More Credit Card Debt, Here I Come!

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I’ve decided to continue my somewhat controversial practice of borrowing cash from credit cards and profiting by earning interest off of it. As I’ve already got my $100 gift card from my Citi Professional Card with ThankYou Network, I’m going to use the no balance transfer fee 0% APR offer also included with it to take out $9,000 free for 9 months. I figure I can put it in a bank account earning at least 4.5% APR, so that would be about $300 profit pre-tax. This will join the $20,000 in borrowed money that I already have out.

For those interested, please see the following posts which detail how I go about doing this, see my very detailed series on How To Make Money From 0% APR Balance Transfers.
Please read through those posts and the comments before yelling at me! =) Your concerns are most likely already voiced, and my response already jotted down. I’ve been doing this for years and I’ve heard it all. Yes, there are some dangers. Here’s a good rule of thumb: If you’ve missed a credit card payment deadline within the last year, doing this may not be a good idea. The simple truth is that I have personally decided that it is worth the risk for me. Why do I bother? Moola. Dough. Bling. A quick and dirty example:

If you have good credit, you can borrow $30,000 for 12 months with no fees (use one of the offers listed above). $30,000 x 4.5% = $1,350. Even after taxes, I’m looking at over a grand of free money. As usual it took me way less time to request my check than it did to write this post.

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  1. How in the world do you keep track of your cards? You must be very disciplined, or very crazy!

  2. I heard that doing the 0% APR balance transfers do have a hidden cost. Supposedly it lowers your credit rating which puts you in a higher risk/interest bracket when you apply for a home loan.

  3. Jon, how are you managing all of these cards. Did you create some kind of spread sheet or what? Thanks.

  4. if you don’t ever close any accounts after the 0% intro period, don’t you feel annoyed each time you need to activate a new card?

  5. How about investing the money into T-Bills which are paying 4.5% ? These are tax free, aren’t they?

    Also, isn’t it detrimental to your FICO score to max out your credit card? At least that’s what I’ve read. Article I read stated that if you need $10K…and you have two cards with a Credit Limit of $10K each, its better to take $5K from each than to take $10K from one. Not sure if that’s true…doesn’t relaly make sense…but then again a lot of how FICO score is calculatd doesn’t make logical sense.

  6. Jonathan,
    I just got my second Citi card but haven’t figured out if I can get a 2nd $100 gift card thru the Thank you network. They would not let me open a new account, will they credit the points to my orginal Thank you network account?


  7. Jonathan,

    About a month ago, I got a Chase Visa as my main cashback card, thanks to the excellent advice on your blog. πŸ™‚

    They gave me the “getting acquainted” call this weekend, working out my bill’s due date, etc. and they of course brought up the 0% balance transfer offer.

    Now, your site thankfully gives the warning not to use the same card for both purchases and 0% BT offers. Unless I misunderstood, the reason for this was that any montly payments you make would apply to the BT first, thus making your purchase payments late and putting you into debt and/or negating the terms of the 0% agreement.

    But when I brought this up with the Chase rep, he said I could pay my purchases each month and leave the BT at 0% for it’s full term.

    Suspicious that we hadn’t communicated properly, I spelled it out for him: “You mean to tell me that I can take money from the balance transfer, make free interest on that in a bank account until I pay it back in full next February, and still pay off my monthly purchases in full each month without every owing any interest on this card?” He put me on hold, returned a few minutes later after checking with someone else, and responded that yes I could do exactly what I had described.

    I didn’t sign up for the BT, mostly because I’m worried either I missed something from your how-to pages or that somehow that particular rep still got it wrong. I’ll probably get a completey different card for the BT anyway just to be safe, but thought I’d ask for your thoughts on this.

    Thanks again,

  8. Every new card is simply one more bill to pay. I get a bill, I pay the bill. There is no need for spreadsheets πŸ™‚ It’s just another bill – like the gas, water, electric, garbage, newspaper… I do set multiple reminders for when the 0% period ends. See the ‘Extra Tips’ post.

