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| Tuesday, April 10, 2007 |
| Gone are the good days for credit card balance transfer arbitrage? |
Although I have known credit card arbitrage for quite a while, I did not really engage in it actively till last year. In my eyes, the gain of several hundred dollars a year is not enough to compensate for the potential damage to my credit score. So, I am not a big fan of this AOR thing either.
However, last month, I got a credit card invitation that I can not resist--it was from the alumni association of the second university I studied in. I have a card from my first university. I do not use it, but keep it as a souvenir. I want to have one for the second university too.
So I got the card, issued by Bank of America, MBNA card. It came with 0% APR till 03/2008. Given that I am not using it for purchases, I am tempted to do the credit card balance transfer arbitrage.
Lucky for me, I found this website. My return will be a mere $159 due to the BT fees, and minus the taxes, it will be tiny...
Definitely not worth it. And for anyone who is still looking for credit card arbitrage opportunities, please be careful with the BOA world points cards. IMO, it is not worth it.
The best credit card deal I got was in 2003. I applied for a AT&T universal card, with 300 cash back points. And at that time, I-bond could be purchased using credit cards. So I bought $30K I-bond with 1.6% fixed rate and got $300 cash back in 3 month. In fact, at that time, I was not that financially "savvy" -- I purchased the I-bonds only to get the $300 cash back. I did not do any research to find out whether I-bond was a good investment or not. I was thinking of redeeming them after the 6 month limit and put them back to savings account.
Last year, I got some free time and started to review my portfolio. If I recall correctly, the APY for the I-bond was around 7% for 6 month last year. Plus the initial $300 cash back, it was a decent, low-risk investment for 3 years!
I cashed all my I-bonds once the rates went back to something around 2.5%. I was thinking of getting new ones since the fixed rate got a little up. But now, we can not buy I-bond with credit cards, and the BT fees are not capped any more, the overall return is decreased dramatically. I guess that the good days for credit card BT arbitrage are gone... Dear PF bloggers, we need some "financial innovation"!Labels: Arbitrage, Balance Transfer, Credit Card, Investment, personal finance |
posted by Jacqui @ 2:40 PM |   |
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| 4 Comments: |
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I just use one of the "convenience checks" to deposit money from my credit card into my bank account to take advantage of the zero balance things. You don't need to just spend the money on paying off another credit card or something you can use a credit card to buy.
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I spent the money to get the $300 cash back, not the zero balance transfer. Most "conveneince checks" nowadays incur BT fees, which makes them not "convinient" for BT arbitrage.
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I can't agree that there aren't beneficial offers nowadays. For instance, consider credit card deals from Chase Bank that comes with convenient terms and conditions, and various rewards as well. Or offers from American Express wchich are expensive enough but have exclusive bonuses and benefits.
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There is such a great variety of
credit cards nowadays that it is possible to find the one to suit your needs and preferences.
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I just use one of the "convenience checks" to deposit money from my credit card into my bank account to take advantage of the zero balance things. You don't need to just spend the money on paying off another credit card or something you can use a credit card to buy.