Another way to profit from credit cards

[SLC Tortfeasor]

There've been threads about making money off credit cards before, but I'm planning a new one and want to share my feelings of smugness.

I currently make about $300 a year off of my Citi Platinum Mastercard (they offer 1% on most purchases, and I think 3-5% on certain purchases like gas and groceries).  But I just got an application from American Express for 0% interest on new purchases for 15 months.  So I think I'll just start putting all my new purchases on the new Amex card, paying the bare minimum monthly balance.  Every month instead of paying off my Amex balance, I'll pay my Emigrant Direct account (currently paying 4.5%) instead.

Even better, at the end of my 15 months of 0% interest with Amex, I'm sure I'll have plenty of offers to transfer my balance to another card also offering 0% for another 15 months.  So I'll just transfer the balance, and keep making 4.5% in Emigrant Direct. 

I'll be making effortless, no-risk profit off the credit card companies.

 

[justin]

It will work if you follow your plan to a 'T'. I've done the zero percent CC balance transfer rate arbitrage for almost a year now. I'm up to ~ $90,000 float now. That's about $330/month "free" money. Plus I get the "$100 gift card for signing up for a CC" occassionally. Most of mine are with Citicards. They have started to figure out that I have a lot of outstanding credit card debt now though. I get turned down sometimes for their top notch cards due to my high balances.

 

[KB]

If you're really brave, Emigrant Direct has 5% CDs with maturity dates from 9 months on up to 10 years.

 

[SLC Tortfeasor]

Wow.  I'm extremely impressed.  I don't think I want to get that far into it, but you definitely deserve a high five.  

If you tally up the total sum you've made off the credit card companies so far, how much is it?

 

[SLC Tortfeasor]

If you're really brave, Emigrant Direct has 5% CDs with maturity dates from 9 months on up to 10 years. 

Thanks, I will check this out.

 

[maddythebeagle]

Dont be surprised that amex only gives you 6 months rather than 15, though. A lot of folks have complained about them. I also do a lot of these cc games for freebies and cash in the money market accounts. Make sure you leave enough for the rest of us

 

[haha]

It will work if you follow your plan to a 'T'.  I've done the zero percent CC balance transfer rate arbitrage for almost a year now.  I'm up to ~ $90,000 float now.  That's about $330/month "free" money.  Plus I get the "$100 gift card for signing up for a CC" occassionally.  Most of mine are with Citicards.  They have started to figure out that I have a lot of outstanding credit card debt now though.  I get turned down sometimes for their top notch cards due to my high balances. 

Does this amount of CC borrowing come around and bite you by raising your auto insurance rates?

Ha

 

[elroy]

Right now I float 45K on 0% CC's. I set my bill payer up to make sure monthly payments are made well in advance of the due date. Need to pay back that about $800 a month of that principle (~2% a month). As long as you make sure you pay on schedule and dont take on too much risk this is a no brainer. Lots of good deals. Citi has two deals were you can get free $100 gift cards after your first purchase and then you can take advantage of 0% rates.

Good luck,

Elroy

 

[Texas Proud]

My BIL has you all beat... he has $150,000 floating right now.... but not all at zero... he has some 1.9 and some 2.9....

 

[azanon]

I'll tell you guys the same thing i told JG.  That sounds like work (a job) to me;  keeping up with all of that, and tracking it.   Of course you should be paid for it!

I'd rather play another set of tennis with that spare 30 minutes. * shrug *

 

[BigMoneyJim]

Good point. Any idea on what the effective hourly income is?

I hesitate to try this because I'm a procrastinator. Even after being debt free I tried buying my HDTV on a 0-interest deal but was late a couple of days on one payment for a $30 late fee, so I just paid it off and again swore off of revolving credit, even if free and covered. (I still put a lot on the CC, but I pay it off every month...oddly I haven't missed that target yet.)

 

[justin]

Does this amount of CC borrowing come around and bite you by raising your auto insurance rates?

