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Doesn’t opening all these cards and having such a crazy high credit limit negatively impact your credit score?
I was wondering the same thing as Matt. Not only does having a high credit limit affect your credit score, but does having so many credit cards open have an impact? Does having such large amounts of money on credit cards affect your credit? Are you still able to get low interest loans or do you use the 0% credit cards to buy things like cars or a home?
If you aren’t looking to obtain serious credit (i.e. loans) any time soon, who cares what your credit score is?
Since Madison’s been doing this for many years, she likely has some infrequently or unused credit cards with high balances, so her available credit percentage might not be all that bad. The only thing that might hurt is length of credit history and amount of new credit both of which don’t hurt that much.
From my understanding Madison doesn’t need home or a car anytime soon. I think she is looking to refinance, but loan officers look at all monetary accounts in addition to credit scores. If the money she makes from this arbitrage is in a high-yield savings account, it’ll have likely have little negative effects on refinancing.
My question is that $12,000 net earnings after all the minimum payments and balance transfer fees?
@ Matt: Actually, I have found just the opposite. While the score takes a slight hit right after the applications, it quickly rebounds and we have great credit scores.
@ Tina: The high credit limits and multiple cards actually help our score, here’s why: The percentage of outstanding debt is lowered with high limits. If you have a card with a $10k on a $11k limit, your ratio is over 90%. If that same $10k balance is on a card with a $50k limit, it is only 20%.
Since we keep our total outstanding balances at or about 20%, we are actually better off with high limits and lots of card.
I always try to keep the balances to less than 50% on any one card. Never more than 90%.
Of course, our credit scores are also good because we don’t have any adverse impacts: late payments, bankruptcies or judgements. In addition, we have a long credit history and relatively few inquiries.
We haven’t had any problem getting credit. We have qualified for the best rates for credit cards, insurance, and home loans. Although, I am very, very careful to check our credit reports before applying for a new loan to make sure that all the accounts are reporting favorably.
We use a combination of regular loans, our heloc and 0% interest credit cards to finance our house. Here’s the breakdown: credit card arbitrage.
Although all the 0% financing is done to save money on current loans. It is never used to buy things that we couldn’t afford otherwise.
@ Thrifty Femme: Great explanation! You know me better than myself:)
As for the $12,000 – it includes the balance transfer fees. I pay those out of the earnings/ savings. I don’t include minimum payments, because I don’t actually ever really pay them… I just move them to a different card and keep the cycle going:)
**Also, it wouldn’t be right if I didn’t include the “don’t try this at home” disclaimer. When I started the arbitrage 5 years ago, it was much, much smaller.
I’m currently living in Canada and from what I can tell, credit card arbitrage is just impossible to do. No one seems to offer 0% ever. The lowest I’ve seen is 1.9% for 3 months. Are there any resources that you know of to help us canucks out?
Do you ask for balance transfers when you apply for the card, or do you wait until you see what the limit they grant you is and then ask for the transfer?
@ Brad: Wish I knew… Maybe Mike at Four Pillars might know, I’ll ask him if he’s seen any for Canadians.
@ MIT Beta: I usually don’t ask when applying. I like to get the new line and consolidate it with other lines first, that way I can make one big balance transfer.
@ Brad: I asked Mike at Four Pillars, and here was his response about Canadian 0% balance transfers:
“I don’t know if it’s possible for Canadians – MDJ looked at it here http://www.milliondollarjourne.....-is-it.htm
In the second post he did come up with two banks but the info is from last year so who knows?
I think you just have to keep your eyes open – maybe there are the occasional zero balance offer.
Bottom line is that it’s probably not worth pursuing if you live in Canada (otherwise I’d be doing it!).
Citi Gold Mastercard
Save money on purchases you’ve already made. Transfer higher interest-rate card balances to our low annual interest rate of 0% until April 2009.^^
Great find! Thanks for sharing. Also, note that it looks like it has a 1% balance transfer fee.
According to the fine print, the application must be in by May 12/08, out of luck for now
Hi, I noticed all but just a couple of credit cards listed at 0% interest offers have 3% or higher transfer fees. How do you make up 3% up front transfer fee on a safe return like a CD?
Is it a matter of having such large borrowing limits that you hit the maximum $ levels fees on balance transfers but it remains a small % of the return?
For example, borrowing on a card with a $50K limit and having a maximum dollar transfer fee of $100 vs the 3% charge (which would equal $1500)?
I have never done this but am contemplating it since I have little to no debt and good credit.
So how do you get money into a CD (or other safe investment) from a credit card? I would not think a bank would take a credit card for payment into a CD.
And cash advance fees on credit cards are way too big to make it work. Doesn’t it have to be cash or check to get a CD? Do they take credit cards?
Thanks for the help!
Just an FYI that all the Chase cards now have a 3% balance transfer fee with no maximum amount defined in the terms and agreements.
looking around for cards which are low-priced is not an easy task, I believe that is the point of all of them – to be bad value for money.
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