    I am not saying there are no dangers to this, I dedicated a whole post to outlining them. Please see the ‘How-to’ post above.

    I close accounts only when I need to in order to get another offer I like. I have many credit cards, and my credit score is fine. During periods when I have no borrowed money, it is 770+.

    T-Bills, yes, a very good idea. I do that too.

    Greg – Yes, they just credit it to the same ThankYou account. I see no reason why you can’t get two $100 gift cards, I have multiple cards on one ThankYou account.

    Dan – Hmm… all I can say is I think your gut is right. That CSR is not going to be there to help when your bill gets messed up. I trust only the Terms and Conditions. There should be a sentence that says “all payments will go towards the balance at the lower interest rate”. Unless both the purchases and balance transfers are at 0% (like for my Discover Miles offer), I would be very careful.

  9. Are there anymore other good credit cards with no balance transfer fee besides the ones on your list?

  10. Jonathan:
    You stated in one of your responses on February 27, 2006, “During periods when I have no borrowed money, it is 770+.”

    When was this? And do you have any proof to share with all of us (your captive audience) that your credit score is that good? I find it hard to believe that you would not have any borrowed money with your so called system. You would have always have borrowed money on some card or two. I find it hard to believe that your credit could stay at that level in the long-term. Just my opinion.

  11. I’ve applied for the Citi Dividend Platinum Select (I think that’s the one) for the 0% BT game. My first. What happens when we are done collecting our “free money”? Will it really be good for anything else besides using it as a CC? This particular one however will be good on 5% on every purchase, but what about others? Then does that mean, if I really want more “free money” that I continue to apply for more and more credit cards? Great blog, too!

  12. cc – However much I am borrowing each month is in the ‘Goals’ category for the world to see. I had a credit score of 770 when I had less than $10,000 in borrowed money months ago. I don’t see how I could ‘prove’ it, but my source is my old Providian credit card from college which gives me a free FICO score update every month.

    When you have big balances, your score drops, but the second that you pay off your credit cards and it is reported to the credit bureaus your credit scores shoots right back up. It is not like a missed loan payment, which can affect your score for a much longer time. (Again, more on this in the linked posts.)

    Gail – Yes, most of these 0% cards never even leave my house. I just take the money and leave in my lockbox. I only regularly use 3 cards for buying stuff, please check out the ‘My Favorite Rewards Credit Cards’ link in the top right corner by the orange arrows πŸ™‚

  13. I’ve been doing the 0% APR Game since Sept of 2005. I have close to $20,000 borrowed from 3 various cards. All are maxed out. I have recently requested my full credit report from all 3 bureaus and also requested my fico score and it was a healthy 720. (i will be happy to email you a jpeg if you want.)

    I found Jon’s site by happenstance in Dec while looking for other crazy people like myself who are doing this 0% game. And I agree with most on this site, the only real disadvantage to this whole game is getting temporary dinks on you fico score every time a company asks for a credit inquiry. As far as risk. As long as you are placing “your” money in an FDIC insured vehicle, the only way you can mess up is missing one payment. But if you are as paranoid as Jon and I are you’d be smart enough to set up a billion alarms/reminders. (oh and a final tip). I have a detailed print out of all the credit companies contact and billing info, how much i borrowed and when attached to the cards also locked up in my box, with intructions of how to pay them back. this is of course if i just happen to die before the promotional apr is up. =)

  14. Minimize risk by fully automating the payoff. My checking (Citi) and savings (Emigrant) let you schedule repeating and one-time payments far into the future. For a 12-month 0% card, you may pay #1 manually, then set up 10 small monthly repeat payments and one big #12. Set up savings to auto-transfer the big amount into checking before payment #12 is due.

    Give your payments enough lead time to safely let due dates vary from month to month. As long as your checking balance can cover the monthly minimum payments, there’s less to forget!

  15. As far as T-BIlls….any advice on this stratgety

    Since you can purchase using credit cards, I was thinking of using a rewards card to buy the T-BIlls, then transfer the balance to a 0% balance card.