It's hard to say definitively. My last auto insurance renewal in July 2005 (when I was at ~$25000 float) had my rates decrease by about 10% from the July 2004 amounts with essentially the same coverage (two cars each became 1 yr older).

I'd say no effect based on that. Even if our rates doubled from $800/yr to $1600/yr, we're still making much more from the interest rate arbitrage.

 

[justin]

I'll tell you guys the same thing i told JG. That sounds like work (a job) to me; keeping up with all of that, and tracking it. Of course you should be paid for it!

Good point. Any idea on what the effective hourly income is?

I figure 2 hours tops to apply for a single card, activate it, make a purchase if necessary, enter it into the credit card company's web interface, enter it into my spreadsheet, request a balance transfer check, deposit the check at the bank, roll the amount to Vanguard, and perform quarterly accounting tasks.

Then I figure 5 minutes per month to pay the CC bill online, enter it into my checkbook, etc. That is 1 hour per year.

I generally figure I'll make ~$300-400 per credit card depending on the terms, free cash/gift cards and credit limit.

I'm making about $100/hr at least. Yeah it's work, but pretty easy given the pay. It isn't any harder than paying my regular bills and entering them into the checkbook. It's also something I can do while watching tv or sitting on hold with some P.O.S. customer service rep.

 

[justin]

If you tally up the total sum you've made off the credit card companies so far, how much is it?

Probably a few thousand bucks including all the promotional offers and interest from arbing the rates. I do have some nonzero rates I pay that I have locked in for life of balance that I used to partially finance my house purchase.

 

[maddythebeagle]

There are also ways to lessen the affects on your credit score...like moving balances between cards knowing that most cards report balances at statement time, etc. I agree on it not significantly affecting my insurance rates...I think for most people, they would save more on car insurance by not buying a new car and taking advantage of discounts, etc. I think it is highly profitable and fun...who doesnt like to play the system 8)

Hey Justin: are you using your wife's credit profile for more sign on bonuses?

 

[Bimmerbill]

Don't you have to pay a fee for using the convienence checks?

 

[Enuff2Eat]

definitely some works involved to get "free" money but you get to work at home and making 50$/hr. NOT BAD

enuff

nothing is completely a free ride

 

[justin]

Don't you have to pay a fee for using the convienence checks?

Not the Citicard balance transfer/convenience checks that I use.

 

[virginia]

Doesn't that American Express Card charge a yearly fee?

 

[73ss454]

My Amex Gold card was just charged $150 for a yearly charge.
(not happy)

 

[Bimmerbill]

Ok, so I open a citi bank card. Get the 0% for 12 months. Write myself a convienence check for $20K or $25K, and buy a 9 month CD, right?

Then the CD comes due, I pay the card off and keep the CD interest?

That how it works?

 

[justin]

Ok, so I open a citi bank card. Get the 0% for 12 months. Write myself a convienence check for $20K or $25K, and buy a 9 month CD, right?

Then the CD comes due, I pay the card off and keep the CD interest?

That how it works?

More or less, yes. Citi's credit limits are usually lower than that. Think half of what most other card companies give you generally.

 

[brewer12345]

Ok, so I open a citi bank card.  Get the 0% for 12 months.  Write myself a convienence check for $20K or $25K, and buy a 9 month CD, right? 

Then the CD comes due, I pay the card off and keep the CD interest?

That how it works?

That's pretty much it, although I prefer a money market fund since you give up little or nothing inyield and the money stays liquid.

 

[retire@40]

Ok, so I open a citi bank card.  Get the 0% for 12 months.  Write myself a convienence check for $20K or $25K, and buy a 9 month CD, right? 

Then the CD comes due, I pay the card off and keep the CD interest?

That how it works?

Well, if you put the entire amount in a 9 month CD, you need to be able to come up with the monthly minimums on your own.

 

[SLC Tortfeasor]

Doesn't that American Express Card charge a yearly fee?

I think most American Express cards do, but the recent offer I got was clear that no annual fee is charged. I think it's an American Express Blue card.