Playing the Credit Card Balance Transfer Game

Consumer credit has become so available and plentiful that often times credit card companies are offering good customers rates of 0% for over a year as a way to draw them in as customers. Some savvy consumers who do not need to borrow the money are borrowing it anyway and investing it at a higher rate and paying off the balance when the 0% introductory rate is over to make money.

A friend of mine introduced me to this game, and here's how he got started. He was approved for the Citi Dividend Platinum Select card which gives a discount of 5% off for fuel, groceries and pharmacies. When he activated the card the customer service representative told him that he could transfer the balance from another credit card for no fees and no interest for a whole year. My friend quickly told the CSR he had no credit card debt, and the CSR told him that he would be happy to transfer the money into his bank account! He now borrows money from credit card companies at 0% interest and invests the money in online savings accounts in order to earn decent interest rates and get free money. It's a form of financial arbitrage. If you are going to play some game there are some details that you need to know about, because often times credit card companies are very sneaky when it comes to the fees that they are charging.

First you have to find the right offer. Citibank is a favorite for many players of the balance transfer game. They have a lot of offers for 0% for 6 to 12 months and allow you to get a check which you can deposit at your bank. Chase and Discover also have a number of offers which are potentially lucrative. You need to be very well informed as to the terms you are agreeing to, making sure there are no fees for balance transfers, and that balance transfers are under the 0% rate. You will also have to learn how they calculate interest to be sure you are not charged any interest for your dealings. For example, Discover uses a two month cycle to factor interest rates, so be very careful.