Most of us are constantly getting offers from credit card companies in the mail, each one trying to convince you to sign up for their credit card, offering incentives like cash back and other rewards. As you sort through your mail, junk in one pile and bills in the other, take a closer look at some of these advertisements. You will probably find one that offers you 0% APR on either purchases, balance transfers or both. What does that mean? What they are offering you is a loan with no interest for a certain amount of time. This could be anywhere from 6 to 18 months. Why would a business give away free money? Well... this "free money" comes with many strings attached. Usually there are rules that need to be followed. You must pay at least the minimum balance each billing cycle and you must have the loan paid back by the end of the offer, if not the interest rate will go up. This is how the credit card companies make money.
Why would you want a large amount of money that you can't spend? Well, you could put that money into a high yield savings account like ING direct or FNBO direct. You would be using someone else's money to make money for yourself. Let's say you borrow $10,000 and you put that money into an FDIC insured savings account for 12 months. If that account was earning 3% interest, at the end of the 12 months you would have $10,355.67. That's $355.67 profit after paying off the balance.
Before you start applying for as many credit cards as you can, there are a few things you should think about. Using up most of your credit is bad for your credit score. So, if you're thinking of buying a house, this isn't for you. All it takes is one late payment for your interest rate to sky rocket and the offer to end. Make sure you read the disclosure very carefully and call the company with any questions. If there is a balance transfer fee, how much will it cost you? Can you get a approved for a credit card with a high enough balance for this to be worth your time? These are all things you should think about before you try a credit card arbitrage.
OK, so you've decided you want to take the credit card companies for all they're worth. What you need to look for is a 0% APR on balance transfers, preferably for 12 months or longer. Where do you get these cards? Here's a small list of offers I found online .
Discover More Card - The information about this card, a.k.a. the fine print, is at the bottom of the application.
Other APRs
Balance Transfers: 0.0% until the last day of the billing period ending during November 2009;* then the standard APR for purchases
Cash Advances: 23.99%
Default Rate: Up to 30.99%*
Other Fees
BALANCE TRANSFER TRANSACTION FEE: 3.0% for each balance transfer made under this offer, with a minimum of $10 and a maximum of $75.
CASH ADVANCE TRANSACTION FEE: 3% for each cash advance, with a minimum of $5 and no maximum. LATE FEE: $19 on balances up to $250 and $39 on balances over $250. OVERLIMIT FEE: $15 on balances up to $500, and $39 on balances over $500.
Make sure you thoroughly read through all the information on the site before applying. There is a balance transfer fee with this card, 3% with a minimum of $10 and a maximum of $75. Is it still worth getting the card? That's up to you.
Bank Of America Petrewards Card - Again, always read the fine print.
Other APRs
Balance Transfers: 0% Introductory APR for the first 6 statement Closing Dates following the opening of your account for all Balance Transfers, Check Cash Advances, and Direct Deposits. After that, the APR for these promotional balances is 7.99%, 10.99% or 14.99%, based on creditworthiness. The Standard Variable APR for Balance Transfers is 7.99%, 10.99% or 14.99%, based on creditworthiness. The Introductory APR will end sooner if your payment is late or the account balance is over the credit limit. See 1, 3 and 6 below for explanation.
Cash Advances: Standard Variable APR is 20.99% for all Direct Deposits, Check Cash Advances, ATM Cash Advances, Bank Cash Advances, Overdraft Protection and Cash Equivalent transactions. See 3 and 7 below for explanation.
Default APR: Up to 29.99% for all Purchase, Balance Transfer, and Cash Advance balances if late or overlimit. This is not a variable rate. See 2 below for explanation.
Standard Balance Transfer Fee: None.
Standard Cash Advance Fee: 3% of each such transaction (minimum $10).
Late Fee: Based on your balance as of the day the fee is assessed - $15 if $0 - $100; $29 if between $100.01 - $250; $39 if $250.01 or over.
Overlimit Fee: Based on your balance as of the day the fee is assessed - $15 if $0 - $500; $29 if between $500.01 - $1000; $39 if $1000.01 or over.
This card has no balance transfer fees. Although the 0% APR offer only lasts for 6 months.
Iberiabank Classic Visa - ... fine print...
Balance Transfers:
Annual Percentage Rate for Balance Transfers
0% APR for 6 billing periods from the posting date of the balance transfer check *
There is no balance transfer fee listed. I would call to make sure before applying.
These are just a few cards. You can search google for "0% Apr balance transfers" to find more lists of cards with similar offers.
Finally, most credit card companies will let you request a check, or transfer the money to a bank account. If not, there is a way to indirectly get that money. You'll have to transfer the money to a credit card that has a zero balance. This will give you a negative balance. Once the transfer goes through, call the company and request a "credit balance refund" and they will send you a check.
As long as you make sure you pay your bills on time and know all the fees and rules involved with the card you are using, you should have no problem making money off the credit card companies.
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