    So, not only am I “Borrowing” money for 0%, I’m getting rewards on top of it.

    Is this what you do?

  16. How much are your minimum payments on the $30,000 ?

  17. FYI – The practice of borrowing money at 0% from the credit cards and using that money to earn interest is called Stoozing.

    Last year I made approx. $800.00 from stoozing and other deals. I borrowed about $35,000.00 from 4 different cards. What made the deal so sweet is one of the cards (the Citi Dividend card) allowed me to borrow the money with no fees. So basically it worked like this…I would borrow the money from that card and any other card with no fees. Then I would balance transfer money from other cards back to my Citi Dividend card. I could then borrow the money again with no fees from the Citi Dividend card. My buddy and I called the Citi dividend card the “Stooge” card πŸ™‚

    I also applied for a Charles Schwab Visa with a $150 Visa gift card as long as I used the card once. I applied for another card that gave me a $50 gift card at any store that they listed (I chose Bed, Bath & Beyond).

    On top of all of that I applied for the AT&T Unviversal card with 5% cashback on Gas, Groceries, and Prescriptions and 1% on everything else. That caps at $300.00/year.

    With some luck, I was able to hold onto $45,000.00 from my Dad for 4 months, so I just added that to the stooze pot. This allowed me to gain about $200/month in interest for 4 months @ 3.75%.

    BTW, you have to pay the minimu back and I was paying something like $700/month. I would just use the money I borrowed and at times I would use my own money if I could afford it.

    The key is to use a card with no balance transfer fees. All in all, I probably made about $1500 last year using other people’s money.

    Now that hard part, managing all of it. This is the most critical piece. You have to be disciplined in several areas. I used Quicken to keep track of everything and literally watched it almost everyday. I chose two times/month that I would pay off the cards since the due dates were all scattered. Towards the end, I actually slipped and ended up paying a $39.00 late fee. Once I slipped, I decided to pay off all of the cards for fear of messing up. It’s all about management and discipline.

    This year I plan on just getting the 5% cashback from two cards. They each cap at $300, so I plan on making $600 from those. So far, I’ve made ~$100 this year from the cashback money.

  18. Oh, I forgot to add that my credit score dropped from 745 to 676 and after 2-3 months it rose to 690. It’s been less than 1 month since paying back the cards so my score is still at 690. It takes approx. 30 days for everything to clear. So I suspect my score will go back up to about 745 after the credit is shown as paid back.

    Don’t forget that stoozing is a bad idea if you have any debt or you plan on purchasing a house or car in the near future as your credit score will be effected.

  19. I hate to be picky, but the long post that says was written by “Stephen” was actually written by me, Helevitia. Could you please correct that.


  20. Can’t buy T-Bills with credit cards, sorry, I’d be all over that. I wrote a bunch of stuff on T-Bills, check out the ‘Treasury Bills and Bonds’ category on right.

    Minimum payments are about 2% of outstanding balance. But since you cashed out the money, you can just pay the minimums from that.

    Helevitia, the name of each commenter appears *after* their comment. =)

  21. Ha! Thanks Jonathan, I missed that πŸ™‚

  22. There are always risks, if you screw up and don’t pay attention to the fine print. But if you are careful, you can make enough free money using 0% offers to go on a free vacation on VISA. The better your credit rating the more money you will be able to borrow. I’ve recommended the 0% shuffle and I’m amazed at how many refuse to take free money. The type of people who should not do this are:
    1 – people who can’t pay bills on time
    2 – looking to buy a large purchase(home, car)
    3 – looking for a new job(FICO scores are evaluated at some job searchs to see if you can manage your own financial life)..
    4 – have a low fico score..

    Otherwise, you’d be foolish not to take such an easy bit of $$$$. I have been doing this for years, and with each year, I get more credit. I am up to 100,000 and growing. A simple 4 grand for doing absolutely nothing but making sure that bills get paid.

