Interest Free Cash With Zero Percent Balance Transfers

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Credit Cards - Secrets Revealed
Most people today have at least one credit card, but many don't fully understand how their card company works. To know this, you need to look into your agreement with your credit card issuer. You know -- the fine print below the interest rate that you never read.

The average consumer has no idea that if you make your credit card payments on time, your rate could still increase. All you ... Read credit cards article



Getting Cash Back on Credit Cards
Cash back offers are a type of rewards program where the cardholder receives a cash rebate equal to a specified percentage of the amount charged to the card on an annual basis.

Cash back reward programs started appearing in 1990 when the Discover Card made their industry-shattering 1% cash back offer. Other cards soon followed.

Cash back programs typically come with higher in... Read credit cards article



Interest Free Cash With Zero Percent Balance Transfers
If you have a great credit rating and no debt, then you could be in line to make some money. And you can do it using the tools that credit card tarts have been using for years.

The Credit Card Tart System

Credit card tarts have used the incentives offered by lenders to their advantage for quite a long time. These incentives often consist of 0% interest on balance transfers for a fixed period of up to 12 months. Borrowers who have a debt apply for a new 0% credit card and transfer that debt to the new card. They make repayments as they normally would, but the balance owed is reduced since no interest is being charged.

When the incentive period is due to end, credit card tarts look around for a new 0% deal. They apply for the new card at least six weeks before the expiry of the old 0% deal, so they have plenty of time to transfer the outstanding balance onto their new 0% card.

This serial card switching allows borrowers to clear debt without paying any interest. Lenders have begun to fight back as they are losing hundreds of thousands of pounds' worth of interest. Many of them now charge a balance transfer fee of about 2%. However, there are still some fee free balance transfers available, which is good news fro debt-free consumers looking to use the system to make some money.

How To Earn Money On A 0% Card

To make money from a 0% balance transfer card, it is necessary to have a good credit rating and to get two new credit cards. One credit card has a 0% balance transfer rate. This must be a card that does not charge a balance transfer fee. The second allows credit card cheques at no additional charge.

The borrower can use the balance transfer card to transfer a sum of money onto the card that allows credit card cheques. The borrower can then write a cheque for that amount and pay it into a high interest savings account. This strategy only works if the interest earned is more than the amount being paid. Borrowers can use the same technique to get a low interest loan. Long term balance transfer rates are lower than standard interest rates on loans.

But Is It Legal?

There is nothing to prevent borrowers from using their cards in this way. As long as they make repayments on time and in full, there are unlikely to be complaints. It is also essential to keep credit card applications to a minimum so there are no red flags on the borrower's credit report. There's no reason why borrowers who stick to these rules and make payments on time shouldn't make a bit of money from their credit cards. And while they're shopping around for the perfect credit cards, it's worth checking out the other incentives as well.

Joe Kenny writes for the Card Guide, a credit card UK site, apply for a 0% balance transfer credit card to clear your credit card debt today. Visit today: www.cardguide.co.uk/

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Credit Card - Making Free Money From Balance Transfer Offers

Beware, Traps Ahead

In Part I of this article on making free money from balance transfer offers, we looked at balance transfer offers and how some very smart credit card holders are making money from balance transfer arbitrage. Today we're going to take a look at some of the things that you have to watch out for in using this strategy. As I stated in Part I, this credit card strategy is not for everyone. If you slip up just one little bit in executing it, it could wind up costing you money instead of making you money. Here are some of the things you need to watch out for:

Whether or not the the convenience checks are treated as a cash advance or a balance transfer. Be very careful on this because, the credit card issuer may classify a check made payable to the card holder as a cash advance instead of a balance transfer. If the offer treats balance transfer checks made payable to you to be cash advances, toss it in the garbage. The high APR for cash advances will be too much of a hurdle to overcome for the arbitrage strategy to work the way we want it to.

Know which APR applies. Yes, the offer states 0% APR balance transfer, but that doesn't mean that its the same one for purchases (or for cash advances). You may find some 0% APR on purchases offers, which is great, but in most cases, there's a higher APR for purchases. Like I said before, outside of the default APR, the cash advance APR will be the highest. Be sure to use another credit card, like a cash rewards card, for your purchases. That way you get some cash back. Don't use your balance transfer card or any other credit card for cash advances.

Transaction fees for balance transfers and caps. These fees are spelled out in the terms & conditions of the offer and expressed as a certain percentage of the balance, as well as a minimum and a maximum dollar amount. The lower the fee, the better for you and no transfer fee is the best. Keep in mind that these fees reduce the amount of money you can make from this arbitrage play. For example, State Farm Bank will pay you 5.5% for depositing $30,000 with them in a high yield savings account, but the credit card company is charging you 3% in transaction fees on that $30,000 balance, leaving you with a net of 2.5%. The fees knocks out the excellent interest you're earning at the bank. Avoid offers that have no caps on the transaction fees.

Length of time for teaser rate. The promotional rate is usually good only for a limited period of time. For the purposes of maximizing the interest that can be earned, look for deals where the teaser rate is good for 12 to 15 months. Avoid the short term offers.

Oh, There's More

Beware of purchase requirements to maintain the low interest rate. Remember, in most instances the APR for purchases is different from, and usually higher than the APR for balance transfers. The balance transfer gets the teaser rate and any purchases get the higher interest rate. Any payments on that card are applied to the lowest interest balance first, then the meter starts running on the interest for any purchases made. That's why you should only use the balance transfer credit card for borrowing only. Also, be sure to make all payments on all debt on time! Most credit card companies, under the Universal Default Clause, can jack up the APR if they discover that you've paid any creditor late. Set up monthly payment reminders if you are prone to forget. Even better, set up automatic bill pays to make your payments. Speaking of payments, if you are depositing the borrowed funds into a high yield savings account, link it to a free checking account with the bank for the purpose of making the minimum payments. Most banks put a limit on the number of ACH withdrawals from high yield savings accounts and some major credit card issuers will flat out reject any payments from these accounts.

In Part III of this article, we will analyze the details of an actual balance transfer offer to see if there's an opportunity to make a profit from it.

All rights reserved. This article may be reprinted provided it remains as is and all links remains intact.

Ray Harris writes articles on credit, investments and personal finance. He is the webmaster of a website that provides information on a variety of credit card offers, including balance transfer offers.




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Interest Free Cash With Zero Percent Balance Transfers
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