The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: kiyosakisJanitor on January 19, 2018, 10:45:45 PM
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Hello all,
If I were to borrow 30k from a 0%apr credit card to invest in real estate, etc.
Pay minimum for 11 months then apply and roll over to another 0% card, my ROI will be very high or technically infinite since it was none of my money.
The downsides I can see are: investments failing while being over leveraged , transaction fees, and the second credit will not be approved due to high credit utilization from initial balance.
Do you guys think this strategy is viable? My main concern is the second card not being approved due to high credit utilization.
Regards
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You can remove transaction fees from this strategy. Instead of paying 3-4% for "transferring" the balance from card #1 to card #2, you can just pay your daily/monthly expenses with card #2 and use your salary/income to pay off card #1. It effectively moves the debt from the first to the second card w/o incurring a balance transfer fee. Rinse and repeat with cards #3, #4, etc.
But with 18 months of 0% interest, just how many years do you intend to play with the banks $$ before settling the score?
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I’ve done this several times but not quite as aggressively as you suggest. When I was paying off debt, I was able to save about $1,500 of interest (net of fees). I also routinely do it to avoid selling highly appreciated assets to fund large purchases/new investments. It does affect your credit score more than it should. I have over $100k in credit card limits and with $20k in advance my score drops from over 800 to around 750. It then jumps after paying a card off to even higher than before so no long term issues. Citi and BoA will deposit money directly into a checking account and Chase will then transfer that money for no fee on some of their cards. Getting a $20-30k unsecured personal loan for 3-4% fee is a great deal as long as you can really afford it.
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