Another way to profit from credit cards

[maddythebeagle]

I was going to look at my spreadsheet for my story, I have out 40k out of an available 150k. I made the mistake over the years of closing some accounts and just started building up over the last couple of years. I recently did an application spree and netted over $1000 in freebies (ipod, gift cards mostly for gas, and just some free money). I probably will put some more of the 150k to work in my money market account....even some of those have sign up bonuses.

No significant change in my insurance and dont need a mortgage anytime soon. Never miss any payments. I have such a low mortgage, that I probably will use the money to pay it off by the end of the year or next, also.

 

[justin]

The other rumor is that your home/auto insurance rates will get pounded by the drop in your credit score. Have you seen that yet, or is it an urban legend?

My home and auto rates dropped by a few percent with this last renewal in June 2006 vs June 2005. The June 2005 renewal was before I really started heavily into CC balance transfers, so I'd have to say "no effect". Even if they double (from ~$1300/yr to $2600/yr), I'd still be way ahead with $4000/year gross from the CC bal xfer.

 

[justin]

Did you just started doing this or have you been doing this for a while now? The only problem I forsee in the future is that your credit score will go down every time you apply for new CCs and that at some point you might have some problems trasfering all balances at 0% for 12 months.

I've done 0%/low rate balance transfers for a few years. I used them to finance about 1/3 of my house purchase about 2.5 years ago (I didn't get a mortgage at the time of purchase, instead paying "cash").

I started a little over 1 year ago aggressively obtaining balance transfer offers in order to make as much money as possible.

 

[justin]

No significant change in my insurance and dont need a mortgage anytime soon. Never miss any payments. I have such a low mortgage, that I probably will use the money to pay it off by the end of the year or next, also.

I've thought about putting a part of the bal xfer money into paying off my mortgage in part or in whole. Then getting a HELOC for liquidity purposes, and just in case I screw up and default somehow and have to repay some/all of the bal xfers. Maybe I'll do this once the MM yields are actually less than my mortgage interest rate.

 

[maddythebeagle]

I've thought about putting a part of the bal xfer money into paying off my mortgage in part or in whole.  Then getting a HELOC for liquidity purposes, and just in case I screw up and default somehow and have to repay some/all of the bal xfers.  Maybe I'll do this once the MM yields are actually less than my mortgage interest rate.

Yep, a heloc is a good idea for backup to start with. I also have 2 credit profiles in my household to use and make sure that cards that carry a balance arent on the other as authorized user (so dont get reported to the other). Use the authorized user to report old accounts to improve each profile.

 

[Gumby]

I apologize in advance if this has been covered, but how do you get the balance in the first place?

Rather than simply shred it as junk mail (my usual practice), I actually looked at a 0% balance transfer offer for a Discover card last night. I understood that I could have them pay off the balance on another card and I would then enjoy 0% interest for a year, but I am uncertain how to obtain the initial balance to transfer to the new card. I have diligently paid off my credit cards every month for 25 years, so the maximum I will ever have outstanding is one month's spending, which hardly seems worth the effort. I thought about writing one of the checks my current credit card company periodically sends me, but that incurs an immediate 3% cash advance charge. I could let the balance build for a few months before the transfer, but then I am paying interest to my existing credit card company, which seems to defeat the purpose. I am also concerned that if there is a delay in effectuating the transfer, I will incur interest during that delay.

 

[justin]

Citicard, for one, lets you write a bal xfer check to yourself. No transaction fee at all. I use them to generate a balance, then transfer it to Capital One, Bank of America, etc. I learned something new here, you can apparently have Capital One, Discover, etc. "transfer" a balance from Citicards even if you have no balance to transfer. It acts as a credit on your citicards account, and then you request a check from citicards for your credit balance to be refunded to you.

