Making Money With 0% Balance Transfers

Eric responds:
Posted: February 28th, 2006 at 2:34 pm

You won’t miss that first month of interest from your Citi Professional card. The 0% balance transfer period begins at the time you request the transfer.

I recently received both these cards you mentioned, requested a check made out to me directly online and made the deposit this week. I also applied for a Discover Platinum because it also had a balance transfer offer of 0% for 12 months with no transfer fee. To get the money from Discover I transfered the balance to my American Express card, waited for it to be posted then called AMEX customer support and requested they send me a check for the amount of my overpayment.

Amanda responds:
Posted: February 28th, 2006 at 3:07 pm

Let us know how this works for you. I’ve often thought about it, but for some reason it makes me really nervous!

FR responds:
Posted: March 2nd, 2006 at 5:24 pm

Hi,

This is the first time I’ve visited your site.

I currently am doing this with Discover (0% for 15 months) and Citi Premier Pass (0% for 12 months). I would have used Citi Professional card but I use that as my main credit card to earn points.

One thing I’ve read is that Citi’s Dividened Card actually gives you money back for even balance transfers. I haven’t looked into it too much since I don’t want to take out any more credit cards for the fear of it impacting my credit score, but you can bet that once my 0% runs out, I will do to that card. Good luck with it and please do let us know how it goes.

FR

P.S. I’d love it if you could visit my site and give feedbacks.

» Another $100 Citi Professional Credit Card Offer on Blueprint for Financial Prosperity responds:
Posted: June 8th, 2006 at 7:06 pm

[...] I have the Citi Professional credit card (it’s one of the cards I use in my 0% balance transfer arbitrage) and they’ve been offering 10,000 ThankYou Points to new applicants after their first purchase on the card. The 10,000 points is good for a $100 gift card to a whole bunch of places or $100 in straight cash that can be applied towards your student loans (if you have any). A popular choice for the $100 gift cards has been gas stations since everyone needs gas. [...]

RM responds:
Posted: June 9th, 2006 at 4:33 pm

Inre the overpayment to Amex, they do NOT like this. This has been discussed many times on various credit and finance forums (such as FatWallet) over the years. This is probably the best way to have the account closed by the grantor or the credit line reduced to “toy” credit-card level.

As for the FICO hit, I think the Balance Transfer Arbitrage game works better with no credit lines utilized greater than 50%. You make up for it by opening more accounts. This sounds very impactful to FICO scores but it’s actually not. There are people on FW with 8-10 credit lines floating a combined $100k and maintaining 700+ FICO’s.

Rick responds:
Posted: March 20th, 2007 at 6:27 am

I am absolutely consumed by the 0% game. I’ve taken out 7 cards so far and I’ve been able to earn between 8% and 12% on the “free” money. First, I had some debt on my Heloc that I was paying 8% on, so that was the first thing to go once I started the Balance Transfers. I’ve also taken a more aggressive approach than some of you here and invested in some money in mutual funds. The risk has paid off for me, and wouldn’t have put me in a bind to payoff the cards when they come due even if I had lost a little in the short run.

One consideration that I have been looking at is the possibility of opening up higher credit lines under the umbrella of a business. Advanta has some great business cards out there. And, I’m in a situation where my self employment/side job could go as either a sole proprietor or register as an LLC. Have any of you ever considered opening up these types of lines in your existing business? The credit lines offered can be much higher than personal lines in some cases.

Rick

Ankur responds:
Posted: March 27th, 2007 at 1:50 pm

to let you know that I applied for a new chase credit card and also signed up for a Balance transfer. I asked them to transfer the Balance of 4500$( no balance transfer fee ) to my Amex Blue card which has no dues on it. When I called the Amex to send me the 4500$ cheque as it was Credit Balance , they said that it is against their policy and they might close the account. They said you made a payment into an account which had no dues. I wanted to know is their a way I can get that 4500$ without making a purchase and still keep my Amex Account. Please advise.
Ankur

funvin responds:
Posted: April 19th, 2007 at 5:57 am

Ankur, I would be interested in how you resolve this issue. I was planning to get into 0%APR game, but that incident has me thinking again.

How do the pros here handle this issue?

tylert responds:
Posted: May 7th, 2007 at 10:07 pm

I would tell them that you accidentally transfered the money to the wrong card and really need the money back asap. Tell them you feel stupid and really hope they can help you out of this situation.

Mary responds:
Posted: May 9th, 2007 at 1:28 pm

I need help… I opened up two accounts yesterday with 0% balance transfers. Now how do I get this 0% money to open up interest bering mutual funds, savings accounts, etc. Please advise… I’m new to this and really excited to see what I can do with other people’s money.