    In general, if you have a low FICO score you shouldn’t do this, since you have a low FICO score for a reason.

  23. This looks like ?nit-picking? for me or in worst case big scam.
    The only way to get cash from credit card (CC) is ?cash in advance?. For now I?m sure ALL CC charge 3% for ?cash in advance transaction?.

    Let?s see how it could work:
    1. 0 balance;
    2. get a new CC and take cash in advance $1000.00 ? it will cost you 3% i.e. $30.00. Here: balance -1000; cash +970;
    3. put 970 under 4.4% and move my balance to new CC for 0% (for 9 months); Here: balance -1000; cash +970.00;
    4. 9 moths later;
    5. 970.00/100*4.4/12*9=32.01. Here: balance -1000; cash 970.00+32.01=1002.01. Gain 2.01;
    6. if you take $10000 cash in advance the result will be 20.01
    Please show me where I?m wrong.
    Don?t be stupid ? there is no free lunch in this world!! Why would banks give you money for free?!

  24. alex – Sigh. You’re calling me stupid? Did you see where I mentioned the yelling? Please READ the How-to and posts, I am tired of repeating myself. This works, I do it, other commenters in this post do it, lots of people do it. All I’ll say is that it is *not* a Cash Advance, so you don’t have to pay a 3% fee.

    Banks give me money for free all the time!

  25. yes jonathan i’m wondering the exact same thing as alex. i think it’s because i don’t quite understand the balance transfer concept. if you have no o/s balances on any credit cards and you open up a new 0% apr card, then where is the cash coming from? not a balance transfer b/c you don’t have anything to transfer to the new card w/ no o/s balances. the only way i could think of it working is if you used the credit card to buy a cash equivalent but i have no idea what that is (i.e. you can’t use your credit card to fund a savings account). so what is being bought or transferred? where is the cash coming from?

  26. It is a balance transfer.

    Citibank allows you to take your balance transfer as a check mailed right to your door.


    Otherwise, you end up with a credit balance on the card you did the transfer to, which many (but not all) companies allow you to cash out in the form of a check.


    Please please please read all six posts I listed above, I just pointed out the two out of those six that addressed your exact questions. Please?

  27. Now that’s funny, the “it’s too good to be true” scenario. Jonathan, I feel your pain, I get the same response. The best response for the people who can’t believe this can work, and there are lots of them out there is to attempt it small scale. Do a balance transfer to yourself for 100 bucks. If you get hit with a cash advance fee, then you will all know that everyone talking about this is lying thru their teeth. Or you may get confirmation that yes, this is true, and I should jump at the chance before the 0% offers start to dry up, or they start adding more fees to the balance transfers. If you can’t take the “possible” 3% hit on a 100 bucks, well then you have other problems.
    Be wary of all the gotcha’s, like writing a check to cash, call the credit card company and ask them how you should do it to avoid the cash advance fee. This is pretty much a no brainer, I could teach my two year old to do it, if only she could form a complete sentence, and had good credit.

    Credit card companies are well aware that many people are doing this, when it becomes unprofitable for them, I’m sure that it will dry up.

  28. Aga! Who read manuals? πŸ™‚ I was forced to read almost all your explanation before I got it. You use ?balance transfer? which cost you in some cases $75 (from CitiBank: ?3% of the amount of each balance transfer, $5 minimum, $75 maximum. However, there is no fee with the 0.00% APR balance transfer offer described above.?)
    Now the only problem is do not miss your payment and to get credit limit as high as possible.
    You only can hope that Charles Prince and other CEOs of CitiGroup Inc. will not change this policy in near future and that all these games will NOT hit your CreditScore (which would be a disaster). My congratulations!
    The problem with ?too good to be true? is that in 99.99% it IS NOT true.

