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Are You a 0% Credit Card Daredevil?

Written by Nickel - 35 Comments

Well, it looks like the 0% balance transfer game (see also my list of 0% balance transfer credit cards) has now officially hit the mainstream, as MSN/Money had a story about it last week. In the story, they describe 0% balance transfer ‘daredevils’ who use these transfers to borrow a ton of money and stick the proceeds in the bank, thereby pocketing a bunch of interest without having to pay anything in return.

While the article outlines a number of potential gotchas, including interest and fees for missing a minimum payment and possible negative effects on your credit score, they correctly point out that:

“There’s no denying that smart, careful, savvy consumers have been making money using credit card arbitrage.”

So… Have you ever played the balance transfer game? If so, how much 0% money have you gotten your hands on? And how much did you end up making

For details on how to pull it off, check out my guide on how to profit from 0% balance transfer offers. As I noted above, I also have a list of fifty 0% balance transfer credit card offers (note that I recently updated the list with a bunch of new balance transfer offers).

Published on May 29th, 2007
Modified on June 5th, 2007 - 35 Comments
Filed under: Credit Cards

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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35 Responses to “Are You a 0% Credit Card Daredevil?”

  1. 1
    Blaine Moore Says:

    I considered it, but decided that it was not worth the effort in the end and haven’t gotten around to playing the game at all.

  2. 2
    Toby Says:

    I haven’t gotten into the 0% arbitrage game but about 18 months ago I bought a brand new car with a “1.99% for the life of the balance” deal. Needless-to-say, I am only paying the minimums. At this rate I am not going to pay off my CC for 7+ years.

    I’m taking the difference between car payments and CC payments and investing it, so I think this is one 7-year car loan where I will actually make more than I pay in interest.:)

    The point about being careful and making sure your payments are on-time (better yet, early) is important. It only takes one screw-up to turn a lucrative CC arbitrage deal into a disaster.

    Good luck to all!

  3. 3
    Jonathan Says:

    I tried this first in 2005 for about $10,000, and again this year borrowed another $30,000 fee-free for 12 months at 0%. I’ve earned about $2000 in total in interest payments from an online bank like GMAC.

    The best deals I have found are through either Citi or Bank of America. But this isn’t something I would recommend to everyone. If you are a careful, quick reader and can scan the Terms and Conditions for a credit card successfully, you can avoid many pitfalls and find the right opportunities.

    Once you have a trained eye, this doesn’t take long, but I imagine that a lot of people can get themselves into trouble by not understanding the fine print of a mediocre card application.

    Good luck.

  4. 4
    seth Says:

    Be VERY careful people. Any change in your income, or borrowing can trigger a universal default provision.

    The only way this works is if it works. I used to play chess, and we had a term for this sort of behaviour. Hope chess. Hope chess is when you think you’ve got the drop on your opponent about 7 moves ahead. The problem with hope chess is that it only works on idiots. Real players are intelligent and know what you’re doing. Don’t think the CC companies aren’t wise to this.

  5. 5
    Beth Says:

    While I’m not late with bills (or at least very, very rarely), I really don’t trust my absent-minded to not screw this up. I like my good credit rating.

  6. 6
    tmg Says:

    I borrowed a total of ~$32,000 with 4 cards last year and made ~$1,600 by parking it at HSBC. 2 of the cards (Chase and Providian) had a balance transfer fee while the other 2 (Citi) did not.

  7. 7
    kitty Says:

    Didn’t get around to it yet, but continuously toying with the idea. Not enough time to read the details of every agreement, though…

    Most of my bills are set up to be automatically deducted from checking, and I have no debt, so I am not worried about the universal default.

    My mom is playing this game with one card now, and there is one thing she is curious about.

    She says that when she sends a payment, they first apply it to the purchases (including current month purchases that are not yet on the bill) and then to the cash advance. So she is wondering if sending the full amount of the last-month-at-zero-percent bill is enough or if she has to include new and pending purchases in the payment as well to avoid them applying her payment to new purchases instead of the cash advance. Any thoughts from experts here? Do they really apply it to new purchases instead of cash advance?

