Credit Card Arbitrage (Pt. 2)
How much can I actually make?
That depends on several factors – your credit limit, the interest rate on the savings account, your minimum repayment requirements, your tax rate, and perhaps most crucially, your credit rating, since this will determine how long you can reasonably expect to keep being approved on 0% balance transfer offers. For most of us, credit card arbitrage won’t bring in more than a few hundred dollars a year, though I have personally heard of some people routinely making 5 figures annually.
So is it a good idea?
That depends. If you’ve got a good track record when it comes to credit cards and you’re willing to take a small to moderate hit to your credit rating, then it’s a good way to make some money with relatively little effort. For the rest of us mortals who forget dates, make impulsive purchases, and occasionally pay their bills late, my advice is to steer well clear.
And if you decide to ignore my advice (it has been known to happen), please, PLEASE take at least some minor precautions, like calling the credit card company and asking them to provide some basic information. At the very least you should find out what the terms and conditions are, and the exact date when your introductory offer expires. Try to get this in writing, but if you can’t it’s still worth noting down the time and date you called and who you spoke to. Whilst it might seem like a pain now, this information will be priceless if they try any funny business in the future.
Finally, and this is critical, make sure you either repay your debt or transfer it over to another card at least a month before your introductory offer expires. It often takes several weeks for credit card companies to process a balance transfer so you should continue to make the minimum repayments until you are absolutely positive you no longer need to.
Come back tomorrow for a final wrap-up on Credit Card arbitrage as well as some ad-free, objective product recommendations if you think you’d like to give it a shot.
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[...] Credit Card Arbitrage (Pt. 2) How much can I actually make? That depends on several factors – your credit limit, the interest rate on the savings account, your minimum repayment requirements, your tax rate, and perhaps most crucially, your credit rating, since this will determine how long you can reasonably expect to keep being approved on 0% balance transfer offers. For most of us, credit card arbitrage won’t bring in more than a few hundred dollars a year, though I have personally heard of some people routinely making 5 [...]