topic Re: Fun credit card strategy... in Credit Cards

Fun credit card strategy...

Anonymous — Tue, 20 Mar 2018 14:31:39 GMT

I have become big on 0% intro cards lately. I tend to always have on in my wallet. I pay the bill in full to a brokerage account invested in Municipal Bond ETFs [if the price is low] or a Discover savings account. On top of the cash-back offering of the 0% card, I can make an additional 1.5% to 4% [pre-tax] on the money. It's not going to make me a rich man, but definitely a way to make some extra green and pay a few extra bills throughout the year, especially if you run that 0% high - north of $10,000 or so. Anyway, just thought I would share. Any other systems you guys have developed to try and maximize your gains from credit cards?

Re: Fun credit card strategy...

Anonymous — Tue, 20 Mar 2018 15:18:14 GMT

Can you elaborate a bit? How do you pay for an example: a zero percent capital one card to a brokerage account? If you charge something on a card, the issuer gets paid back, I’m lost.

Re: Fun credit card strategy...

Blackswizz750 — Tue, 20 Mar 2018 15:18:25 GMT

For the last couple of years, I have spent mine from Capital one, Discover, and NFCU. I still have a several hundred dollars left from 2017's credit card spending. Also, I havent cashed out my MR's from AMEX because the dollar amounts arent as good.I didnt count the statement credit from BCE or Synchrony as I dont put much throught hem to get any significant dollars. I so want to put them in a separate account and splurge on a trip or cool gift to my kids or something. Its cool doing what ifs on choosing which card to put spend on for most of the year.

Re: Fun credit card strategy...

SouthJamaica — Tue, 20 Mar 2018 16:07:34 GMT

@Anonymouswrote:
I have become big on 0% intro cards lately. I tend to always have on in my wallet. I pay the bill in full to a brokerage account invested in Municipal Bond ETFs [if the price is low] or a Discover savings account. On top of the cash-back offering of the 0% card, I can make an additional 1.5% to 4% [pre-tax] on the money. It's not going to make me a rich man, but definitely a way to make some extra green and pay a few extra bills throughout the year, especially if you run that 0% high - north of $10,000 or so. Anyway, just thought I would share. Any other systems you guys have developed to try and maximize your gains from credit cards?

No. It's only the lenders who make money on my credit cards.

Re: Fun credit card strategy...

Anonymous — Tue, 20 Mar 2018 16:22:37 GMT

How do you use a discover card to fund a brokerage account? And you'd have to pay off the discover balance right? So what exactly are you doing?

Re: Fun credit card strategy...

K-in-Boston — Tue, 20 Mar 2018 16:27:10 GMT

I'm not sure if OP is stating that they invest their cash back earnings from credit cards to earn a little interest on them, or if they're taking 0% advances and investing them?

Re: Fun credit card strategy...

Jimp2323 — Tue, 20 Mar 2018 16:32:04 GMT

@K-in-Bostonwrote:
I'm not sure if OP is stating that they invest their cash back earnings from credit cards to earn a little interest on them, or if they're taking 0% advances and investing them?

My guess is that he is saying that he uses his 0% card for purchases, then takes the cash that he would normally use to pay the card off and invests it until the end of his 0% offer.

Re: Fun credit card strategy...

Blackswizz750 — Tue, 20 Mar 2018 16:35:04 GMT

@Jimp2323wrote:
@K-in-Bostonwrote:
I'm not sure if OP is stating that they invest their cash back earnings from credit cards to earn a little interest on them, or if they're taking 0% advances and investing them?

My guess is that he is saying that he uses his 0% card for purchases, then takes the cash that he would normally use to pay the card off and invests it until the end of his 0% offer.

I hope he is saying he takes the cashback and invest it with other funds and not fund with the card. I dont think you can fund with credit cards with brokerage. I figured they want proof you have cash or funds from other brokerages to transfer

Re: Fun credit card strategy...

K-in-Boston — Tue, 20 Mar 2018 18:14:34 GMT

I think @Jimp2323 may have it. I suppose that strategy could work for those with modest spend and high starting limits; I just did the math and I'd run into major utilization issues doing that unless I were getting something like a new $25,000 card at 0% on an almost monthly basis. So if I just got for example a $7500 15-month certificate at NFCU paying 2.25% every month instead of paying my card, I'd make $168.75 a month starting in 15 months. That would work out to $2025 a year (plus churning bonuses left and right!), but at the cost of opening up 10-12 new cards every year and racking up over $100k in debt the first 15 months until I started paying off the balances one at a time when cashing out those certificates. That sounds like a recipe for AA disaster.