  8. 8
    Norm Says:

    I’ve currently got about $20,000 borrowed from 0% cards that is sitting in the bank. I don’t understand ever doing this when they charge a fee though. Those fees can be around 3%, and if you’re getting a return of 5%, by the time you pay the taxes you haven’t made anything.

  9. 9
    Tinyhands Says:

    I’ve got a couple months left on my first 12-month, 0% loan from an AmEx card offer. I’ve been making the minimum payments and expect to net a couple hundred. I hadn’t read any articles about doing this before I tried it, so I was glad to see that I came to the same conclusions as others.

    I don’t think I’m going to do it again though. When this deal expires I plan on exploiting the cash-back/rewards system instead. I’d do it now, but I don’t want another open line of credit.

  10. 10
    Toby Says:

    @ kitty: With all due respect to your mother, she is doing one thing wrong with CC arbitrage. The general guideline is that once you take a BT at a low rate you must stop using the card until it is paid off. Most cards make payments on the lowest interest balance first, so making additional purchases at 10-18% interest is not very prudent.

    It sounds like your mom’s card may work a little differently (perhaps it is a store card like Home Depot or Best Buy) but I would still be wary about continuing to make purchases with it if I was your mom.

  11. 11
    Sun Says:

    I consider myself a ‘daredevil.’ Right now I have about $60K borrowed money in my accounts that earn me 5+% interests. If I could find another card that offers 0% balance transfer with a maximum fee, I will take it.

  12. 12
    Livingalmostlarge Says:

    I have done 0% purchases for 12-24 months. That’s risky right?

  13. 13
    mbhunter Says:

    I agree with Beth above. I don’t have the organizational skills yet to pull off this 0% thing.

  14. 14
    Crediteria.com Says:

    I know quite a few people personally that do this “credit card flipping” game. It saves them a ton in interest but watch out as banks are starting to be on the look-out for this type of behaviour and may reject you because of it.

    Interesting bit of trivia:

    Did you know this act of flipping credit cards has a name?

    It’s called “stoozing”

    See Wikipedia definition
    http://en.wikipedia.org/wiki/Stoozing

  15. 15
    Edwin Says:

    I’m thinking of trying this just not the right time right now for me. One thing I would do is set up automatic min payments from my checking account that way I can be sure I’ll never miss a payment thereby eliminating that risk.

  16. 16
    Tim Says:

    the one caveat to automatic payments is that some of the card companies change the due dates. I have set up payments for a couple days after the billing date rather than using the due date.

  17. 17
    shaz Says:

    I have worked for a bank in credit cards word of advice never take out cash only do purchased on 0% as no chas is 0%

    _____________________________________
    A journey of a young UK based Muslim
    http://www.islam4me.co.uk

  18. 18
    christina Says:

    I’m doing one now on a Citi card as part of my 365 day “Free Money Experiment”. They tried to tack on a 3% transfer charge, but I had printed a copy of my Terms and Conditions. I had to speak with a supervisor, but I did get the fee waived. Stick to your guns!

  19. 19
    kitty Says:

    @ toby:”@ kitty: With all due respect to your mother, she is doing one thing wrong with CC arbitrage. The general guideline is that once you take a BT at a low rate you must stop using the card until it is paid off. Most cards make payments on the lowest interest balance first, so making additional purchases at 10-18% interest is not very prudent.”

    This card’s rules were 0% on purchases and cash advances till July. Before this card, my mother had always paid her balance in full, so she is not paying (or planning to pay) any interest. With this card she took out cash advance (less than credit limit), put it on a CD, and continuing using the card for groceries so that the money she’d normally use for purchases would stay in a bank and continue to earn interest.

    She fully intends to pay everything while it is still at 0%, and she has more than enough money to do so and no other debt. The question is – should the check be for the bill amount+cash advance amoount or should it be for bill amount+cash advance amount+new purchases not yet on the bill to avoid paying any interest at all.

