Using 0% credit card balance transfers for additional investment capital

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DonIce
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Using 0% credit card balance transfers for additional investment capital

Post by DonIce »

Does anyone here do this? It seems like there are quite a few offers for 0% APR, no fee balance transfer credit cards with promotional periods of 12 months or more. For example, I recently got an offer for $30k with 0 fees and 0 interest for 1 year (I was under the impression there is usually a 2-3% balance transfer fee but some offers recently have it completely for free). I could take the maximum balance transfer, invest it into a very safe money market fund at ~2.5%, and pocket $750. At the end of the year, I could sell the money market fund and pay off the balance, or, alternatively, I could get a new balance transfer credit card and start the process all over again.

Has anyone here done this? Any risks to consider besides the obvious? If you assume I don't do anything stupid like accidentally forget about the credit card or wait too long to pay it off, or invest the $30k into something risky and lose the money, then is this basically a "free lunch"?
Flyer24
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Flyer24 »

Wouldn’t that be a cash advance and not a transfer?
delamer
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Re: Using 0% credit card balance transfers for additional investment capital

Post by delamer »

Do you have a $30K balance to transfer?

Otherwise, as Flyer24 said, you are talking about a cash advance which probably has different terms.
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GoPackGo
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Re: Using 0% credit card balance transfers for additional investment capital

Post by GoPackGo »

I recently did this. Got a ~15 mo. 0% balance transfer with a 1% fee on a credit card I no longer use that they let me just deposit into my bank account. I figured screw it, I'll take it and put it in a 1 year CD, then when the CD matures, pay it off. I won't profit much, I was just sort of curious if the process worked smoothly. In the end, a couple hundred dollars for a couple of clicks, not too bad.

My credit score did drop ~28 pts since I was technically maxing out a credit line. But no big deal, I don't plan on needing it within a year anyways.
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whodidntante
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Re: Using 0% credit card balance transfers for additional investment capital

Post by whodidntante »

I've posted about using 0% purchase APR credit card offers several times. I have done it and currently do it. I've never paid a fee though.
TravelforFun
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Re: Using 0% credit card balance transfers for additional investment capital

Post by TravelforFun »

I don't have any balance to transfer but if there were no-fee cash advance offers, I would take as much as they would give me. No risk on my part.

TravelforFun
MotoTrojan
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Re: Using 0% credit card balance transfers for additional investment capital

Post by MotoTrojan »

GoPackGo wrote: Thu May 02, 2019 6:51 pm I recently did this. Got a ~15 mo. 0% balance transfer with a 1% fee on a credit card I no longer use that they let me just deposit into my bank account. I figured screw it, I'll take it and put it in a 1 year CD, then when the CD matures, pay it off. I won't profit much, I was just sort of curious if the process worked smoothly. In the end, a couple hundred dollars for a couple of clicks, not too bad.

My credit score did drop ~28 pts since I was technically maxing out a credit line. But no big deal, I don't plan on needing it within a year anyways.
I did this with my Barclays Uber card and also regularly use the 0% APR sign-up bonus on purchases to make a few extra bucks. No real gotchas. My only advice is to fully pay off the card before the period ends and let it go through a full billing cycle without any spend to ensure things are settled, then if you desire you can keep using the card traditionally.
Topic Author
DonIce
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Re: Using 0% credit card balance transfers for additional investment capital

Post by DonIce »

Flyer24 wrote: Thu May 02, 2019 6:16 pm Wouldn’t that be a cash advance and not a transfer?
No... you can cash advance from a personal line of credit or HELOC to your checking account. Cash advances from lines of credit have no fees. Then immediately use the balance transfer credit card to transfer the balance from the PLOC/HELOC to the credit card. So you might pay a few days of interest on the PLOC/HELOC until the balance transfer processes but that's it.
Flyer24
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Flyer24 »