Re: Fun credit card strategy...

redpat — Tue, 20 Mar 2018 18:22:18 GMT

Here's one better OP, getting free points for business and travel expenses.

That's the best strategy I could come up with.

Re: Fun credit card strategy...

Anonymous — Tue, 20 Mar 2018 18:41:13 GMT

Well, not the same end goal, but I've heard that Citi has denied people for not carrying balances on their cards, and the reason given when the reconsideration line was called id that they like people who carry debt - dunno if this next part was explicitly stated, but basically they want you to pay interest and they're making no qualms about hiding it. Well I don't like paying interest but there are 2 or 3 Citi cards I have had my eye on. I was recently approved for the Citi AA Platinum. I had a balance on my Vantage West card (0% APR until June), my CSP (just hit minimum spend, paying off before statement drops), and my Penfed Pathfinder (working on minimum spend, paying off before due date). This way it looks like I'm carrying balances on 3 cards when in reality I'm only carrying a balance on 1 card but that card is 0% so I'm not paying interest. So my next 2 cards will also be Citi, I'm basically gonna do the same thing lol. I might dangle a carrot and pay a bit of interest on the AA card just so they don't start getting suspicious.

Re: Fun credit card strategy...

Anonymous — Wed, 21 Mar 2018 17:00:21 GMT

I didn't make my initial explanation clear enough. I take my bill on the 0% card, but instead of paying the bill to the card issuer, which they will not need until the promotional period ends, I send the money to my brokerage account. Then when the promotional period expires, I cash out the brokerage account and send in the due payment. This last time I had a remaining balance in the brokerage account of about $450 after pulling out the credit card payment. That left me with on the Freedom Unlimited with 48,000 ultimate rewards with Chase [counting the sign-up bonus] and $450 in brokerage

Re: Fun credit card strategy...

Anonymous — Wed, 21 Mar 2018 17:28:07 GMT

Also, I thought running up a huge bill on my credit line would hurt my fico score, but it didn't really. And now because I made a fairly large credit card payment, Chase must think I have more money outside. They invited me to try Chase Private Client, which requires $250,000 liquid assets that I don't have. But hopefully their notion leads to enhanced future offers like the one I got for the Freedom Unlimited ($300 sign-up bonus instead of $150).

Re: Fun credit card strategy...

LionLaw — Wed, 21 Mar 2018 17:57:46 GMT

@Anonymouswrote:
I didn't make my initial explanation clear enough. I take my bill on the 0% card, but instead of paying the bill to the card issuer, which they will not need until the promotional period ends, I send the money to my brokerage account. Then when the promotional period expires, I cash out the brokerage account and send in the due payment. This last time I had a remaining balance in the brokerage account of about $450 after pulling out the credit card payment. That left me with on the Freedom Unlimited with 48,000 ultimate rewards with Chase [counting the sign-up bonus] and $450 in brokerage

You should be careful about a few things here.

--First, and most importantly, this may be a violation of your cardmember agreement. When a lender deposits funds into your checking account and puts the balance on your credit card for a 0% balance transfer offer, one of the conditions is usually that you actually use the funds to pay off the balance of other cards. It would be worth double checking.

--Even if putting those funds into your brokerage accounts is permitted by your cardmember agreement (and your broker, for that matter), that 0% loan isn't really free. There is usually a 3% (or even 5%) balance transfer fee. You'll also have brokerage fees to deal with. Between the two, you may have a tough time breaking even before the interest-free period ends. And if the market happens to be having a down week when your payment comes due, you could very easily end up losing money, without the ability to ride out the downturn.

--It's also worth keeping in mind that you will have to make nominal payments to your credit card every month during the 0% period. The payments are usually relatively small, but it's still something you need to account for.

The combination of all those factors make me think this isn't a great plan. Maybe better than taking the money to Vegas or the track, but not by much.

Re: Fun credit card strategy...

Anonymous — Fri, 30 Mar 2018 21:55:17 GMT

This is a way late reply, but I'm not utilizing balance transfers, just intro bonus periods. The 3-5% fee would discourage me from trying this.

Second, the brokerage fee is $4.95 per buy [free for me]. Not a huge deal.

Third, comparing a municipal bond etf to Vegas or the track is scare-mongering. Obviously do your homework on the fund, but you can't make that kind of comparison and act like they are in the same ball-park.