  20. 20
    Etta Says:

    Kitty,
    I just paid off a card that had 0 % on balance transfer and purchases. I used it for purchases (was a cash rewards card, $100 bonus for first use)and just paid the monthly minimum til the 12 months was over. I then paid the full amount due, on time (actually early) prior to the end of the promotion period. So there was a 0 balance and had paid no interest for the 12 months. I continued to use the card estimating I had put about $250 on it in the next month. Got the bill. New balance was 320. Ok, I estimated wrong. About to pay it in full. Looked closer, NO!, they charged me $50 interest.
    Called Chase and they did credit it back to me, but had I not looked closely I would have just paid it. I figure their 2 cycle finance charge calculations caused this since I had kept a balance month to month for the 0 % interest period. So if I do this again on another card with similar offer guess I should not use the card for the month after the promotion period or remember to check and call and complain

    So in answer to your question,
    “should the check be for the bill amount+cash advance amoount or should it be for bill amount+cash advance amount+new purchases not yet on the bill to avoid paying any interest at all.”, I think even if she paid all that, they may still charge interest as they did on mine, which, as I said I think was a result of the way they use 2 cycle finance charge calculations. Chase uses this 2 month calculation thing, I did not mention to the csa because she did not bring it up and I did not want to give her an excuse to not credit it back to me.
    Call the card and ask them them your question. If I were to have the same situation again I would use the card only up to the end of the promotion, pay it in full, and not use it for the next month, then start using it again.
    I still use the card because it is a good rewards card but now pay in full each month.

  21. 21
    David Says:

    If you know how to read the Terms and Conditions, understand the deal you are being offered, know how to pay your bill on time, and understand how to analyze your bill to make sure there are no wrong charges, there is nothing risky or “daredevil” about the balance transfer game. It requires time, but it will definitely be worth it for the interest I am earning. The only negative is that my FICO score has dropped by 100 points since I now have a total credit card balance of $70000. Once the balance is gone my score will go back up to where it was, and since I don’t plan on applying for a mortgage or auto loan any time soon, it doesn’t really matter that much anyway.

  22. 22
    Bill Says:

    I’m currently at $104,000+ in borrowed 0% money that’s gaining 6% in FDIC bank account.

    I’ve been doing it for over 1 1/2 years – at one point I had $135,000+ accumlated from different offers.

    I watch my balances like a hawk, and make my monthly payments two weeks in advance to make sure nothing is late.

    When it’s time to pay off a card, I’ll look for another offer to see what I can get.

    Good luck if you try – it works for me!

  23. 23
    JoeyJam Says:

    Wow!
    I didn’t know so many people did this! But I must say I’ve been doing it for several years now and made decent money – between $1000 – $4000 a year. But it does take work and discipline! But its fun too! I like getting paid by the credit cards! I recently had about $110k borrowed at 0% – so that’s pretty good. I’m not quite sure how someone can make 50k doing this without exposing themselves to a lot of risk…but I guess its possible.

  24. 24
    BD Says:

    How does one get the 0% money into their bank account? Isn’t there usually a fee for a cash advance?

  25. 25
    nickel Says:

    BD: See this link about 0% balance transfers for details.

  26. 26
    joel Says:

    Wow I had no idea so many people were doing this! I thought I was so creative. My first 0% transfer was October 2006. I currently have over $120,000(all 0% credit card transfers) sitting in a money market earning @ $530. per month. I have been paying the minimums out of my own income so as to not touch the money in the money market. This is like a forced savings plan for me. If you are disciplined and pay the bills before they are due this is a great way to earn some easy money. I would only suggest this to someone who is already financially secure. Final Note: Read the fine print(they make it small for a reason).

  27. 27
    The Sim Says:

    awesome… greetings folks – I’ve been playing this game since 1998, and have almost never had a slip-up. I am fully computerized, and pay all bills online. Be prepared to pay off any card on a moment’s notice, though, in case of any accidentally accrued interest or fees (late payment, etc.) During this time period, I have obtained 5 mortgages and 1 HELOC (not all at once), without any problem — although that may change now that credit standards are starting to get tighter, but since I have the money sitting in a high APY savings account, I can pay down the balances as needed at any time. Good luck!