DonIce wrote: Thu May 02, 2019 8:01 pm
Flyer24 wrote: Thu May 02, 2019 6:16 pm Wouldn’t that be a cash advance and not a transfer?
No... you can cash advance from a personal line of credit or HELOC to your checking account. Cash advances from lines of credit have no fees. Then immediately use the balance transfer credit card to transfer the balance from the PLOC/HELOC to the credit card. So you might pay a few days of interest on the PLOC/HELOC until the balance transfer processes but that's it.
Ahh. Gotcha. So you are creating a debt then doing a transfer. That is interesting.
Goal33
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Goal33 »

Yea you can do it. I do it occasionally. However I just invest the money in my normal 70/30 stock bond portfolio. Pay it off using cash flow throughout the year. You can lose money my way though.
Minty
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Minty »

As one data point, back in the 2000s, I made $20K or $25K doing 0%, no-fee, cash advances and investing the proceeds in the highest high-yield savings accounts. At my peak, I had $280K in credit card debt, matched by $280K (plus interest) in bank deposits. When a good offer comes along, I do it again; I've got a little under $20K now. But unlike some, I do not believe in investing short-term borrowed funds in the stock market, only in no-risk, positive expectancy, wholly liquid investments. If I want to overweight equities, I can change my AA, without having to worry about a margin call.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15
stinkash22
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Re: Using 0% credit card balance transfers for additional investment capital

Post by stinkash22 »

Minty wrote: Thu May 02, 2019 8:48 pm As one data point, back in the 2000s, I made $20K or $25K doing 0%, no-fee, cash advances and investing the proceeds in the highest high-yield savings accounts. At my peak, I had $280K in credit card debt, matched by $280K (plus interest) in bank deposits. When a good offer comes along, I do it again; I've got a little under $20K now. But unlike some, I do not believe in investing short-term borrowed funds in the stock market, only in no-risk, positive expectancy, wholly liquid investments. If I want to overweight equities, I can change my AA, without having to worry about a margin call.
Woooowww
TravelforFun
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Re: Using 0% credit card balance transfers for additional investment capital

Post by TravelforFun »

stinkash22 wrote: Fri May 03, 2019 9:55 am
Minty wrote: Thu May 02, 2019 8:48 pm As one data point, back in the 2000s, I made $20K or $25K doing 0%, no-fee, cash advances and investing the proceeds in the highest high-yield savings accounts. At my peak, I had $280K in credit card debt, matched by $280K (plus interest) in bank deposits. When a good offer comes along, I do it again; I've got a little under $20K now. But unlike some, I do not believe in investing short-term borrowed funds in the stock market, only in no-risk, positive expectancy, wholly liquid investments. If I want to overweight equities, I can change my AA, without having to worry about a margin call.
Woooowww
I did that too. Used the cash advances to buy 1-year CDs which at that time paid 5-6%. Those deals were sweet if you were organized and had the discipline to make on-time payments.

TravelforFun
Spirit Rider
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Spirit Rider »

Yes, those were the days when you could get 5%÷ risk-free arbitrage. I even had 0% for life offers from Chase, Citibank and Discover. I set up minimum automatic payments and paid the last one off recently. Chase reneged after the passage of the Card Act of 2009.
Zero85
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Zero85 »

Great read, interesting discussion!!
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willthrill81
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Re: Using 0% credit card balance transfers for additional investment capital

Post by willthrill81 »

As others have noted, it works best if you have a credit card balance and can defer its repayment with a 0% balance transfer.

That being said, it's possible to borrow money with credit cards for currently up to 18 months for a flat fee of 3%. You do a cash advance with one credit card and immediately do a balance transfer to another card with a 0% interest intro period; the balance transfer fee is nearly always 3%, the only fee you pay with this move. I don't know of a cheaper, legal way to borrow money today that doesn't involve family.
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Raraculus
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Raraculus »

Can I use a balance transfer check to pay off a margin loan at my brokerage? Would that be coded as a cash advance or not?

