Wednesday, July 23, 2008

Balance transfer trickiness

Well, I got a letter in the mail (how quaint) from Citibank confirming my balance transfer and got a rude surprise. They calculate the end of my 0% term as December 2008! Apparently the "12 month 0% transfer" is still from last year when I opened my account. I emailed customer service and they confirmed that.

Oh well, I'll still make some money. I'm glad I didn't do something rash like stick the money in a CD. And I'll still be on the lookout for other profitable balance transfer offers!

Sunday, July 20, 2008

Kiva -- loan sharks?

I really like the idea of but I keep getting dissuaded by one fact -- they charge a very high interest rate to borrowers, but expect you to loan them money interest free.

On the info page of any field partner (the local agency that actually lends the money and collects payments), you can see stats about how much interest they charge for Kiva loans. For instance, FundaciĆ³n Paraguaya charges 20% interest, and you can see that the average charged by all Kiva partners is 22.77%. I have to ask... why?? The money is entirely put up by sponsors so there's zero risk to the lending partner. I understand that they have overhead costs, but come on, this is an outrageous interest rate. I could understand 5% - 10% to recover costs, but 20%?

Keep in mind that even though these are micro-loans, to the people borrowing the money they can be fairly large, like the equivalent of a year's income. Imagine getting a loan equivalent to your salary and then paying 22% interest on it! Good luck actually making a profit on your new farm equipment or whatever.

Thursday, July 17, 2008

Credit card rewards

I'm getting my first cash-back rewards check from my Chase Freedom card -- for $200 of credit I'm getting a $250 check! Not bad.

On a related note, I used Chase's online credit limit increase request function to give myself an additional $22k credit. Holy crap! We're in a credit crunch, right? I'm not planning on using any of it until Chase comes through with a great no-fee balance transfer offer. I'm patient. Maybe I should open up a few more cards with Citibank, wait a while, and then increase my credit limits with them.

If I can 10x my balance transfer amount then I'll be making around $25/week even in this low interest rate environment. That is going to trounce my cash-back rewards.

Friday, July 11, 2008

Balance transfer account funded

The deposit from Citibank came in today and I immediately opened up a new savings account to hold it. I should earn 36 to 37 cents each day in interest. There's also a chance that within a year interest rates will rise.

The only snag is I don't know what the minimum payment is going to be until August because it still says 0 for the amount due at the end of July. I have to remember to check on that!

Tuesday, July 8, 2008

First attempt at credit card arbitrage

I randomly signed on to (Citibank's credit card website) to see what's up and I found a balance transfer offer on one of my unused, zero-balance cards. There's no balance transfer fee and no interest for 12 months. Let's make some money!

Just now I submitted my balance transfer request and the money should show up in my ING Electric Orange in a few days. Here's my plan:

  1. Set up a new savings account and transfer the money into it.

  2. Set up an automatic transfer from the new savings account to my Electric Orange monthly for slightly above the minimum payment amount required by Citibank.

  3. Set up an automatic payment for the same amount from my Electric Orange to Citibank, scheduled waaaaay in advance of the due date.

I only transferred a few thousand dollars because A) I have a pretty small credit limit on this card and B) I've never done this before and I don't want to get burned too badly. Next year I'll pay off the balance and all of the interest will be mine to keep. I figure I'll make around $100. That's not much money over the course of a year, but considering it's going to be fully automated it's worth it.

Maybe in a few years I can build up to $50,000 or more in balance transfer offers and make some significant money. I bet that interest rates will be heading up (they sure can't get much lower) so it'll only become more profitable. Maybe credit card companies don't make such sweet deals when interest rates are up, though. We'll see.