Can you beat the credit card companies at their own game?
Yesterday I read another blog about a guy who owes thousands of dollars to credit card companies, however he also has thousands of dollars in the bank. He could pay off the credit card balances, but instead he keeps the money in the bank to collect interest, Why? Because most of the credit card balances carry a 0% interest rate. Can you really come out ahead in this game?
If you are still reading then I’ve at least got you interested so let me explain the basic principals and see if we can actually beat the credit card companies at their own game. The basic principal is to play the balance transfer game with credit card companies while at the same time taking advantage of the rewards programs offered. Pay all your bills and put all your expenses on the credit cards and then pay them off each month without carrying over a balance to the next month.
Before you have a chance at winning at this game you have to have some prerequisites understand all the risk associated with this technique. First, you have to have excellent credit scores in order to qualify for the 0% interest rates. Second, you have to find multiple cards with good rewards or incentives and low or no balance transfer fees. Third, you have to be very disciplined about paying your bills on time and not overspending. Finally, you have to be very organized to keep up with the multiple credit card accounts and expiration dates of all the low interest rate offers.
If you meet the above criteria then here is how to win. The first step is to find a credit card with a great rewards program. Most reward programs offer 1% cash back or 1 point which is equivalant to about 1% when you trade the points for prizes, gift cards, etc. However, the best cards offer great introductry cash back rates such as 5% for the first 3 months or even a bonus for signing up for the cards. I have had multiple offers in the mail for $100 gift cards when you get accepted and use the card the first time. It’s free money just for filling out the application and making your first purchase. We personally put about $1,500 worth of expenses and bills on our credit card each month, which equates to about $15 per month. We use a discover card that sometimes gives 5% for certain items purchased so we usually average about $20 in rewards every month. They also offer a rewards program with certain resturants, retail store, etc. that give you a $25 gift card for $20 so it’s a great deal in my mind. We always pay off the balance each month so we basically get $25 per month from Discover for free!
Next, you need to find credit card companies that are willing to loan you money at 0% interest for at least one year. If you have excellent credit then these offers do exist.Â Some of them will even let you do a 0% balance transfer without a balance transfer fee. Many of them will even put the money into your checking account so that you can pay off the bill. The best part about this is that you don’t have to pay off the loan. Keep the money in the bank and collect the interest each month while only paying the minimum payment. when the 0% offer is about to expire pay off the remaining balance and you get to keep all the earned interest.
PLEASE understand that this is a dangerous game to play. You can really get yourself into financial trouble with this game. Miss a few payments and all your hard work will be worthless.