What happens when the credit market dries up and you can’t get a new credit card or low interest loan to transfer that huge balance into? Hopefully you can quickly liquidate your “investments” to pay down that balance before the high, non-introductory rates kick in. If not, you’ll be left holding the bag on any remaining credit balance.

Suddenly, instead of earning interest on credit “wealth” that you didn’t really have, you’ll be paying through the nose for high non-introductory credit card interest rates on the remaining balance.

How quickly could you liquidate your investments? In a down economy, it might take a lot of time to sell your house. Stocks might be down far below what they are really normally worth. Retirement accounts will probably ding you hefty taxes if you take your money out early before retirement age. I don’t know what the heck “Budget Busters” is, but it sounds like big expensive stuff that you might not be able to easily sell off in a down economy. Vehicles depreciate quickly, so even if you can sell them, they likely won’t be worth the balance you owed on the credit card.

Ugh.. I’m glad I have zero debt and plenty of savings, just thinking about this gives me a headache. Go back to work and start earning money like a normal person until you’ve generated genuine savings to live off of. This is a tragedy waiting to happen and I hope nobody else reading about it decides to do what you’re doing.

How does your credit score look?

When did you buy your house, before building up all the cards or after you got yoru house?

Geni.

This blog post illustrates what happens when that crazy guy grows up and becomes educated.

Very interesting.

Jason Crowe’s last post: Marketing for Professional Services

“Consider too that credit cards that offer 0% rates on PURCHASES can also be arbitraged, simply by charging all ordinary expenses to them, making the minimum monthly payments , banking the money you would’ve spent on those ordinary purchases, paying off the entire balance at the end of the 0% period and keeping the interest earned for yourself.”

This is exactly the scheme I have been following. I have documented this process in this article.

My favorite arb is a card to which I transferred $11k three years ago with no balance transfer fee. When the 0% rate period was up, after a year, the card company offered to extend the 0% rate as long as I make two purchases a month – which I do (typically $1 each) and pay the interest on the purchase balance — still less than the minimum finance charge of fifty cents / mo.

At present I’m drawing 3.55% on the money (now less than $5k) that I’ve ‘borrowed’ for nothing, and am still netting about $14 / mo. before taxes, at a cost of fifty cents/ mo. Of course eventually I’ll have paid down the balance transfer amount and racked up such a high purchase balance that I’ll no longer make any money on the arbitrage. At that time I’ll pay off the remaining balance. But this will take many years under the card’s current terms and at the current interest rates I receive.

Consider too that credit cards that offer 0% rates on PURCHASES can also be arbitraged, simply by charging all ordinary expenses to them, making the minimum monthly payments , banking the money you would’ve spent on those ordinary purchases, paying off the entire balance at the end of the 0% period and keeping the interest earned for yourself.

[...] you know what credit card arbitrage is? My Dollar Plan presents 0% Balance Transfer Credit Card Offers providing a list of credit cards [...]

2) How to you manage the actual arbitrage refi? 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?

3) Do you worry about your HELOC being frozen? Would you be hosed 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.

love your site – I’m having fun browsing through it.

[...] reading a ridiculous post over at My Dollar Plan about how they have a credit card balance of $223,270 I wanted to revisit this issue to see if we really had made the right choice in going with Chase. [...]