 

[brewer12345]

Citicard, for one, lets you write a bal xfer check to yourself.  No transaction fee at all.  I use them to generate a balance, then transfer it to Capital One, Bank of America, etc.  I learned something new here, you can apparently have Capital One, Discover, etc. "transfer" a balance from Citicards even if you have no balance to transfer.  It acts as a credit on your citicards account, and then you request a check from citicards for your credit balance to be refunded to you.

Yup, I have transferred a balance to my paid-off Citi account several times. Works like a charm.

 

[maddythebeagle]

citibank is one of the few that dont mind a credit balance. amex, mbna, and chase hate it. Chase will specifically lock your account. Mbna reportedly will close if you mess around too much. Best to use the bt checks...I think that some of this activity is a little harder than it was a few years ago and only can get more tricks. I have several coworkers that have tried these games and end up not having the money at the end of the bt or putting purchases on a bt card, etc, so I think that helps bring more offers....(people screwing up....) why else would they give free money

 

[SLC Tortfeasor]

Rather than simply shred it as junk mail (my usual practice), I actually looked at a 0% balance transfer offer for a Discover card last night.  I understood that I could have them pay off the balance on another card and I would then enjoy 0% interest for a year, but I am uncertain how to obtain the initial balance to transfer to the new card.  I have diligently paid off my credit cards every month for 25 years, so the maximum I will ever have outstanding is one month's spending, which hardly seems worth the effort.  I thought about writing one of the checks my current credit card company periodically sends me, but that incurs an immediate 3% cash advance charge.  I could let the balance build for a few months before the transfer, but then I am paying interest to my existing credit card company, which seems to defeat the purpose.  I am also concerned that if there is a delay in effectuating the transfer, I will incur interest during that delay.   

Discover will (or would, when I last did this with them about 2 years ago) let you transfer the balance to any account you have -- it doesn't have to be another credit card. So, if I had a car loan, I could have transfered the balance to pay off the car. I didn't have a car loan, so I transfered $18,000 of my mortgage over to the Discover card. You simply tell them the account number, and they can do the transfer.

The deal I'm on is 0% interest for life, as long as I make one purchase a month with the card -- I just buy $1.00 of gas on the card once a month. This allowed me to wipe out the PMI on my home and save an extra $100 or so in mortgage interest every month -- over $2,000 a year.

Of course, you can also use the little balance checks they send you.

 

[FinanceDude]

To REW's point in terms of reading the fine print, people need to consider utilization rates.  If the balanced transfered funds from card "A" is at the max credit limit and then you do the same for card "B" and card "C", chances are card that "B" can apply a universal default rate because card "A" and "C" are at the maximum if card "B" pulls your credit report.  Universal default could mean getting immediately slapped with interest rates at 27%, etc.

I simply do not trust credit card companies under any circumstances.  They CAN  change the rules at a whim and send you inocuous looking term change notices in 2 1/2 pt font  in the mail.  For $600 extra bucks, it's simply not worth my time nor anxious energy to manage or worry about IMHO.

I have found this to be true with my sister and a close friend............CC companies are parasitic freaks...............

 

[Mr._johngalt]

I have found this to be true with my sister and a close friend............CC companies are parasitic freaks...............

I just posted about this before seeing this post. I love the CC companies.
In fact, I love all "money lenders" because I view it as
free market forces at work. If only we could keep government out of the mix. Now, a small highjack........... We have become a nation of "whiners"
"Oh poor me! My CC company is charging me 35% interest and a
$50 overlimit fee." "Oh poor us! our closing costs on our 100%
McMansion mortgage were so high!" "Oh, the car we bought a year
ago with no money down and no payments..........we were tricked!
Now they wanmt us to pay for it." Turn on your TV. Whining and
the "drive-by media" goading them on. Rugged "watch out for yourself and take responsibilty" individualism may not be dead but it's on life support.

