Credit Card Arbitrage Q&A

It’s credit card arbitrage turnover time! Wow, that is a mouthful. If you aren’t familiar with my credit card arbitrage here is some background information:

• Our Credit Limits: Over $1,000,000!
• Reallocating Credit Limits for Bigger Balance Transfers
• When Does the 0% Credit Card Really Expire?

My cards are nearing the end of the promotional periods and I have to find new cards. Complicating the process this year is our refinance that is underway. It might get tricky, so this year won’t be a typical year for the rollover.

Just as I was preparing to tell you about it, I received some questions from a reader, Greg. The questions will help with some of the background before I get into the entire turnover process later this summer.

Do you worry about your HELOC being frozen? Would you be in trouble if that happened? Mine was frozen a couple of months ago and even though I was able to have it unfrozen, it was a royal pain.

As a matter of fact, my husband asked me the same thing recently. In general I don’t worry about it, because I have multiple personal lines of credit that I could use in a pinch if I had to.

We might actually have to close our HELOC to get the loan terms we want. Either way, during this turnover, I’ll be without my HELOC to use to store money. It’s a pain without it, but I think we could pull it off.

I understand how you get such large limits, but how do you get such large advances? I just opened another 0% card and completed a transfer. Since I have other Chase cards, I could easily raise the limit on this new card to $30k just by lowering other limits.

When you do this, are you then able to get them to process another and possibly larger transfer? I’ve come across some cards that have a limit of $10k on the amount they will transfer. You’ve obviously blown right past this.

Hmmmm, I haven’t run into the limit on the balance transfer amount before. One strategy I suggest is to raise the limit first, then do the balance transfer. That way if they are charging a fee, it will only be charged one time, effectively lowering your costs.

Also, I have often called and said that I would transfer more if they raise my limit, this seems to work in a few cases; maybe it would work when they give a limit on the transfer amount.

I’ve found the 0% no fee offers to be exceedingly rare. Most are 0% and a 3% balance transfer fee. Discover maxed the fee out at $50. Do all the 0% no fee offers come to you in the mail or do you search them out? Where?

I agree that many of the no fee offers have dried up. I looked in my notes from last year and found that we got no fees from various American Express, Citi, US Bank and Washington Mutual cards. We consistently found that Discover, Chase, Bank of America, and Bank Atlantic charged fees that usually maxed at $30, $50, $75, and $99.

I usually calculate what the fee is in terms of % rate. For example a $50 fee for a one year transfer on $25,000 works out to be 0.2%. (It’s actually a little off since you make a payment each month.) If the fee makes the interest rate to be more than 0.5%, I’ll pass on it. (This is why making the huge one time transfers help lower the effective interest rate.)

I used to keep all the offers that come in the mail before a big turnover, now I just primarily use online resources. I’ll highlight some of my list of target cards that I am planning on using (see below). In addition, Fatwallet Finance is a good source for finding hot cards.

Are all credit cards in your name, your husbands, combo? All mine are in my name alone. I’ve thought about getting some in my wife’s name also.

Yes, I run both of our cards through arbitrage, but all are individual cards. In addition, every once in awhile I run some of the festivities on my moms cards. Here is why:

• We can run turnovers at different times during the year.
• If we find a great card with a good offer, we can use it twice, once for each of us.
• Individual cards helps out on credit scores by not having us both hit by the same balance.

How staggered are these amounts? A simple average would say you have to refinance ~$20k per month. How much time do you spend tracking down and applying for another 0% card?

I do our applications once per year in our turnover. I pick out a bunch of cards, and apply all in one day. It usually takes about two hours to apply for them. When I complete my husband’s turnover, I use the same list of cards to save time. I pay him $5 per application to sit at the computer and apply for all of them. (Yes, I know we share money, but I don’t think he minds helping me out once in awhile.)

Since I turnover all the cards once per year, I don’t change them each month. To make the payments, I just pay out of the savings account or our HELOC. It’s much simpler that way.

How do you manage the actual arbitrage refinance? When you apply for credit card B to replace credit card A do you simply overpay the payoff amount on A and then ask them to send you the overpayment? Or do you send the money somewhere else and then payoff card A?

I never pay the cards directly. This is where I use HELOCs or personal credit lines. It’s much easier and there is no worry about missing a due date. I also avoid having to call to ask for refunds or to send up any red flags for payments that are too large.

Although, as I pointed out, I’ll be trying to run the turnover this year without my HELOCs because of our refinance. It will definitely be more challenging!

0% Credit Card Offers

To get started, I’m working on a target list of potential cards. Once I find a set of cards, I go in and look at the terms and check for: annual fee, balance transfer fee, 0%, and the number of months.

UPDATE: I’ve posted the list of 0% balance transfer credit cards I am considering.

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