Making Extra Money

Interestingly enough, the most feedback I've gotten on the posts I've done here were related to the posting on coupons. I figured more people wanted to hear about Bailey or my razor sharp insights on life - but apparently I was wrong. That said, I'll let you in on another of my money making tips.

The 'game' is called credit card arbitrage and it made me over $1000 last year. It essentially involves taking advantage of the 0% APR that credit card companies offer to get you to sign up for their card. As the credit crunch gets worse, these offers are harder to find but they're still out there.

There are a couple of keys to making this work:

1) Finding the credit cards that offer 0% APR - the longer the term, the better. 12 months is pretty standard. Here's an example:

http://citi.bridgetrack.com/usc/05/HomeRebate/default.htm

Notice the 0% APR in the blue box on the right side - that's what you're looking for. This particular offer is even better because they don't charge a fee for balance transfers. That's important. If you have to pay a fee, your profits are diminished. I only do it if I can find one like this one - no balance transfer fee!

2) Pay your bills on time. These offers come with STEEP penalties (back interest and your interest rate goes to 22% or something crazy) - so make sure you pay the minimum every month and pay it on time. I set my auto-pay to pay it about 5 days early just to be safe.

OK - so - here's what you do. Sign up for this card. Somewhere during the sign-up process you'll have the opportunity to transfer a balance from this card to another account. At that point, I transfer the entire credit limit of this card - whatever they've given me as my credit limit during the enrollment - from this new card to a credit card that I already have that has no balance on it. Assume I got a credit limit of $10K. The transaction would looks like this:

Existing Card's Starting Balance: $0
Transfer from New Card with 0% offer to existing card: $10,000
Existing Card's New Balance: $10,000

So...I owe the new credit card $10,000 which I will pay back over the course of the introductory offer. The existing card owes ME $10,000 - I had no balance, I paid them $10,000 (using the new card's transfer offer). I call my existing credit card company, tell them that I want my credit issued as a check and voila - a week later, I'm holding a check for $10,000.

Now - to make money on this, you find a money market account that is paying a good rate. Some of the ones I've used:

http://www.emigrantdirect.com
http://www.hsbc.com
http://www.ingdirect.com

Find the one with the highest interest rate paid on savings, put the $10,000 in the account, and yield free interest for a year. Each month you'll owe a minimum balance that you want to make sure and pay. Also - make sure you know when your intro offer ends because you'll want to pull your money out of the online account and pay off the credit card before that date!! Assuming you don't miss any payments or make any late payments, you've just netted a year's worth of free interest.

Let me know if you have questions!!