EOR

JG

 

[cube_rat]

I just posted about this before seeing this post.  I love the CC companies.
In fact, I love all "money lenders" because I view it as
free market forces at work. If only we could keep government out of the mix.  Now, a small highjack........... We have become a nation of "whiners"
"Oh poor me!  My CC company is charging me 35% interest and a
$50 overlimit fee."  "Oh poor us!  our closing costs on our 100%
McMansion mortgage were so high!"  "Oh, the car we bought a year
ago with no money down and no payments..........we were tricked!
Now they wanmt us to pay for it."  Turn on your TV.  Whining and
the "drive-by media" goading them on.  Rugged "watch out for yourself and take responsibilty" individualism may not be dead but it's on life support.

EOR

JG

Errr, this isn't about whining, it's about reading the FINE print. Newflash: You may love the credit card companies, but they don't love you. At the end of the day, it's all about business and turning a profit, even if it means burying legal terms common folks don't understand in the fine print of some innocent looking piece of paper. My point remains for those profiting from CC offers: Caveat emptor. If you can make it work for you while flying "under the radar" more power to you.

 

[FinanceDude]

I just posted about this before seeing this post.  I love the CC companies.
In fact, I love all "money lenders" because I view it as
free market forces at work. If only we could keep government out of the mix.  Now, a small highjack........... We have become a nation of "whiners"
"Oh poor me!  My CC company is charging me 35% interest and a
$50 overlimit fee."  "Oh poor us!  our closing costs on our 100%
McMansion mortgage were so high!"  "Oh, the car we bought a year
ago with no money down and no payments..........we were tricked!
Now they wanmt us to pay for it."  Turn on your TV.  Whining and
the "drive-by media" goading them on.  Rugged "watch out for yourself and take responsibilty" individualism may not be dead but it's on life support.

EOR

JG

Your overstated lack of original thought is truly astounding....I applaud you with a golf clap...............

[Moderator edit:  quote fix]

 

[brewer12345]

Heh, now you see why we "missed" JG in his absence.

 

[youbet]

they don't love you.  At the end of the day, it's all about business and turning a profit,

Credit card companies are absolute masters of exploiting peoples greed and lack of discipline to postpone consumption.  I'm not a fan of credit card companies since they use their expertise to take advantage of a known weakness (greed) in human beings.  But I'm not a fan of greedy people either.  So, it's fun to sit back and watch the fun.

To you folks exploiting credit card companies......  Congratulations!  Despite the fact that your mindset, morals, philosophical outlook on life, etc., is the same as the dudes who scheme and plot against consumers for the credit card companies, I applaud you and find your efforts amusing to follow along with.  It's like watching snipers for two different armies sitting far apart taking shots at one another.

 

[justin]

To you folks exploiting credit card companies...... Congratulations! Despite the fact that your mindset, morals, philosophical outlook on life, etc., is the same as the dudes who scheme and plot against consumers for the credit card companies, I applaud you and find your efforts amusing to follow along with. It's like watching snipers for two different armies sitting far apart taking shots at one another.

I like to envision myself as a sniper in a rogue guerilla outfit taking potshots at the invading army below in the valley.

Bottom line is that I don't view my requests for credit as exploitation. Any CC company is free to decline my requests at any point. They all have access to my credit reports, so there is no inequity due to lack of information for one party or the other. I freely tell them that I intend to use the proceeds from balance transfers for a "business venture" ( ). I accurately state my real income and never misrepresent myself. All I do is respond to offers that the CC companies make through advertisements, internet sites, email, phone, bulk mail, and magazines.

 

[youbet]

I like to envision myself as a sniper in a rogue guerilla outfit taking potshots at the invading army below in the valley.    

Well, of course.  But as an observer who enjoys being entertained, I like to think of you and the credit card companies both being sinpers taking potshots.........  Nothing personal, it's just more entertaining that way.  If there is no risk for one side, it quickly becomes a bore!

