Long time readers will probably remember my credit card arbitrage [1] strategy. I’d regularly take about $200,000 in credit card balance transfers and put it into high yield savings accounts [2] earning interest and cash in on the difference.
And while the credit card act [3] and credit crisis changed the landscape of credit cards, it didn’t kill the arbitrage game completely. Here’s an update on credit card arbitrage today.
Current Credit Card Arbitrage
I’m still going strong on credit card arbitrage! There is still a lot of opportunity in credit card arbitrage, but it does take a little more creativity.
I’m currently carrying about $189,000 in credit card balance transfer money.
Changes in Credit Card Arbitrage
I have made some modifications to my strategies. With the shift, here are some of the ways I focus on arbitrage now:
Offers from current cards. One of my best source of new balance transfers is from current cards. I still get offers in the mail. Last week I took advantage of a 12 month 0% balance transfer from Bank of America.
It’s on a card that I already have (my Fidelity 2% Cash Back Credit Card [4]) and it’s one of the benefits to having dozens of credit cards and keeping them open [5].
They also let me reallocate my credit line [6] from another card. So even an offer in the mail on a card with a $3,000 credit limit was turned into a $18,000 balance transfer with a quick phone call.
Seek out higher interest. Finding a place to stash the cash has also become more difficult since rates are lower, but not impossible. I recently reserved a good chunk of 5% CDs at Penfed [7] to stash a lot of our balance transfer money.
Pay a Little Interest. While 0% is always ideal, there’s still a lot of opportunity to use cards with an interest rate less than 3%. I have many uses for these low rates, like offsetting our mortgage [8] or heloc.
Lock in life of balance transfers. I jumped on the opportunity to lock in various life of balance transfers to finance long term investments like our rentals [9]. Every time I get a life of balance transfer in the mail, I calculate the long term cost of these. Since you can float the money for such a long time, sometimes over 29 years [10], they are often a fantastic deal, even when you have to pay a small fee or a little interest up front.
Recalculate the Fee. While the 0%, 0 fee offers are great, they are harder to find these days. But don’t overlook a fee that is stretched out over a long time period, like the 21 month balance transfer from Citi below.
Favorite Balance Transfer Card Right Now
Besides the offers in the mail, I keep a running list of the current 0% balance transfers [11] available right now.
So while the credit card arbitrage strategy has evolved, I’m still in the game.