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2007-10-04 00:22:58

How Can You Make Money from Credit Card Deals?

The idea that credit card companies make money from cardholders seems quite common. The amount of publications about various credit card traps is enormous. Still, we keep on making credit card deals for the benefit of credit companies and our mistakes become their income. Meanwhile, some cardholders venture on a very bold step to make a profit on credit card deals. It sounds almost impossible but it is true. If you are a savvy person, you can try and earn "free money". But be careful! It resembles a stock market game - one false move will be costly for you.

It's worth saying that such experiments are not so frequent, and not everyone is capable for doing that. However, the principle is quite simple. An arbitrager looks for a card with low interest rates and a big grace period. Then he or she deposits in a high-yield savings account and after making minimum payments, gets a net profit. This method really works if you are skillful enough to clinch this deal.

If you have ever experienced the hardships of credit life, you will sure to feel a sincere admiration for those daring pioneers, who managed to make money from credit card deals. Interestingly, arbitragers do not regard this as a tactic of building their wealth. It's rather a kind of hobby for them. The question is: How much can you earn from it?

The best scenario for you is to find a card with no annual fee and low or zero interest rates for 12 months. Another step of yours is to open a savings account with the annual return on 5.05%. So, if your arbitrage amount is $1,000, your profit will be $50.50. Not bad, really.

But face the truth, some credit card companies are not so generous. Most probably you will have a 3% balance transfer fee. And it will work out to about $22 for $1,000 of arbitrage. By all means, the first sums of your "free money" will not be enormous. And in a couple of years, your net profit will be thousand dollars. It's a good option for getting extra money.

Credit card arbitrage can be an excellent example of financial discipline and perfect analytical skills. First of all, you should deal with many credit cards at a time, and monitoring of your money matters takes time and efforts, not to mention infinite patience. One should be a good analyst as well for making calculations. As a rule, arbitragers use special spreadsheets, which indicate the amount of money paid and money received.

This arbitrage game is for wise heads taking a sensible view of things rather than for severe debtors with bad credit history. It's like walking on the razor's edge. You must know what you are going to deal with before you start. In other words, look before you leap.

One needs to be extra vigilant of various troubles and dangers. You cannot miss a single payment, for it will result in much higher interest rates, meaning your credit arbitrage game has no sense. The idea of maxing out your credit cards is also bad, because it will affect your credit score. Besides, if you plan some big-ticket purchase, like a home, you'd better stay apart from financial games that can reduce your lending capacity.

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