I'd join in myself but when I looked at the potential revenue,  the risks if I don't keep closely on top of the game, my available time vs. other opportunities, etc., I'm going to stay on the sidelines for this one.  Keep us spectators posted will ya?  When we don't hear from you on this subject, we worry you might have taken one between the eyes!

 

[justin]

Well, of course. But as an observer who enjoys being entertained, I like to think of you and the credit card companies both being sinpers taking potshots......... Nothing personal, it's just more entertaining that way. If there is no risk for one side, it quickly becomes a bore!

I'd join in myself but when I looked at the potential revenue, the risks if I don't keep closely on top of the game, my available time vs. other opportunities, etc., I'm going to stay on the sidelines for this one. Keep us spectators posted will ya? When we don't hear from you on this subject, we worry you might have taken one between the eyes!

Everything is going great so far. Up to ~$100k or so. Essentially all 0%. I think I have reached a plateau though. CC companies are starting to wonder why I need 6 or 8 of their cards and "what are you doing with all this money"?

My trusty spreadsheet keeps me straight.

 

[MJ]

If I wasn't going to be overseas a good part of the year. I would have tried to get as many of the 0% transfer as I could have. I just don't need the headache of having to keep track of CCs and payments that are due, while I am gallivanting around parts of this glorious world.

MJ

 

[justin]

If I wasn't going to be overseas a good part of the year. I would have tried to get as many of the 0% transfer as I could have. I just don't need the headache of having to keep track of CCs and payments that are due, while I am gallivanting around parts of this glorious world.

You are definitely correct! Imagine being in a small village in the hillside of Cambodia and getting stuck on hold for 30 minutes with Bank of America trying to figure out why your last payment was not applied to your account and why you have $39 in late fees, $39 in overlimit fees, a 30.24% default rate all the while paying out the wazoo by the minute for an international phone call. And some dude with a bag full of pig entrails is waiting impatiently for you to get off the payphone so he can use it.

Seeing angkor wat at sunrise: $12
Riding around the countryside on a moped: $8
Not holding up the dude with the bag of pig entrails: priceless

 

[maddythebeagle]

I agree, I think you "rate surfers" are just trying to stick it to the man....

 

[MJ]

You are definitely correct! Imagine being in a small village in the hillside of Cambodia and getting stuck on hold for 30 minutes with Bank of America trying to figure out why your last payment was not applied to your account and why you have $39 in late fees, $39 in overlimit fees, a 30.24% default rate all the while paying out the wazoo by the minute for an international phone call. And some dude with a bag full of pig entrails is waiting impatiently for you to get off the payphone so he can use it.

Seeing angkor wat at sunrise: $12
Riding around the countryside on a moped: $8
Not holding up the dude with the bag of pig entrails: priceless

 

[jazz4cash]

OK, time to fess up..........I am running 30k on low rate for life CC offers.  It is reassuring to see that I am in good company.  It's not nearly as big a deal as you might think if you never did it. 
Yes, I always expect the CC company will eventually blacklist me, so I have the funds handy for a quick payoff if necessary.  I use a HELOC for that purpose currently, but if the prime rate drops, I would use something else, like a MMF. 
I use online banking autopay, so I never worry about late payments (notice how many due dates fall on saturday, lately?) or things getting lost in the mail.

I don't use these cards for any purchases. So far these are accounts that I already have open, but I am considering an offer from Fidelity.   I subscribe to a credit monitoring service and I have not seen much change, as I am simply moving the piles, nor do I worry about it very much.  I guess the main thing I wanna add to this thread is that you really gotta read the fine print carefully as NO TWO OFFERS are the same.........People on here saying company X does this or that, does not mean you get the same deal from company X.  I have had multiple simultaneous  offers from the same company with very different terms and I nearly got them confused!  Finally look at the min/max balance transfer fee if there is one.  Ya gotta be careful with these as its up front interest on the entire amount transferred (and Ive even seen where they charge >12% on the fee).  The last one I used was 3% capped at $90, so it worked out to be well <1/2% fee