Third item today, which ties into the Money is Debt video [1] I linked to the other day [2]. He may call it How To Make Money From 0% APR (Annual Percentage Rate) Balance Transfers [3], but I would call it “How To Abuse 0% APR Balance Transfers”.
In reading it over, it appears to work like this:
So, if you manage to find a $10,000 limit credit card with 0% APR balance transfer, and manage to transfer the $10,000 to your bank and collect the interest while paying the minimum, you can earn about $450 over the span of a year. That doesn't sound like much, but what if you had 75 such cards? That's over $34,000 a year profit (it's a bit more than the $33,750 you would expect because you earn more interest from a larger sum of money), for not much else than keeping track of credit card bills.
And if keeping track of 75 credit card sounds like too much hassle, there are people juggling more than that [6] out there.
I don't know if I should be amazed or appalled by such shenanigans. There's no real work going on there—no real value being added to the economy. You're just shuffling paper (or electrons) hither and yon and end up with more “money.” Talk about your house of cards.
[1] http://video.google.com/videoplay?docid=-9050474362583451279
[3] http://www.mymoneyblog.com/how-to-make-money-from-0-apr-balance-transfers/
[4] http://www.mymoneyblog.com/archives/2006/08/scouting-for-0-balance-transfer-offers.html
[6] http://www.mydollarplan.com/our-credit-limits-over-1000000/