Anon responds:
Posted: August 13th, 2007 at 4:40 am

The big question is: does it really worth the time you invest in doing this 0% APR Balance Transfer game? Yes, you do get to make a few quick bucks from the interest (after tax) but you also have to factor in the risk. In addition to the usual ones such as missing a payment, bank apy changes from promotions, and mis-management of fund, my friend recently told me of this one: you make money on this 0% balance transfer game by collecting interest on this huge “loan.” Now, imagine you get sued over some reason… someone will see that money in your bank and the lawyers will quite frankly, go after that $$$$$$. Ouch!

There was a thread “App-O-Rama: Is there such a thing as a free lunch?” on Fatwallet that is worth reading. It links to a profits calculator that is fairly good: http://www.moneyeconomics.com/articleInterestArbitrageCalculator.php

Phyliss Miller responds:
Posted: August 25th, 2007 at 7:15 pm

I’ve joined the “herd” also. I’ve been seeing this Balance Transfer Credit Card Game discussed on several boards, and since we are debt free except mortgage we decided we would try it. I applied for a credit card from Chase and was approved for $25,000.00 credit within a few days. Now, I’m getting one or two offers a week. My question is how many cards do you feel safe juggling at one time, and what would you feel the pros and cons are? Any advice would be appreciated.

I read Anon responses: (1) Missing payment - Want happen if you set up automatic deduction with credit card company.
(2) Possibility of being sued would be slim wouldn’t it? If you have good insurance coverage on your auto and home owners insurance wouldn’t you kinda be protected there?

Chase sends you a blank check and we deposited it right into your bank and then transferred to 5 CD’s @ 5,000 each @ Ing for a year. The transfer is for 15 months at 0% so if we’ve not paid them off completely I will only have to cash in a couple of the CD’s at the end of the year.

Bruce responds:
Posted: August 26th, 2007 at 12:45 am

I did this for 6 months with $40,000 from MBNA and a one time transfer fee of $15. Put it in ING direct for 4.5% and paid of the account at the end of 6 months. It worked just as you outlined but there is a possible catch if you don’t read the fine print and stay on top of the account. You still have to pay minimum monthly payments. You can’t just take the money and run.
Miss a payment or making a late payment may jump your interest rate to as high as 28%. (About what you would make in 6 months & they get it in one month) This leaves you at the mercy of the post office delivering on time both ways. (your incoming statement & your outgoing payment) Also the processing department can miss place payments at their discression. (I’m not suggesting they would do this, as these a credibable companies)
Another catch in the fine print is: miss or make a late payment to any other card or account and they find out about it and your 0% can go to as high 28% the next month.
I thought I was the only one doing this but go to 0% credit cards and find out who the losers are.
If you think it is to good to be true then it probably is. The people behind these offers are not that dumb to not think of it before us.
D.B.Copper is the only one that got away the first time that I know of, and who knows where he is.

Phyliss Miller responds:
Posted: August 26th, 2007 at 6:47 pm

Bruce,

Thanks so much for your reply. I think I’m covered on all the things you have pointed out. We save approximately $3,000 a month so mininum payments are doable. On the $25,000 - $500.00 is min payment. I have set up the auto deductible on the minimum and they have acknowledged that they will deduct on due date each month. The only other monthly payment we have besides our mortgage (it’s on auto deducted and they have never failed to deduct pmt) is our Discover Card which we pay in full monthly for all our monthly purchases so we can get the 1-5% cash rebate. The minute I’m notified that the statement is available, I go in and set up the payment for balance in full so there isn’t a chance of a payment being forgotten.

It does sound to good to be true, but I think the credit card companies think we consumers have no discipline at all and want be able to refrain from spending the money. Therefore, we want have the means to pay it off in 15 months and will have to pay the interest. I’m going to take advantage as long as it last…I like free money!

Mark responds:
Posted: October 28th, 2007 at 11:06 am

Thank you for your “helpful hints” re: credit card rates and fees, etc., BUT…not all of your assertions are correct. The Citi Platinum Select Mastercard DOES charge a balance transfer fee of 3% ($10 min., no max).

Thought you’d like to know.

Credit Card Arbitrage responds:
Posted: November 1st, 2007 at 3:03 pm

Nice post but one thing I’d definitely do differently is doing what some people call an “App-O-Rama” - basically a fury of applications. I applied for 15 credit cards when I did mine. Many credit reporting agencies do not count same-day inquiries, so you’re more likely to get a bigger credit line. Plus it’s nice to do the various processes (applying, getting money to bank) in one swoop.

