Surprised this hasnt been discussed yet...

[Belok]

I was browsing around the fatwallet forums and started reading up about this "App-o-rama" thing that their finance area has been buzzing about.
http://www.fatwallet.com/t/52/632935/


Basically, the idea is that you apply for a big pile of "0% APR for the first 12 month!" credit cards that allow you to balance transfer for a reasonable rate (low fees, 0% first 12 months, etc)

Once you've stacked up enough credit, pull out as much $ as you safely can and put it in a good savings account.

After your year is up, take your money out, pay it all back, pocket the 5%. From their trials, it looks like a person with a decent credit score could fairly easily get a hold of ~100k and earn 5 grand a year doing this. It looks like there isnt a very large hit to your credit score afterwards either - looks like between 25 and 75 points.

Sounded like a great idea...



Taking it a step further...

What if you were to organize 10 people to all collectively do this at once...and then instead of everybody individually earning 5% in a savings account...pooling the 1mil together and taking it to some high-end hedge fund or something, earning 8-15%.

I'm sure if this could have been done, it has...I'm no financial genius, but if this is doable, it could be a LOT of free money.

Thoughts?

[TheGrifter]

[ QUOTE ]
I was browsing around the fatwallet forums and started reading up about this "App-o-rama" thing that their finance area has been buzzing about.
http://www.fatwallet.com/t/52/632935/


Basically, the idea is that you apply for a big pile of "0% APR for the first 12 month!" credit cards that allow you to balance transfer for a reasonable rate (low fees, 0% first 12 months, etc)

Once you've stacked up enough credit, pull out as much $ as you safely can and put it in a good savings account.

After your year is up, take your money out, pay it all back, pocket the 5%. From their trials, it looks like a person with a decent credit score could fairly easily get a hold of ~100k and earn 5 grand a year doing this. It looks like there isnt a very large hit to your credit score afterwards either - looks like between 25 and 75 points.

Sounded like a great idea...



Taking it a step further...

What if you were to organize 10 people to all collectively do this at once...and then instead of everybody individually earning 5% in a savings account...pooling the 1mil together and taking it to some high-end hedge fund or something, earning 8-15%.

I'm sure if this could have been done, it has...I'm no financial genius, but if this is doable, it could be a LOT of free money.

Thoughts?

[/ QUOTE ]

This is expressly forbidden by the credit card companies.

Lolfraudaments

[Belok]

[ QUOTE ]

This is expressly forbidden by the credit card companies.

Lolfraudaments

[/ QUOTE ]

Which part?

It would qualify as fraud?

How would they know, and would they care enough to investigate and find out?

Hypothetically, if you were caught what would the punishment be?


I dont understand how they would specify the difference between this situation and...for example
I have 5k in a checking account
I get a 0% card with a 5k limit
I put the 5k from my checking account into a savings account
I re-fill my checking account with the new card

I'd be using my money to get the interest, but essentially I might as well have put the money straight from the card into the savings.



I'm just trying to learn more about this and figure out how viable it is.

Thanks

[Sniper]

fwiw, just because you have a 0% interest rate, doesn't mean you don't have to make payments [img]/images/graemlins/wink.gif[/img]

Also, 0% offers used to be easier to get than they are now.

[Belok]

[ QUOTE ]
fwiw, just because you have a 0% interest rate, doesn't mean you don't have to make payments [img]/images/graemlins/wink.gif[/img]

Also, 0% offers used to be easier to get than they are now.

[/ QUOTE ]

Payments are a very small hurdle... If you can accumulate 100k in 0% credit, invest 80 and save the other 20 for payments. No biggie.

I'm more worried about the legality...or an audit...or the creditor changing their terms 2 months in and screwing me with interest.


This seriously seems like thousands of free dollars per year... There are 100s of threads with 1000s of responses for adsense blogs making 10$/month and this one seems to be disregarded...i dont get it.

[BradleyT]

It's been talked about in the finance & investing forum before.

[Big TR]

I think overall it is a lot of work for little profit. Don't forget you have to pay ordinary income taxes on this money. Every time you do a balance transfer, you are going to incur fees. Some of these are $75 max, some are changing to 3% no limit fees. Let's say you have 10 line of credit balances of $10k each for simplicity sake.

Quick Math:
100k at 5% = $5,000 income.
30% taxes plus 10 balance transfers at $75/each = (2,250).
Net profit, generously, of $2,750.

Now include your time and effort making 10 monthly payments and keeping track of all of this so you don't have 1 late payment. Mess up even one of these 120 payments over the course of the year and you will be hit with their highest interest rate on the entire $10k balance you have had outstanding from day one. Goodbye profit.

[TheJokerIsWild]

[ QUOTE ]
Now include your time and effort making 10 monthly payments and keeping track of all of this so you don't have 1 late payment. Mess up even one of these 120 payments over the course of the year and you will be hit with their highest interest rate on the entire $10k balance you have had outstanding from day one. Goodbye profit.

[/ QUOTE ]


This would be the easy part to deal with. All you would have to do (assuming you have online bill pay with your bank) is set up automatic payments for each account to pay at least the minimum payment each month at least 10 days before the payment is due.

[BradleyT]

[ QUOTE ]
Every time you do a balance transfer, you are going to incur fees. Some of these are $75 max, some are changing to 3% no limit fees.

[/ QUOTE ]

Incorrect. There are no fee balance transfer offers you can get.

http://www.mymoneyblog.com/how-to-ma...nce-transfers/

[Big TR]

True, but I believe just as many are moving to no ceiling fees.