Profiting From 0 Percent Balance Transfers And 0 Percent Credit Cards

There has been a lot talk recently about taking advantage of 0 percent balance transfers. The idea of these 0 percent balance transfer is pretty obvious, you simply transfer your balances from high-interest creidt cards to 0 percent credit cards and save a lot of money on interest that you can apply towards lowering your debt.

Sounds easy enough. But what about those of you that don’t have any high-interest credit card debt? Can you still use these 0 percent credit cards to your advantage? The answer is YES. What I will layout for you are the steps you must take to access the funds from 0 percent balance transfers and use them to earn money or savings, which ever the case may be.

Getting Your Hands On The Money

The way to access your 0 percent credit line is to request a balance transfer check from the credit card issuer and then deposit it in your bank. Citi is probably the easiest to do this with. I’ve also heard that you can get balance transfer checks from Chase, though I can’t say for certain that this is true.

The alternative is on the creative side, but is still pretty much possible for any credit card. If you can’t get the money directly, you’ll need another credit card (Card #1). The good news is that this card doesn’t necessarily need to have an outstanding balance. Ideally, you don’t want it to have an outstanding balance. When you apply for your 0 percent balance transfer credit card (Card #2), simply request a balance transfer from (Card #1 to Card #2). This causes the issuer of (Card #2) to make a payment against (Card #1), creating a negative credit balance. The next step is to request a credit balance refund. In some cases you can do this process online. In other cases you may have to call to make your request.

Once you get your balance transfer check or your credit balance refund, you’re ready to go.

Putting Your 0 Percent Balance Transfers To Work

There are two different choices you have at this stage. First, you can simply deposit the money in a high-yield savings account, where you can make up to 5% APY or more. Your earnings from the account, minus the taxes, will leave you with your profits. Be sure to avoid any fees if you want to maximize your profits.

Second, for those of you that do have high-interest debt, you can use your 0 percent balance transfers to offset this existing debt. Simply transfer your high-interest credit card balances to your 0 percent credit card and then use the money you save on interest to pay down your existing debt. If you don’t pay off the debt before the introductory offer expires, simply apply for a new 0 percent credit card and transfer the balance again. In second example, your profit comes in the from the savings on interest that you would have been paying.

Watch Your Step

The biggest catch when it comes to using 0 percent balance transfers is the transfer fee. Many credit cards charge a balance transfer fee of about 3% of the transferred amount. Others simply do not. If you’re looking to maximize the value of your balance transfer, you’ll want to avoid paying these fees. The good news is that there are a number of no-fee balance transfer offers. You may consider using a card with a 3% balance transfer fee in exchange for a longer 0 percent introductory offer.

Remember that most 0 percent credit cards will begin to charge you interest if you make just one late payment. Make sure you completely understand the terms and follow all of the rule.

One Final Note

A downside to this plan is that it could negatively affect your credit score. One of the major components that go into your credit rating (FICO score) is the amount of your available credit that is currently tied up. Maxing out one or more of your 0 percent credit cards can eat up your debt to utilization ratio.

There are two ways that you can reduce your credit utilization. First, you can simply borrow less. Obviously this goes against the idea of profiting by borrowing a bunch of money at a 0 percent rate. Second, you can have your credit limit increased.

To get around this problem you would need to have other credit cards that you won’t be using for your 0 percent plan. The idea is that you won’t put any charges on these cards in which case they’ll offset the heavy amounts on your other cards. This is one of the reasons that you shouldn’t cancel your old credit card accounts. The other reason is that credit scores are also affected by the average age of your accounts, so the older the better.

It’s time to get started reducing your debt. You have the information about how to use 0 percent balance tranfers effectively. Make a plan and stick to it no matter what. There are lots of great 0 percent credit cards to choose from. To get out of debt you must be determined. There will be moments of weakness when you must remind yourself of the goal.

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