The reason I ask is that I don't have debt I could readily manipulate into getting a balance transfer check into my brokerage account. (One poster suggested using a HELOC for this purpose.) I can get a balance transfer check for 0% APR for 15-18 months, with the usual 3% fee.

But cash advances at 0% APR for 15-18 months? Even with the usual one-time 3% fee? That is a unicorn. :( I'm afraid that if I use a balance transfer check to pay off a margin loan, it'll be coded as a cash advance by the CC company.
placeholder
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Re: Using 0% credit card balance transfers for additional investment capital

Post by placeholder »

Seems like a question for the CC company as they might have different policies.
chassis
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Re: Using 0% credit card balance transfers for additional investment capital

Post by chassis »

This sounds like chasing bank promotional offers to open a new account. It seems like manufactured busyness for its own sake.

Why bother? Is the money worth your time and mental bandwidth? Don’t you have better things to do? Serious question.
nalor511
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Re: Using 0% credit card balance transfers for additional investment capital

Post by nalor511 »

If they were offering 300k, I might do it, but for 30k it would not be worth the time/effort, IMO
rongos
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Re: Using 0% credit card balance transfers for additional investment capital

Post by rongos »

Minty wrote: Thu May 02, 2019 8:48 pm As one data point, back in the 2000s,
Ah, the 2000s, those were the days for this game.

Around 2007, a Citi card I had offered 0% for LIFE, so I called customer service and combined the credit limits from all my Citi cards to that account, about 40k. I borrowed it all and put it in a 5% high yield savings account. Of course, it's not 5% these days. Still paying the loan off, have about 2k left. I think Citi hates me, I hope I'm not on their black list.
Last edited by rongos on Sat Jun 12, 2021 11:52 pm, edited 1 time in total.
chassis
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Re: Using 0% credit card balance transfers for additional investment capital

Post by chassis »

Another example: fully paid lending programs offered by brokerages.

These are all chases after the wind:

- 0% credit card balance transfers
- Bonus incentives to open bank accounts
- fully paid lending programs offered by brokerages

Too little compensation for too much effort. These are wheel spinning exercises. Don't waste your time.

It (time) is the most precious commodity, and holds higher value and utility than money.
MBB_Boy
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Re: Using 0% credit card balance transfers for additional investment capital

Post by MBB_Boy »

Raraculus wrote: Sat Jun 12, 2021 12:41 pm Can I use a balance transfer check to pay off a margin loan at my brokerage? Would that be coded as a cash advance or not?

The reason I ask is that I don't have debt I could readily manipulate into getting a balance transfer check into my brokerage account. (One poster suggested using a HELOC for this purpose.) I can get a balance transfer check for 0% APR for 15-18 months, with the usual 3% fee.

But cash advances at 0% APR for 15-18 months? Even with the usual one-time 3% fee? That is a unicorn. :( I'm afraid that if I use a balance transfer check to pay off a margin loan, it'll be coded as a cash advance by the CC company.
I've just sent the money to a card that was paid off, which creates a negative balance. Then I have that money sent to me via check or ACH to my checking.

Have done this multiple times, no issues
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Raraculus
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Raraculus »

chassis wrote: Sat Jun 12, 2021 7:17 pmThis sounds like chasing bank promotional offers to open a new account. It seems like manufactured busyness for its own sake.

Why bother? Is the money worth your time and mental bandwidth? Don’t you have better things to do? Serious question.
It's called interest rate arbitrage. I can make a decent amount of money. (In my case, I just wanted some breathing room with my margin account.) Ok, I'll step back from my Excel tinkering to see what new financial shenanigans I can come up with in using OPM. :)
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Raraculus
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Re: Using 0% credit card balance transfers for additional investment capital

Post by Raraculus »

MBB_Boy wrote: Sun Jun 13, 2021 6:26 amI've just sent the money to a card that was paid off, which creates a negative balance. Then I have that money sent to me via check or ACH to my checking.

Have done this multiple times, no issues
Genius. I do have a couple of unused CC's for this purpose. Thanks.
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