Tim responds:
Posted: December 28th, 2007 at 11:21 am

I have been doing the balance transfer Arbitradge over 3 years, and just about wind down. I didn’t care about my credit, since i already owned a home with a long term mortgage, and wasn’t planning on buying any car for a while. I got my balanace upto 200k in 0%, i would pay about 3k a month to cover minimum payments. I few times i would transfer to 1.9 % cards for a month then transfer to back to a 0% card. I would merge cards after using the balance with a new card from the same bank, so that i would apply the new credit limit to a new promotion. Gradually credit card companies got more stringent, and i have less need for the money. I kept my expenses low, and invested every single penny. I figured a home equity line of credit might have cost me 60-70k in interest over the life of the loan. My expense came out to a max of 5k. I made the whole balance, so it was worth it. I didnt keep track of it, but the only time i paid a high rate was Bank Of America, who had no cap on fees. I have bee winding them down and within 12 months will be debt free. If you invest the money wisely and not spend it on items, then it pays of, sure those money market accoutns pay you 5%, but if you put into solid picks in the stock market you do better. Also you must have a good plan for the future, so if you intend to buy a home, you pay them of early by a month. Also you set aside each month enough to pay the minimum payments, and pay them off or roll them over to another card if possible. Credit card companies are picking up on this, but will take a long time to stop. Also mak sure you track all your payments and credit cards in a spread sheet listing how much the balance is how much you paid, and when the promotion is over. Also make sure you have back up cards that you can merge the old card into when the balance is paid so you can do it again.

Max responds:
Posted: January 24th, 2008 at 3:25 pm

I’ve been doing this for years now and it works great. But there are four things that you need to do if you’re going to get involved.

1) Read the fine print carefully and make sure you understand the terms (6 months, 12 months, transfer fees, annual fees, etc.). I generally only bother with the cards that have 0% for 12 months, no annual fee, and no transfer fees.

2) Once you get the card, activate it, and get your money in hand, CUT UP THE CARD!!! You should never use the card to purchase anything.

2) Have a separate savings or money market account that is only used for the proceeds you receive from these credit card offers and ONLY withdraw from this account to either make the minimum payments or pay off the card entirely. I have a money market account with my bank that I use ONLY for this. I keep about $150k in credit card funds in there at any given time and the account pays 5.15% interest. If you do the math, I’m making nearly $8,000/year in interest from these cards.

3) Keep track in a spreadsheet (or somewhere else if you prefer) when each card’s offer expires and how much you have to send to pay it off. The last thing you want to do is let that balance go unpaid beyond the introductory period. If you do, the credit card will charge you the accrued interest over that period at whatever percentage they’ve specified in their terms agreement.

If you can be disciplined doing these four things, you can supplement your income nicely and earn enough to take that really nice vacation one per year. $8000/year is plenty for my family and I to go somewhere nice every year.

Good luck!!

Denise Hicks responds:
Posted: March 18th, 2008 at 11:24 am

If my fico is 654 and I have signficant debt, all are current with no lates, what is the best card to apply for a balance transfer?

Anony responds:
Posted: March 23rd, 2008 at 8:06 pm

Denise,
Debt is not a game. If you have significant debt, do not transfer it. You will only wind up with more debt because of the transfer fees. I can almost guarantee that anyone that will offer you a transfer will charge you some sort of balance transfer fee to do so.
The only people who legitimately get 0% “free money” are people who don’t need the money… and of those who take it, most are unable to successfully game the system the way this forum implies.
You can’t get ahead if you keep digging yourself in a hole. My advice would be to seriously consider the amount of debt you have and if you have any hope of repaying it (if you can’t reasonably do so, you may not have many options).
Get psyched about getting out of debt. I would suggest listening to a few Pod casts of the “Dave Ramsey” show. Dave suggests a “debt snowball”, cut up all your cards and start making min. payments. Take the one with the smallest balance and start putting as much as you can towards this. Pay till it hurts.. no more eating out, stop buying junk you can’t afford.. your diet is “beans and rice - rice and beans”. Once you’ve paid off the smallest one, start applying the money to your next smallest balance. This does not make as much “math-geek-sense” as paying off the largest interest rates first, but it works. As you successfully start to pay off these smaller debts you get a lot of psychological momentum towards getting yourself out of this hole.
There is no magic to it. There are lots of people who will want to sell you quick fixes, consolidation loans, or whatever kind of B.S. will make them a few bucks. Don’t get caught up in trying to transfer the balance or consulting with some “expert”. Just start paying. It’s not going to be easy. It takes discipline the way diet and exercise do. Those who can’t stick to the basic principles pay the price.

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Posted: April 12th, 2008 at 11:20 am

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david mackenzie responds:
Posted: April 15th, 2008 at 11:22 am

Jim, the Advanta Platinum Business card now appears to be offering a 0% rate for 12 months (not 15) on balance transfers. It’s difficult to keep up with these terms.