0% cash advance game: avoiding fees?

[brewer12345]

Ok, so I am thinking about playing the spread game with all the 0% CC offers I get in the mail. One thing sticks in my craw though: how do you avoid the cash advance fees and still get the money to play with?

 

[soupcxan]

The two companies I've done the 0% game with, Citi and Chase, treat the convenience checks as "balance transfers" not "cash advances" - even if you write the check out to yourself and deposit it. So you don't get hit with the cash advance fees. And Citi had a special where they waived the normal BT fees as some promotion they were running, so it cost me nothing. The chase card had a BT fee (3% capped at $75), but my credit limit was large enough that I could still make money even after taking the $75 expense.

However, one thing that is annoying me: why does Emigrant Direct refuse to raise their rates? I am going to move my 0% funds into a Vanguard MM account in the next few days if they don't get their act together.

 

[Marshac]

Most 0% offers have no fee attached to them when you first sign up. Once you're a card member however, many will charge some sort of BT fee. You could always call customer service and ask for a no fee BT Never hurts to ask

Citi will actually cut a 0% BT check in your name if you ask for a BT to yourself. Nice.

 

[maddythebeagle]

You can also transfer to another card and request a credit check.

 

[Mr._johngalt]

I took my "final" -0-APR deal today. Took the enitire line
with no fee at -0-% until 03-07. I am amazed that these
deals are still available. Anyway, I am taking all the $ they
will allow. BTW, I have tried to get new cards and/or
increases in my credit lines with little success. I can't really
blame them as I wouldn't give me any more either.

JG

 

[Mr._johngalt]

Ok, so I am thinking about playing the spread game with all the 0% CC offers I get in the mail.  One thing sticks in my craw though: how do you avoid the cash advance fees and still get the money to play with?

Simple math. Read the fine print.

JG

 

[cube_rat]

Justin is the man on 0% offers. He kind of has it down to an art. There was thread created by soupcan (sp? sorry) a while back about this subject.

 

[cute fuzzy bunny]

I wish I'd get some of these freebie offers. The only ones i've gotten charged a % fee for the transfer...usually 2 or 3 percent, or required that you made a regular charge to keep the 0% active, and you have to pay full interest on those charges until the whole thing is paid off. So far the fine print hasnt been good.

I have made some small hay with home depot and sears 0% for one year financing on building materials and appliances.

 

[BUM]

How much money can you make? How much time does it take?

A grand or two, ok maybe. But a few hundred bucks?

Sounds like w o r k to me.

 

[brewer12345]

How much money can you make? How much time does it take?

A grand or two, ok maybe. But a few hundred bucks?

Sounds like w o r k to me.

I bet I could run it up to $100k principal pretty quickly. That's something like $3k annually after taxes. Not too shabby, considering what lengths some of us go to to pack on a few thousand more of annual savings.

 

[Mr._johngalt]

I bet I could run it up to $100k principal pretty quickly.  That's something like $3k annually after taxes.  Not too shabby, considering what lengths some of us go to to pack on a few thousand more of annual savings.

Well, I am way too lazy to go back and figure this exactly, but I've got to be up between 5K and 10K over the past 3 years. Let's look at today for example......................
I've got about 125K invested at 4.5%. Assuming an average o/s for one year
of only 100K (some promos will expire and remember, you are paying
down the balances with their money), if I keep grossing 4.5%, even if my average "spread" is only 3%, that's $3,000 a year, all tax-free in my case.
As close to a no-brainer as there is IMHO.

JG

 

[soupcxan]

It adds up pretty quick. Assuming you have $40k at Emigrant Direct as your savings account and the 0% offers are for one year:

Interest: $1600 $40k @ 4% for 1 year
Expenses: $(75) Chase fee, Citi waived
Taxes: $(400) 25% bracket

Net Income: $1125

I set a weekly reminder in Outlook to check my accounts at the start of every week to make sure I don't miss a payment. The credit cards' online payment feature is linked to the Emigrant account so I don't have to futz with transferring it to a checking account first. If I spend 10 minutes a week on this for the next year, that's about 9 hours in total...effectively $125/hour return on my time.

There are some that say you shouldn't utilize 100% of your available credit line because some lenders will flag/close your account, but I haven't had any problem with that. And obviously you shouldn't do this if you're applying for credit anytime soon, as your credit score will take a temporary hit from the excessive utilitzation.

 

[brewer12345]

Soup, et al., ca you tell me about the mechanics of the CC transactions? Did you do a cash advance at the 0% rate or did you somehow do a balance transfer (transfer to a debit card or something)? I assume you got on the phone and negotiated with the CC company for fee waivers, etc.

