patrick.net

SF ace says

“Charge up the card and invest in good stocks, while citibank gives us an interest free $15K loan.”

I don’t think it will apply to cash.

You have to be tricky.... What you do is charge ALL YOUR LIVING expenses you can to your 0% interest card.. I'm talking all your food, gas, bills, everything...

THEN invest with all that cash flow that is opened up... Sure it won't be 15K instantly, but say.. $2000 in charges a month... will add up quick.. and that's $2000 of cash to invest each month.... I'm doing this now and I've made a tidy profit over the past year.

In fact, I've got $10 grand I've been floating on a card for 2 years now... And instead of doing a balance transfer... about a year before the cards 0% interest is up.. I order a different 0% interest card.. probably one for 12-16 months... and start charging all my living expenses to that card, in the meantime I'm using that excess cash to pay off the old card before 0% interest expires. In a few months... I've done a balance transfer without paying any balance transfer fees...

You have to have loads of a credit to do this though.. or your credit score takes a hit.. I'm floating a credit line of about $50K on my 3 or 4 cards. So have $15K-20K floating indefinitely at 0% interest isn't too hard... And it enables me to be very liquid when I need to be. I personally could float this money til i died using the above method.

And to top it off.. The credit card companies pay me loads of rewards for doing this... I'd get the rewards also for doing a balance transfer.. but all those rewards are cancelled out with the 3-4% balance transfer fee. This way i get my cake and can eat it too... Am I gaming the system a bit... Sure, but there's a chance I'll pay dearly for this if I mismanage my money... and that 0% card expires before I can pay it off and move transfer to another card. But a responsible person who wants more money to invest, and wants to get paid $300-500 a year to use a credit card along with any profits from investing can do this fairly easily.

One thing of note.. Your credit score takes a hit if you inquire about too many cards in a short period of time... But if you manage it right you shouldn't have to do more than 1-2 inquiries a year..and they fall off the credit roles after 2 years.. so you can start fresh again every 2 years.

shrekgrinch says

Another trick, transfer balances from one card to the next. Use three cards total for this is better.

Every time you transfer the entire balance, it shows up as ‘paid in full’ on the card you just zeroed out. Looks good on your credit.

Plus, you get de-facto free interest when you do. You just have to make sure you effect the transfers on time.

Yeah, but you have to pay 3-4% balance transfer fees on almost all cards .. which is like paying up front interest... which kinda defeats the whole purpose of floating interest free money... In a pinch it's still beats 15% charge your regular card will default to most likely after the 0% teaser rate.. But I find it best to plan ahead and say.. 3-6 months before one teaser rate is set to expire.. open a new 0% card and start charging daily expenses to it.. using the saved money to pay off the old card. This won't cost you a penny.. in fact you'll get paid rewards from the new credit card to do this.

Los Angeles Renter says

And to top it off.. The credit card companies pay me loads of rewards for doing this

It's an illusion. You have to pay more for everything you buy because of the merchant fees paid to Visa/MC/AMEX. that are tacked on to your sales price. You get a partial kickback of that and are supposed to feel like you're getting something for free. You're not.

MarkInSF says

It’s an illusion. You have to pay more for everything you buy because of the merchant fees paid to Visa/MC/AMEX. that are tacked on to your sales price. You get a partial kickback of that and are supposed to feel like you’re getting something for free. You’re not.

It's not an illusion at all.. It's called reality. Tell me what store you shop at that will give you a discount for paying in CASH vs. credit card? Go to McD's and buy a 99 cent cheeseburger with a credit card.. and with a dollar bill? Do you get a discount for paying with cash? No, but I get 1-5% of my that dollar i spent back using my credit card... so who is the smart one in that situation? McD's does well too because people tend to splurge more when cash isn't involved... They'll super size it and buy an apple pie to boot, where if the customer were only carrying $5 with them before... that was a finite amount they could spend. With credit cards at every McD's I'm sure they are selling more cheeseburgers to make up for the fees.. or they wouldn't be doing it.

