Credit Card Arbitrage

[Megan]

I've read a bit about credit card arbitrage, but it's something I'm a little too scared to consider trying. I would, however, love to hear anyone's opinions or experiences about it! Has anyone really made it work well for them without any major losses?

[72Tiger]

It seems like it would work if you gave it enough attention, and never slipped up. It also seems to me that there are a lot less risky, and more straight forward ways to make money. I wouldn't ever try it personally, because I am 100% certain I would screw it up. Even if you pulled it off successfully, it may also show up as a flag on your credit report - not sure about that though.

To me, the math is interesting, and I love to see credit card companies beaten at their own game, but my gut tells me most people who try it would end up failing at it. I am like you though, I would like to hear from some people who have succeeded or failed at it.

[Linsey Knerl]

I would love to read more about this.. do you have any good links?

(Oops.. I noticed I spelled your name wrong.. Forgive me?)

[Megan]

Here are a few links that I've seen that describe the process:

“Good” Credit Card Debt - How-To Play the 0% APR Game, Part 1 » My Money Blog
What A Year of 0% APR Arbitrage Has Brought Me | From PFBlog: The Unique Personal Finance Blog Since 2003
Zero-Percent Credit Card Arbitrage @ Moneyspot.org
Grad Money Matters: Credit Card Arbitrage (Plus an Image of the $2,000 we Made...)
Credit Card Arbitrage I - What is it? | Million Dollar Journey

I guess I just feel like it's too good to be true and also a bit risky unless you're really sure of what you're doing.

[rolltimer]

I am intrigued as well with the idea of making some money this way but I'm certain I would slip up, miss something in the fine print of the credit card agreement and lose a whole lot of cash. I think it's pretty slick that some have managed to pull it off, if indeed they have. I would get too caught up in the details. Much too confusing for me to follow.

[Julie Rains]

This is slightly different but I know someone who used low teaser rates on credit cards and kept switching them out to finance a business -- she built a small chain of tanning salons this way. It wasn't an ideal but the bank wouldn't lend her money so she financed her business with 3-4% interest rate. She had a real job and lived at home (while married) for some of this time so she didn't have lots of other expenses. She also paid very close attention to her payments and managed to get new offers when the teaser rates expired.

I have been getting 0% offers lately and have thought about taking the card companies on their offers. You would need to be very careful with the money and not miss any deadlines; I am pretty careful but not sure if I could do that well. Great idea about putting the money in a high-yield savings account though.

I have noticed that some offers require all of your accounts to be paid on time so if you happen to forget to make a payment on an unrelated bill, then your offer could be withdrawn or the terms changed without notice.

[girlfromsouth]

This is something that's sounded kind of intriuging to me - but I'm terrified of it. I have been in too much trouble with credit cards in the past and I know that somehow I'd slip up on somehting and lose any gain I could stand to make. It seems...I dunno, not worth the risk to me - though I keep reading about people who manage to make tidy sums off of doing it.

[Madison]

We are currently running about $220k in arbitrage. We earn over $11,000 per year from it. However, you must be VERY organized. I've written about it on my site, but feel free to ask me if you have specific questions.

[gtwise]

I have started doing CC arbitrage in November. I haev started with a 740 credit score and opened 10 new accounts in two days. I'm carrying around $130k in CC arbitrage right now. $65k will expire in July the rest will be in effect until November/December timeframe. I'm expecting to make $3-4k after taxes on it this year. Then we'll do it again next year!

We did it all on my name, wifey's scredit score is still 750+ in case we can't pay cash for our next car in May and need to finance a small part of it. Or if they give us 0% for 3 years we'll just finance the whole darn thing .

[Anthony Marrone]

Originally Posted by gtwise

I have started doing CC arbitrage in November. I haev started with a 740 credit score and opened 10 new accounts in two days. I'm carrying around $130k in CC arbitrage right now. $65k will expire in July the rest will be in effect until November/December timeframe. I'm expecting to make $3-4k after taxes on it this year. Then we'll do it again next year!

We did it all on my name, wifey's scredit score is still 750+ in case we can't pay cash for our next car in May and need to finance a small part of it. Or if they give us 0% for 3 years we'll just finance the whole darn thing .

You're much more brave then me. I cannot understand why credit scores for people who partake in the arbitrage game keep going up (I understand how it happens, just not why). It would seem to me that this type of pattern of borrowing would be a red-flag to credit bureaus. I think this is smart strategy if you can pull it off, but I think it highlights another major problem with our credit system.