 

[justin]

Since I'm the resident "man" on 0% CC offers (per cube rat), I'll chime in. I haven't added it all up, but my guess is I'm up to 75k or so. I've been denied new credit from citi - they officially said that they only give new credit cards to those who haven't applied for new credit cards with them in the last 60 days. My guess is I can get 5-10 new credit cards every 60 days or so. So far the average credit limit is $7-10k. I'm getting close to 4% tax advantaged return at VG on this 0% money. Citi charges no fees for balance transfer, and all of their deals I've seen so far are 12-15 months. What I do is sign up for the account, get the card, then you can cut a "balance transfer" check to yourself using their online system, and it arrives in a week or so. Put it in the bank and collect your interest. They occasionally mail out blank checks you can write to yourself too.

I don't do many of the $75 max fee for balance transfer offers - it cuts down on the profit too much. I figure if I can get 4% back on 10k, that is $400/yr. Multiply that times the number of offers I have outstanding and I get into the thousands in profit pretty quick. I usually schedule the payments as the statements arrive, but that is just how I pay all bills for my household. Soup has a good system too - sit down once a week and make sure things are in order.

I have a spreadsheet where all account numbers, outstanding balances and expiration dates are kept so I can manage my accounts.

I haven't figured out a cost per hour of my time for this, but I'm very confident it is higher than what I earn at my day job. Incidentally, it also puts me over $50k in assets at VG, so I don't have to pay certain fees on some of my accounts.

 

[brewer12345]

Justin: thanks for the insight. Do you apply for the cards or just wait for offers in the mail? What are you investing in at VG? I am rooting around for the best place to put the money, but I do business with Schwab, so putting up with the PITA of going further afield woild have to bring sgnificant extra yield.

 

[soupcxan]

Brew, you may want to consider doing an "app-o-rama" as described in this thread at Fatwallet:

http://www.fatwallet.com/forums/messageview.php?start=0&catid=52&threadid=477214

One of the nice things about Citi is that they will let you transfer your credit line between cards. With them, I didnt have to negotiate for the no-fee BT, it was part of the offer when I applied. I tried to negotiate the fee with Chase but they wouldn't budge...I've heard some issuers will, however. Just look on their website to see what the current offers are. I also got a $100 gas card when I applied for the Citi Professional card, so that was extra gravy (I have to buy gas, so it's as good as cash to me).

The "convenience checks" that they sent are considered BT, not cash advance. However, not all issuers will send the checks...some will only do a direct transfer to pay off your old balance. But you can get around this if you have a Citi account...just have the new issuer transfer the maximum to your Citi account (it doesn't matter if your Citi balance is $0). Then you can go on Citi's website and do a "credit refund request" and they will send you a paper check for the overpayment.

If you are looking for the highest yielding account to invest the proceeds in, I would check the thread below. However, I think you should also consider the tax-exempt MMFs at VG depending on your tax situation. Their basic one (VMSXX) is at 3.19%.

http://www.fatwallet.com/forums/messageview.php?start=0&catid=52&threadid=437553

 

[justin]

Justin: thanks for the insight. Do you apply for the cards or just wait for offers in the mail? What are you investing in at VG? I am rooting around for the best place to put the money, but I do business with Schwab, so putting up with the PITA of going further afield woild have to bring sgnificant extra yield.

I started out applying online and accepting mailed promo offers. Then I went to just doing mailed offers (I felt guilty for "ripping off" the CC companies but figured as long as they're mailing me the offer, I can take advantage of them). I haven't received any mailed offers lately, so I'll probably go online and sign up for 5-10 or so.

At VG, I'm in the Federal Money Market fund. The yield is currently 3.92%, but approx 40% of that is free from state tax, which pushes the yield up ~0.1% for me. Their Prime MM fund is paying 4.00% right now. Both funds are $3k minimum.

I don't chase yields either. VG does a good job of raising the rates as the market rates increase. I'm sure I could get another 25-50 bp by switching accounts frequently or putting a part of the money in short term CD's, but that takes too much time and it can get confusing.

If you are starting out from scratch, it may be worthwhile to open up an account at the highest yielding place, and stick with it.

 

[Da Nag]

RE the Citi cards...just got my first one with the 0% / 1 year balance transfer, but I needed it to payoff some unexpected expenses.

However, for purposes maximizing the "trick" suggested here - here's a tip.

The card arrived with a $5K limit. I called them up, told them I had no use for a card with such a low limit, and I'd cancel it immediately unless they bumped it to $15K. They called me back 30 minutes later with an "OK".

 

[justin]

The card arrived with a $5K limit. I called them up, told them I had no use for a card with such a low limit, and I'd cancel it immediately unless they bumped it to $15K. They called me back 30 minutes later with an "OK".

Their standard response for me was that they don't increase credit limits until 6 months after the card is established. I have been successful in getting limit increases eventually though. Citi seems to be the stingiest in terms of credit limits.