We are moving toward a cash-less society.. Soon you'll wave your phone in front of store windows to purchase things... You have to change your purchasing habits and strategies with the times.

Would I be smarter to pay for stuff in cash, and not take a free 0% loan that's offered to me and make big profits investing in say Apple stock in the meantime?

Los Angeles Renter says

Would I be smarter to pay for stuff in cash, and not take a free 0% loan that’s offered to me and make big profits investing in say Apple stock in the meantime?

It just occurred to me, this guy is leveraging his cheeseburgers...

Hey, if it works for you go for it!

Los Angeles Renter says

In fact, I’ve got $10 grand I’ve been floating on a card for 2 years now… And instead of doing a balance transfer… about a year before the cards 0% interest is up.. I order a different 0% interest card.. probably one for 12-16 months… and start charging all my living expenses to that card, in the meantime I’m using that excess cash to pay off the old card before 0% interest expires.

With this fiscal mismanagement and risky home economics no wonder you are a Los Angeles Renter

They used to do 3% up to $50 on balance transfers, now it's just 3%. It's unfortunate, because on a 30-50K transfer that $50 max worked out to about 0%! But it's good to see these offers are coming back.

I'm not sure how many cards allow you to do this now, but the alternative is to do a balance transfer from one card to another with a $0 balance. So transfer $30,000 from Y card to your X card. Now you owe Y $30K, and X has a positive balance of 30K. Call up X card, and ask for a check to be cut for your positive balance. Presto! Cash advance for 0%!

Not sure if that one still works. I think Amex never allowed payments over your balance. Others used to, I'm not sure if they still do.

lurking says

With this fiscal mismanagement and risky home economics no wonder you are a Los Angeles Renter

But i have 20K in the bank to back up all this... I'm not risking anything! Anything I can do to get ahead.. I'll do it. Tell me where the risk is.. I just like to stay as liquid as possible. And have cash to invest.. This is the same things banks are doing to your money when you put it in a savings account.. just on a much smaller scale. You loan them money for practically free.. they hold on to it and invest it.

No offense, but I'd say Los Angeles Renters have been the smart ones over the past 4 years. And most likely will remain the smart ones for a few more years atleast.

I haven't seen any 0% offers, except on short-term (

MarkInSF says

It’s an illusion. You have to pay more for everything you buy because of the merchant fees paid to Visa/MC/AMEX. that are tacked on to your sales price. You get a partial kickback of that and are supposed to feel like you’re getting something for free. You’re not.

Just wanted to reiterate that there are loads of perks that come with owning credit cards that the average consumer doesn't make use of or even know about... For instance... I bought a $1600 samsung dlp HDTV back in 2006... I didn't buy a warranty and it broke in early 2007.. just outside the manufacturer warranty.. (damn dlps.. wonder why they dont' make them anymore). I got an estimate and it was $560 to repair it... I emailed the repair quote to MasterCard's warranty department, at a brief conversation with a claims rep in mastercards warranty division and within a few weeks I was cut a check for the $560 repair in full.

No one looks at fine print.. When you buy almost anything electronic with a credit card.. you get an additional year warranty on top of the manufacturer warranty thru the credit card company! I only learned about this a few years ago... Had I known earlier I would never buy over-priced warranties again. I've had plenty of stuff break after 1 year.. but if it's still ticking after 2 years you are usually golden.

Anyway... once again... I highly doubt any increase in costs of goods outweighs the benefits of my $300 in rewards a year.. plus my $560 tv repair refund.

Los Angeles Renter says

SF ace says

“Charge up the card and invest in good stocks, while citibank gives us an interest free $15K loan.”
I don’t think it will apply to cash.

You have to be tricky…. What you do is charge ALL YOUR LIVING expenses you can to your 0% interest card.. I’m talking all your food, gas, bills, everything…
THEN invest with all that cash flow that is opened up… Sure it won’t be 15K instantly, but say.. $2000 in charges a month… will add up quick.. and that’s $2000 of cash to invest each month…. I’m doing this now and I’ve made a tidy profit over the past year.