  28. 28
    john Says:

    Hi, I tried the 0% BT game and if you are timely on payments and do your research, you can make some extra money on the side. But I think it does effect your credit rating if you balance is too high. I found a website that compares all the recent credit card offers. CreditCardMall.com There are other websites as well.

  29. 29
    Christy Says:

    Im sooo glad to hear about people in the US doing this because from most of my research a lot of this is being done in the UK. I’ve been at it for about 2 yrs now and at one time had close to 50k in the bank. The trouble that I’m having now is keeping it there because as i replace a paid off card the new one doesn’t have the same credit amount because the card companies done want to give as much. At first I could get limits of 10-15k but when you try to replace them I’m only seeing 3-7k. I would gladly put in as much as i can get but that is becoming more and more difficult. If anyone has any thoughts please email me.

  30. 30
    chandra Says:

    Well I got into the game two years ago. Made decent amount of interest from keeping cash in savings account. On problem in the beginning was the bank changed their due date on me and I was late by a day…guess what happened..So since then I devised a plan..I will split my minimum payment into two and make an automatic payment every week . Even though I end up paying double minimum I wont get screwed by the credit companies tricks.
    If anybody knows 0 % balance transfer cards..no fee..can you let me know

  31. 31
    Rick Says:

    Wow. Amazing that so many other people are doing this. Its easy, as long as your disciplined, and may actually improve your score as you pay off bills on time (then call for a higher credit limit and wait for another offer). It’s getting harder as more companies charge for the transactions (with no maximum). The best story I’ve heard so far was from someone that ran up several hundred thousand dollars doing this and was very organized … until he had some legal problems. His brother was supposed to be paying his bills, but slipped up. You know what happened next. What was unexpected is that after the companies raised the interest rates, and really put him behind the 8 ball, they offered to settle cheap. His credit was destroyed, but he paid them off at pennies on the dollar and, last I heard, was back at work with the credit card companies.

  32. 32
    Jeff Says:

    I hate the credit companies that charge 3% fees with no maximum for balance transfers, but I’m not surprised they did that. Now that interest rates have cratered, the best you can do is break even for the 12 month intro period, you can’t make money doing this. It still makes for a 0% credit line, with the interest you receive paying back the bt fee. This is still cool but not as cool as pre-2008.

  33. 33
    SecondCor521 Says:

    So… Have you ever played the balance transfer game?

    Yes.

    If so, how much 0% money have you gotten your hands on?

    $454,422 at the peak.

    And how much did you end up making?

    $10,559.14 in interest to date,
    $1,070 in bonuses,
    $381.40 in a free plane ticket,
    $2.57 in free trial deposits,
    and a free golf glove.

    2Cor521

  34. 34
    Fellas Says:

    Is it worth it? Hell yeah, I’m making 2k per year my first year and the better offers keep rolling in. The holy grail of cards seems to be CapOne and Discover. CapOne has 0%APR with 0 transfer fee cards for 15 months, but you better have stellar credit to get them. Discover gave me 8k at 0% for 29$ fee, for 12 months, and I can extend the 0%APR period indefinitely.
    The key to avoiding fees both from card company and bank is autopay. I set the whole thing up with autopay, a few mouseclicks and there’s nothing to do but watch the money pile up. I hope to get up to the higher credit levels in a few years, 7 or 8k per year would pay my mortgage, is a free house worth a few mouseclicks? I think so

  35. 35
    dave Says:

    I’ve just recently started playing this game. I currently have $55,000 out in 0% cards, a few of them had 3% transfer fees. I think I’ve paid a total of around $1,200 in fees so far. But instead of investing it in banks for their 4-5% interest rate, I put it in the stock market and am up about $7,000 in less than a year. Little more risky, but if you choose your investments wisely (thank you Apple!) then you are set!

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