Kyle’s story about 19 years of arbitrage is inspiring. How many different accounts do you think he opened during that time? I assume that once the 0% introductory offer has expired and you’ve paid it off, that card is now useless in terms of arbitrage and you have to go open another account. My instinct tells me there must be some downside to opening account after account over the years and just letting them sit there. Any thoughts?

I have excellent credit and I’m considering the arbitrage game, but would like some more information on how all these open accounts could negatively effect me.

Thanks!

Balance to transfer from Chase to Citibank – 14K

1st offer – 0% until 3/2010, then it converts to my standard Citibank apr which is currently 5.99%

2nd offer – 2.99% until 9/2010, then it converts to my standard Citibank apr which is currently 5.99%

My thought is that the first one is best because I’ll be paying 2.99% less interest for the first 9-10 months (from now to 3/2010) when the balance is at it’s highest. Then starting in 3/2010, I’d be paying 3.00% more interest for 6 months when the balance is lower. Of course, the latter statement assumes my standard rates stays at 5.99%. My plan is to pay $300-$400/month on the card.

In respond to your 0% balance transfer credit card question, it’s hard to say. Most credit card companies look at your FICO credit score to determine how high of a credit limit to authorize you. If your credit rating is bad, you may be precluded from more lucrative limits. High credit score applicants generally get the best dibs when it comes to 0% APR offers.

But when you apply for your balance transfer card, you may want to indicate your intent to transfer a larger balance than you actually plan to use. Perhaps you may get lucky and this may encourage the card company to grant you a higher limit.

I’ve considered credit card arbitrage for a while but have gotten stuck at no way to get around the Universal Default Clause written into many credit card offers.

UDC is a rule written into the terms and conditions of many CC offers which states that a default on ANY monthly payment with your name on it (i.e., utility bills, cable TV bill, mortgage) will trigger the default rate of 24%-29% (depending on the card) to be enacted on the card, so bye-bye 0% promotional rate. Do you know which credit card companies currently do NOT impose UDCs?

I’ve searched on the Internet specifically for “no UDC” cards, but other than reading each individual terms and conditions, I have not been able to easily identify via a simple Yahoo/Google search regarding which credit card companies have or do not have UDCs…

Also, another potential issue is whether your auto/homeowners insurance policy premiums will be adversely affected by short-term hit on your credit score. If your insurance company conducts an audit of your policy and compares your short-term damaged credit score (as a result of the arbitrage) with your higher original score that you applied with to obtain your insurance, wouldn’t your insurance premiums rise to the extent that they could wipe out any potential gains from this venture?

I think these two questions are critical to resolve before anyone gets started and would appreciate your comments to them.

Thanks.

I wonder…how much did you borrow all in all? What was the total amount of 0% APR seed money that you borrowed via balance transfer cards throughout your App-O-Rama lifespan?

Since you indicate you are barely able to afford the monthly minimum payments, my guess is that it will take you longer than a mere 6 months of steady payments to completely pay off your existing credit cards. First of all, whatever you do, put those cards aside immediately and stop using them. Don’t add any more to the already high balances.

I suggest going for cards (view list of balance transfers) with at least a 12 month balance transfer period (15 month period would work great too). Currently most of them have one time balance transfer fee caps of $75 at a minimum, but the one time cost is worth the 0% APR period you’ll receive in exchange. Something like the Discover More (12 months, 3% fee capped at $75), or the Advanta Business Card Rewards (15 months, 3% fee, capped at $90) would best suit your situation.

In the alternative, you could consider going for 6 month, no balance transfer fee cards, and simply apply for a new card every 6 months as your current 0% APR promotion expires, however that can be a hassle and who is to say you will qualify for a new 0% credit card offer each time?

Yes, card balance consolidation is possible. Citibank is particularly flexible. I’ve been able to shift credit limits around from credit card to credit card. If you already own multiple cards from the same card issuer, sometimes shifting old credit limits to the new 0% balance transfer offer is needed to even qualify for the new card to begin with. Usually the credit card company will call you to inquire about how you would like to handle the credit limit adjustments.