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January 04, 2007
Balance transfer challenge: $433 in 18 minutes
The common reaction I get when describing how to make money from 0% interest rate credit card balance transfer offers by sticking the money into a savings account and paying it back before the interest rate changes:
First, the eyes glaze over.
Then, the fidgeting starts.
Finally, when I'm done talking, I hear, "That sounds too complicated and time-consuming".
I recently got a 0% balance transfer offer from Chase, good until mid-Nov, 2007. The balance transfer fee is 3% of the balance transfer, up to a limit of $75. So I timed myself to see how quickly I could make a few hundred bucks.
Tue 6:45 - 6:47 pm: Open the mail & read the offer. Decide I can make some easy money.
Tue 6:48 - 6:51 pm: Think about asking my girlfriend to stop using the computer so I can use Excel to figure out exactly how much money I can make. Since she only gets to use it for the ten minutes a day I'm not hogging it, I do the math quickly on scratch paper for my $12,000 credit limit:
(The above is a Microsoft Paint reproduction. My handwriting isn't really that bad).
Tue 6:52 - 6:55 pm: Go sneak some Oreos in the kitchen while the girlfriend is on the computer. Stroke of genius occurs - why not increase my credit line and make more money? That way, I could afford both beer AND chips & salsa. Make mental note to self in future: Always eat cookies when working on important financial matters.
Tue 6:56 - 6:59 pm: Finally get computer. Go online to Chase website. Fill out form to increase credit limit.
Total time invested: 8 minutes, not including cookie time.
On Thursday, got an email from Chase saying the credit limit was increased to $18,000. Now the math works out even better. Call Chase:
Me I'd like to do a balance transfer and take advantage of this 0% offer I got in the mail. I believe that instead of using these balance transfer checks you can transfer the money directly to my bank account?
Chase That's right. I'd be happy to help you borrow our money so you can earn interest for guilt-free beer and chips & salsa. I'll just need that checking account number.
Six minutes later, and I'm done. (The money showed up in the account the following week).
Finally, I go online and schedule all the payments until mid-Nov. That takes four minutes.
So taking into account the fact that the money will earn about 5% interest for just under 11 months, that $75 balance transfer fee will actually accrue finance charges at 18% for 11 months, I should come away with about $433 after taxes on that $18,000 (well, actually it was $17,900) balance transfer, all done in 18 minutes.
Wanna try? Here's the Chase card I used.
Posted by brian at January 4, 2007 07:24 AM