Making money from a 0% Credit Card offer, is to borrow money at a low rate(0%) and earn money on it at a higher rate until the introductory low-rate borrowing term has expired. Doing so, means you are hedging two seemingly opposite transactions so as to make a guaranteed profit ? at a zero risk. To get started you need to find credit cards that offer 0% APR(This rate is usually only valid for a transfer of debt, not purchases.) Why do banks do this? They are enticing you with easy credit for the sole reason that if you don?t pay off your balance in time, they will start charging interest. But if you properly take advantage of low rates, you can come out ahead. It may not be a lot without high balances, but even a few hundred dollars per year at no risk can be worth the effort.
Borrowing money from credit card companies is not for everyone. Remember your credit score at any time, reflects the number of credit card you have, the credit utilization, amount of balances borrowed, your current balance payment habits and others. Every time you apply for a new credit card and do a balance transfer your credit scorer will go down by a certain amount. In general if you have a good credit score, pay off your balances regularly, not planning to make a big investment in the future, you may be ok to go ahead.
Action Steps:
1) Find a 0% APR Credit Card.
Look closely at different mailings you receive for credit card offers, the weekend section of your local newspaper and or do a google search online, you will find many 0% APR Credit Card offers. A typical offer, is ?0% APR on Balance Transfers until 2009!? where the date given is typically 8-15 months in the future. Also, keep in mind the longer the balance transfer offer lasts the more you can make, hence 12 months or more is a better option. Once you have a 0% Balance Transfer credit card offer, you need to review the fine print to make sure there are not any catches with the offer. The biggest catch out there in a small ?balance transfer fee? typically 3% (but varies with each credit card company).
You want to make sure there are no balance transfer fees other fees associated with taking out a balance transfer. (Note: You can still profit if some of these fees are in the offer, but since these offers are frequent, it is wiser to wait for a better offer).
Once you are satisfied with the credit card terms and conditions ask the representative to do a money transfer to your bank or to send you a check for the cash advance.
Just to get you started, here are some of the best 0% balance transfer cards.
2) Now that I have the 0% balance transfer, what do you do with it?
The whole reason you are doing this is to earn money, so this is a very important step. Find highest-yielding risk free investments and invest in them for a term less than the maximum term of your 0% APR Credit Card. Most of the safe investment options gives 5% or more interest rate. Hence if you can execute things in the right way, you are looking at a profit of 5% or more. On an investment of $15000 you can potentially make more than $750. Remember, if lets say your credit card 0% APR term was for 12 months, you should make investments for a span of less than 12months, lets say a 9 month CD at 5.25% APR.
Here are some suggestions:
A) Online high yield savings accounts such as HSBC Direct or WaMu Free Checking?.
B) Short term treasury bills on TreasuryDirect.gov.
C) Short term CDs such as a 6-month or a 9-month CD.
D) High-interest, short-term US treasury bills.
3) Start Repaying the Credit Card Debt.
Once you identify your investment vehicle, you must immediately invest the borrowed money from the credit card into it. Next you must set up an automatic monthly payment for your credit card. Make sure you pay a little more than the minimum due, this helps to keep your credit score at a slightly better level.
4) Timely repayment of credit sources.
At the end of your term, when your CD matures, you should pay back your credit balance on time. Withdraw investments a monthly early, before your Credit Card 0% APR expires, for safety. Not making your payments on time can cost you late fines that?ll put a dent in your profits. (Read the fine print on each offer.) In fact, make payments on the balance immediately, if possible ? even if it?s a small amount each month, to reduce your total payout at the end. Else you run the risk of flipping over into the much higher interest rate on the balance.