    P.S. It looks like I should move my investment from CitiGroup to JP Morgan Chase (which allows balance transfer only directly to other Credit card) πŸ™‚

  29. Helevitia says:


    The first card I applied for had no balance transfer fee. On top of that they allowed me to “balance transfer” the money to myself. Yes, I called them up to confirm this. The even offered to put the money directly into my checking account. It was for $10,000. So this is exactly what I did. I had them directly deposit the $10,000 into my chekcing account and then I transferred over to ING. Back then it was at 3%. So I knew that I would make ~$300 for this move. As long as I paid them minimum of 2% back every month. I would try to do this with my own money so I could gain as much from the interest as possible.

    I then applied for a second credit card. This second card was also for $10,000. The problem was, this second card wanted to charge me a 3% balance transfer fee if I transferred the money to myself but no fee if I transfered to another card. I then did a real balance transfer by paying off the first card with the second card.

    This put the $10,000 back into the first card. I then did another “balance transfer” to myself with no fee from the first card again. I did this 3 more times. Citibank told me that I could do this “balance transfer” to myself as many times as I wanted as long as it was within the 12 months of borrowing the money.

    Now, I will more directly asnwer your question. If you borrow $1000, yes you will not make much money and it will not bee worth it. You need to borrow atleast $10,000 in my humble opinion. The deal is, the banks never charge more than $75 for a balance transfer fee (last time I checked), so at $10,000×4% minus the $75 dollars, you will make over $300. Make sense now?

  30. Stephen says:

    Can a sudden drop in your FICO score trigger a switch from the promotional rate to a higher universal default rate ?

  31. Jonathan,

    Two new BT questions for you:

    1. For a card with 0% BT and 0% on purchases is OK to do both? (forgive me if it’s a stupid question, but I’d just be worried there’s some small print somewhere – I’m speaking specifically of Chase Plus Visa if anyone has specific experience)

    2. In reading your step-by-step, I’m assuming you’re transfering 100% of your credit limit on these cards – is that correct?

    Some posters on fatwallet forum seem to believe there’s some rule where if you go over either 90% or 50% or some such percentage of your credit limit with a balance transfer, it sets off red flags with your CC company and they’re certain to lower your credit limit.

    Have you experienced this?

    Would it be better to do 50% of two new 0% cards than 100% of the same total amount on one?

    Thanks in advance!

  32. 1. It’s ok to do both, you just have to weigh the benefits. Would you rather get 0% interest or get 2-5% cash back by using other cards? I personally would rather get the rewards, especially if I’ve already used up the limit anyways.

    2. You are getting into the finer points of this ‘game’. Obviously, if you use less of the credit line, your credit score will be higher. But, every new card app also lowers your score a bit. I personally just transfer all of it, and as I pay the minimums (plus $1) the % utilization will go down by itself. If I wanted to raise my credit score, I would just pay off some of the balance as needed.

    Using less than 50% of your credit line is the “safe” way to play this game, with almost no effect on your credit score. Of course you still have to pay the bills on time. Hmm, I should probably write another whole post on this…

    Stephen – Not unless it is included in the Terms and Conditions. It’s like any other contract between you (borrower) and the bank (lender). Usually there is only a clause that if you miss a payment on any account, then your rates rise. Always gotta read the fine print.

    Which leads me to my newest rule of thumb: If you don’t have the patience to read my posts detailing what to do and what NOT to do regarding these 0% balance transfers, then you probably shouldn’t play this game. Stick to the easy sign-up bonuses. This is a game where “reading the manual” first can save you some bucks.

  33. just wanted to thank jonathan for taking the time to explain this all for the “slower” understanding people like myself. it’s much appreciated –

  34. No problem, I am perfectly happy to help provide clarifications and additional info, as long as people are willing to read my prior writings *first*. I really put a lot of time and effort into making them as easy to understand as possible =)

    If this was push-a-button simple like those Staples ads, everyone would be doing it. Still, it’s not rocket science. I should know, I used to study rocket science! πŸ˜‰

  35. savvy saver says:

    alex – I’ve got 0%BT out with Chase as well. I’ve actually played this game with every major credit card company, except Amex (because I use their card for my day-to-day stuff), including Citi, Chase, Discover, and MBNA. This has been going on for years. There are people on FatWallet who have credit limits into six digits because they have been doing this so long. It doesn’t pose any long-term threat to your credit, as long as you pay your bills!