 

[brewer12345]

RE the Citi cards...just got my first one with the 0% / 1 year balance transfer, but I needed it to payoff some unexpected expenses.

However, for purposes maximizing the "trick" suggested here - here's a tip.

The card arrived with a $5K limit. I called them up, told them I had no use for a card with such a low limit, and I'd cancel it immediately unless they bumped it to $15K. They called me back 30 minutes later with an "OK".

Funny, I applied this morning for a citi BT card and it came back with an absurdly low limit ($7500). I called them and told them that unless it was at least $20k, they could just cancel the card. The CSR told me she could help me with a higher limit and that she would call me back within 2 weeks. Come to think of it, of the three CCs I already have (used for actual purchases), the Citi card has by far the lowest limit and has been the least inclined to give me unasked for line increases. MBNA, OTOH, is like a drunken sailor.

 

[maddythebeagle]

Another trick with citi is to wait 24 hours and apply online for a second card. It will only pull 1 credit report and you can combine the limits and/or reallocate limits from other citi cards.

 

[Da Nag]

Funny, I applied this morning for a citi BT card and it came back with an absurdly low limit ($7500). I called them and told them that unless it was at least $20k, they could just cancel the card.

Yeah, I should have clarified a bit...

I got the same low credit limit details when I applied, and called up imediately after doing so. I was told to the credit limit listed online was not necessarily the same as the card would show up with, and any request for a limit increase would have to take place after the card arrived.

A week later, it arrived with the same credit limit mentioned when I applied online...that's when I called in with the cancellation threat, and got the bump within 30 minutes.

Given the different responses here, it sounds like Citi has some formula for determining these things, possibly independent of credit rating. Our credit is excellent, but it's nothing I would consider unusual...perhaps they were more flexible, given that this was our first Citi card, and our credit history doesn't have numerous open/closed cards on it.

 

[Mr._johngalt]

Yeah, I should have clarified a bit...

I got the same low credit limit details when I applied, and called up imediately after doing so. I was told to the credit limit listed online was not necessarily the same as the card would show up with, and any request for a limit increase would have to take place after the card arrived.

A week later, it arrived with the same credit limit mentioned when I applied online...that's when I called in with the cancellation threat, and got the bump within 30 minutes.

Given the different responses here, it sounds like Citi has some formula for determining these things, possibly independent of credit rating. Our credit is excellent, but it's nothing I would consider unusual...perhaps they were more flexible, given that this was our first Citi card, and our credit history doesn't have numerous open/closed cards on it.

I have tried many times (when applying) to set a minimum credit
limit that was acceptable to me. I said "If it's not at least______
then don't bother sending it." I was never able to get more until
they actually had issued the card.

JG

 

[justin]

Funny, I applied this morning for a citi BT card and it came back with an absurdly low limit ($7500). I called them and told them that unless it was at least $20k, they could just cancel the card. The CSR told me she could help me with a higher limit and that she would call me back within 2 weeks. Come to think of it, of the three CCs I already have (used for actual purchases), the Citi card has by far the lowest limit and has been the least inclined to give me unasked for line increases. MBNA, OTOH, is like a drunken sailor.

Don't feel bad. I'm getting about the same credit limits from Citi. I think the highest was a $10,500 small business credit card from Citi. The lowest from Citi, which I am inclined to take as a joke, was $2850. And this was for a card I actually intended to make all my purchases with! Obviously this amount is insufficient, and I told the CSR so. They said no increase, but after about 6 months, they gave me a "courtesy bump" up by $290 to $3140. We were pretty excited about this amazingly high amount of credit (this is sarcasm).

MBNA is the drunken sailor of the CC industry. After my last round of 0% balance transfers, we got notices from MBNA congratulating us on our new increased credit limits of $16000 and $20,000 respectively on our MBNA cards. I guess they wanted a piece of my 0% action too.

 

[brewer12345]

Don't feel bad.  I'm getting about the same credit limits from Citi.  I think the highest was a $10,500 small business credit card from Citi.  The lowest from Citi, which I am inclined to take as a joke, was $2850.   And this was for a card I actually intended to make all my purchases with!  Obviously this amount is insufficient, and I told the CSR so.  They said no increase, but after about 6 months, they gave me a "courtesy bump" up by $290 to $3140.  We were pretty excited about this amazingly high amount of credit (this is sarcasm). 

MBNA is the drunken sailor of the CC industry.  After my last round of 0% balance transfers, we got notices from MBNA congratulating us on our new increased credit limits of $16000 and $20,000 respectively on our MBNA cards.  I guess they wanted a piece of my 0% action too. 

Yeah, I was surprised at the Citi limit, since the two cards I have gotten over the past year both have limits of better than 20k, and my income has only gone up since then. Oh well, time will tell.