What will you do when the stock loses value and your payment is due?

Who would time a credit card payment to be put through on the last day? Or be trying to eek out a day of interest savings?

If he actively missed payments, he wouldn't be doing this, as all his cards would be at 23%.

If he found himself with 23% interest rates, he would liquidate whatever he had and pay them off, or move them to another credit card. Either way, he's not going to get stuck with 23% rates. He might lose some by liquidating at a bad time, but not pay 23% for sure.

Not to mention, if you simply call up a credit card, you can usually get let off at least once.

I know lots of people who have used this to their advantage, and so have I, when I could do 0% and get 6% from HSBC, it was great.

How many times have you been late on credit cards? How often does that actually happen? I think I've had one in 10 years, and it's because I had to mail a check back then and it was a day late. Call them up and they fix it for you. Big deal.

Anyone who can't pay a bill on time, who has over 20 days to pay it and it's a known amount every month, should be using them. Of course, those are the people who the credit card companies make money off.

Using the credit card is nothing but a hedge, big deal. He won't be paying 23% unless he can't pay bills on time. Maybe it's an issue you have, most of us don't have a problem getting payments in on time.

You never read his message, I wouldn't recommend this for you if you don't understand the basics.

-- Run up bill through normal purchases.
-- Keep money you used to pay off those purchases for investment purposes.

He has the money, he isn't racking up a bill on things he can't afford.

Nomograph says

I agree. I find this to be an extremely bad investment strategy. If a single payment is a single day late your zero interest dream is over.

I predict Los Angeles Renter finds himself with huge CC debt at 23% APR shortly.

Ever hear of AUTOMATIC payment.... I have my CC set to automatically pay in full every month online. I double check each month to be sure everything is running smoothly.

I recently did decided to pay off in full the only 10K.. zero interest card we used to leverage wedding expenses. I primarily did this to help my wife's credit score whose name was also on the card, but her debt ratio was out of whack because of the high balance. Mine was fine because I have a handful of cards.. all she had was that one. But the good news is I helped her score dramatically.. She went from low 600s to mid-700s since we met and married.

Nomograph says

How is taking on massive CC debt “playing with money you already have”?

“Unquestionably, some people have become very rich through the use of borrowed money. However, that’s also been a way to get very poor. When leverage works, it magnifies your gains. Your spouse thinks you’re clever, and your neighbors get envious. But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people.” — Warren Buffet, 2011

Because I do HAVE that money... It's just not as liquid as if it were in my savings account.. it's in my personal AMERITRADE investing account.. It was tied up in the stock market from 2009 until NOW! I got married in 2010... I made the educated decision that pulling all my money out of the stock market at DOW 6000 to pay for an upcoming wedding was not the best idea.. I got a 0% credit card for a year.. Charged all wedding expenses to it... Let my money ride in stocks like APPLE.. from 80 on up to 350 a share.

Rules are made to be broken Nomo... I'm quite positive Buffet contradicted himself on the above quote more than a few times in his life.. and was tremendously successful in doing so.

Would i do the same thing now with the DOW at 12000? Hell no!

BUT, I basically paid for a large portion of our wedding using some common sense.. fairly low risk leverage above.

Buying stocks on the margin was popular in the 1920s and famous wrecking lots of people in the ensuing crash. We learned about this in high school economics for crying out loud. If you were doing this strategy in 2008, you would have lost half of your stock value. Your card company may have called your loan by lowering your limits & you would have been stuck owing 5 grand with no stocks & a 23% interest rate. As it is, you had lucky timing.

As Buffet would say, you are swimming without any trunks. If the tide goes back out, everyone will know it. Until then, party on Wayne. Then again, Buffet has had his fair share of luck. It seems like only the suckers bother with swim trunks these days.

That's if you HAVE good credit.