    If you aren’t one who likes reading all the info (including fine print), then this probably isn’t something you should try.

  36. i’ve been playing this game too, since 9/11… i discovered it out of necessity, and then once i got a new job, just kept doing it… only i rationalize that since i have a very high probability of having regular income for the forward 10 months (ie through the end of whatever current year we’re in), i take the 0% amounts and put them in a brokerage account, and with a bit of savvy research, made 40% last year (without even using leverage). and since i do this into my IRA account, i pay zero taxes on this return, three years running now rolling about $10k borrowed at 0% from card to card, meanwhile earning 40% CAGR returns– free money making me 40% per year with no income taxes or cap gains taxes, growth that is not minimized by periodic tax payments so that it will therefore turn my 10k free money into about 250k by the time i retire. income from capital baby. not a bad racket.

    I would say that if you’re only doing this to earn money from interest, you’re not optimizing:

    the near-certain forward expectation of continuing income (ie you can get a better compound return if you have a job) affords me the cushion to take the risk on various emerging markets securities. Here’s how you do it:

    I keep a reserve card with no balance on it but 20k capacity, so I can easily cover any payments due by rolling should the markets crash– but by now, the returns on the initial couple years is sufficient actually to pay off the entire roll, so i just let it ride, letting the capital continue to grow rather than pay off the free money loan.

    and for those of you who would like a very good tool to track your card balances all in one place, try

    VERY robust security, these are the guys aggregating behind the scenes that gets white-labeled at HSBC and other banks that let you view external accounts from within their online banking platforms.

  37. To Savvy Saver:
    My memory of 2001 is still too fresh to play on the Market with CreditCard’s money πŸ˜‰

  38. You rock dude. It’s soooo simple. Okay so I got my 20k credit line from citi w/9mo’s 0% apr. Three checks totalling 20k go to my other cards. Get my refund checks in the mail. Takes about 30 days max for all this. Leaves me 8 mos at 5.5% in my new emigrant direct account. I make the minimum payment on the card out of this same account. 8 mos from now i have around a grand extra. for about 2 hours max of effort including this post.

  39. oh yeah forgot to mention the extra 100 bucks in gas or target i get within 2 weeks!

  40. other_alex says:

    Just wondering if the extra money ($500-$1000) is worth the time time it takes to make it?

    If you give yourself an hourly wage and calculate the time you take managing the 0% credit cards (some of the comments said daily), were the $500-$1000 you made in a year worth the potentially hours and days of work lost?
    Could you have spent the time buying whole sale lots on ebay and selling them for a profit? Could you do freelance (web)work etc…and potentially make even more? Could you work overtime and make even more?

    It seems like a lot of stress for not much payback. Not trying to be overly pessimistic just realistic. Would love to hear rebuttles to my comment. Because it has definitely sparked my interest.

  41. Here’s what I’ve written before – “Hourly wage? I don?t really calculate it, but let?s try. I float $30,000. 2% minimum payment x 12 months = 24% paid off by the end. Let?s say 12% on average over the length of the loan. So 26,400 floated. Let just say 5% although I am earning more from T-Bills. $1,300 in 12 months. x75% for taxes = $990. Let?s say an hour to pay bills each month. $990/12 = $82/hour net after federal taxes. Very rough, but it?s still pretty good.”

    No way do I track it daily. It’s a credit card bill. I get it, I pay it. Just have to remember to pay it all off at the end.

  42. As Jonathan mentions, once you have the process established there is not much work to maintain. In many cases it is possible to schedule automatic payments to the credit card, so all you need to do is confirm the payments are made as scheduled.

    Think of it this way, do you spend any time watching TV each evening or week? In the time you spend watching one or two shows, you can do all of the required “work” on the credit card balance.

    This strategy is clearly not for everyone but with a little attention to detail, it is an easy way to make a little extra money.

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