Tuesday, September 16, 2008

Balance transfer offer -- no thanks!

Chase just sent me a "great" balance transfer offer: 3% fee ($75 max), 0% APR until 3/2009. What a joke. Considering the risk in paying at the last minute plus the delay in getting the cash, that's only like 4 to 5 months for the promotional rate! At the amount I'm considering ($10k) that is hardly worth it. At ING I'd earn roughly $10k * 3% * 4.5/12 - $75 = $37.50 over the entire period.

Ah... upon closer examination, the promotional rate ends at the opening date of my 3/2009 statement... in other words, 2/2009. So make that 4 months max!

And furthermore, switching my purchases to another card would mean losing quite a bit of cash as this is my best rewards card.

Thanks Chase! But no thanks.

Notice that a 3% fee for 4 months equates to approximately 9% APR. I love how tricky they are, it's like a game.

Tuesday, September 2, 2008

Profit so far

In July, which was a partial month, I earned $7.64 in interest. In August, I earned $11.23. Not much but a good proof of concept. It certainly beats filling out little online surveys for 10 points (7.5 cents)!

At the end of the balance transfer, I'll transfer the leftover money in the account to my Fun fund.

My Prosper loans are doing well. I added a little bit more money and bid on three more loans. Prosper is fun but also scary. I spend quite a bit of time looking for loans I think sound reasonable and am pretty horrified at what some people are willing to bid on. I've seen listings that are entirely blank, but offer 33% interest or so, and have many people bidding. What are they bidding on?? Surely these loans don't make it past the review period. My only guess is that people with automatic portfolio plans have settings that pick up these awful loans. Good luck to them. Who knows what other garbage loans they catch.

One thing that irritates me about Prosper is how they strip out any identifying information from the loan application. I understand it's a safety issue, but it's kind of ridiculous.

Another is the waiting period after you bid on a loan where your money is tied up, earning no interest, until the loan is created or it expires. I don't know who bids on loans that are 10% funded with 5 days left, but someone does. I just sort the loans by time remaining and look at the ones that expire within a day.

The net result is it takes me a good week or so to find a few loans worth bidding on. Kind of silly for a $50 loan, in terms of return on my time investment. I guess I do Prosper mostly for the fun. If I ever invest serious amounts of money, it would probably be better to do one of those "Reinvest in Prosper" loans and let someone else do the work. I wonder if there are any stats about their performance versus Prosper loans in general.