance, keep your old card open, then mainly use your new card for purchases. For the best possible Fico score, just pay off your balance ASAP.

    Good luck!

  26. I am not a finance guru but what I know is, you do not want to make many purchases on the 0% balance transfer card (your new card). The reason I say this is because the purchases are usually APR 8-20% and when you pay the balance, the first one to go is the one with an interest rate. So, if you transfer a large amount to the new credit card, the new purchases will be accruing interest.

    This is just a personal experience I have lived. If anyone can tell me different i.e. it will help your credit score to make purchases on your 0% APR card, please let me know.
    Thank you

  27. Another caveat for 0% APR balance transfer. I transferred $10k out of my home equity balance to save on interest. I didn?t realize from the fine print that the min payment is 3% of balance on the credit card each month. It didn?t create much problem for me at the end as I have enough cash flow to pay the 3%. But I think if people want to use such 0% APR offer to pay off higher interest loan with very long pay off period, they need to be cautious on the cash flow. You may save money from lower interest, but your monthly payment could actually be higher, at least initially.

    Certainly if you are going to take cash and put it a high yield savings account, go for it.

    Another thing I do when use 0% APR purchase is to put some same amount of money as my credit card purchase in the high yield saving account, so I know for sure I have money to pay off the credit balance when promotion ends.

  28. Nice guide you put together, Jonathan. My first $10k is on the way thanks to your help, lol. I read somewhere of someone who has $70k worth of this!

    I transfered to my current AMEX I hope I don’t have any problems receiving a check from them.

    One question for everybody: Does anyone know if you eventually stop being able to sign up for these offers? Like after you’ve had 1-3 0% intro offers from all the major CC companies, do they stop accepting you?

  29. Thank you so much Jonathan for this blog and turning me on to the 0% interest credit card game. As of today I have $27,000 on three cards invested at %0 interest. Since piling up all this cash beginning in July 2007 and investing it in the stock market I have already turned a $4,200 profit (minus taxses of course) and I still have an average of 10 months to go. With stop order limits on my stocks I can’t lose…alright theoretically I can…. but the odds are worth it.
    My goal is surpassing a profit of 10,000 grand before the balance is due! And, paying the minimum balance each month is creating a nice forced savings plan. Who can’t bet all this good fortune!

    So, thanks SO MUCH again for the education on this half of this free money part of the game and, making big money at the expense of the credit car companies.. PRICELESS!

  30. Jonathan –

    This is a great site – it has inspired me to start a blog outlining some of the things that have worked well for me over the years, starting with credit card arbitrage, and I’ve linked your site as providing all the “fundamentals.”

    As one or two others have commented, you can take this to a very high level – this can quickly evolve to a lot more than chump change. I have been averaging around $100,000 out at any given time which yields thousands of dollars a year in extra income.

    To answer a couple people above:

    Bas: I have used Citibank at least 10 times on these deals over 10 years, along with numerous other banks. They continue to offer them up without any hesitation, and I continue to get mailings from other card companies.

    I hope BellaLush had a rock solid stop loss because the market in the past few weeks shows exactly why you want safe and secure holding places when you run this scheme.

  31. If you are using the same money you borrowed to pay off the monthly payments, how would you earn the full 5% interest in your example? It doesn’t add up. But I see how you can make some profit with this. It’s a lot of risk as one will need to be very careful about paying it back regularly and not using the money on high risk investments. Did you make a comparison of your credit score before and after you started this? I’m curious as to how that looked.

  32. NUBeInvestor says

    Great site! – kudos to Jonathan
    Discovered it today and finding lots of good stuff.

    Now onto the topic- RE:FICO scores

    Yes- there are no score “histories”, the score is generated at the time of each query, so could/will fluctuate based on your debt/payment history.

    I would recommend getting your credit report from each of the 3 providers: Equifax & TransUnion & Experian

    In my case, they all had my mortgage, but for credit cards and other personnal loans/etc, they each had different accounts of mine.
    FYI- different companies you do business with may not report to all.
    Which resulted in different FICO scores calculated by each.
    FYI- different companies doing score checks use different providers, they do not check all three.

    I got copies of mine a couple years ago, after I kept getting pestered by collection agencies. Turns out somehow some bad debts from someone with the same name (but with different middle initial) was attached to my “account” on one of the providers. Took 3 months and lots of letter writing to get them removed.
    FYI- even with a different MI and a completely different SSN, these providers appear to not have any kind of verify step before they enter the data they receive…just match to the closest found?

    Other items I ended up fixing(getting consistant on all 3):
    Personal info- birthdate, employer & history, spouse’s name,
    current & previous addresses(they added the bad debt accounts addresses as mine)

    When I got my reports, I had a high score, but would get a warning of “too many accounts”…
    When I went into the details, yes had lots of accounts-
    (Note- I’m 55yrs old and goes back 20yrs)
    They had not cleaned out/been notified of the following:
    Banks and Credit card companies renaming themselves,
    Banks and Credit card companies buying each other out/merging,

    So, I had lots of old/dead (duplicate) entries for current ones.
    After (another) long letter to each provider detailing the renames/merges/etc, got it all cleaned up with only the current versions of them.

    FYI- for the joint accounts (with my wife) also got her reports from all 3 and insured were also cleaned up.

  33. Good strategy, but credit can be like a loaded gun.

  34. although this article was written in 2006 when there were still good interest rates to be had (now everything is between 1-2%), this still seems like way too much work and way too much risk just to earn $1000. If you have the credit-worthiness to borrow as much as 20 or 30 grand, I’d think you can figure out a better way to make money.

  35. It’s sad this trick won’t work in 2009-2010 anymore. With an excellent credit and no debt, if i do a balance transfer of $10,000 with 0% APR for a year, the balance transfer fee would be $300, but nowadays banks don’t offer u 3% 1 year CD for 10k anymore. The most I can get is like $250. So in the end I’d lose money. Sad 🙁

  36. I love this!!! $1000 a year for doing nothing? It’s brilliant.

  37. Man, golden time is gone! basically 0%APR is dead for average people to get money from saving, unless you use money to do business.

  38. Balance Transfer really helped me to save on interest. With $5000 amount transferred, I saved around $740 interest paid in 12 months. Once the 12 months period ended, I will repeat the Balance Transfer process with other credit card.

  39. A brother of mine did this money making scheme but years ago you need to borrow much more than just 10,000 to make it worth the effort,,, add an extra zero on like 100,000 Then you are making 5,000/year in interest which could be worth managing all the payments and hassle of monitoring the accounts. I can’t remember exactly how he did it but it had something to do with applying with many different card companies at once before each could see you applied for the other. Otherwise you could never get that much credit. Ofcourse this will totally destroy your credit rating afterwards. Also, with One mistake somewhere, one late payment, one mistake on an payrule resulting in a late payment and you will have a big mess. It is a must to use automated bill paying services for this kind of scheme or you will spend all your free time handling bills and worrying.

    However, this blog is so outdated. I don’t know of any banks today that pay 5% and don’t see many 0% transfers for more than 6 months these days.

    It’s racked up debt schemes like this that got the country in the mess we are in now in addition to the home loan fiascals people were playing like taking out stated-income loans for way more than their income could afford to buy luxury homes and then fliping them for profit. Ofcourse the banks were at fault and things have tightened up since. Americans are always looking for ways to get things for free and in the end got burned. Playing with high debt is a very dangerous game and can have painful repercussions. Every party eventually ends.

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