DON'T pay off your credit card club

[Pizzabrewer]

For many years credit cards have offered 0% interest on purchases (typically for 12-15 months), and/or 0%  interest cost on balance transfers with 0-4% fees.  Although terms have tightened up in the past year there are still many 0% interest offers available.  Borrowing 0% money from credit cards for arbitrage/investment opportunities is called "stoozing".

Can anyone share a story of how they've "stoozed" 0% credit card debt and how they've leveraged it into profit?

[Michael in ABQ]

I unsuccessfully arbitraged student loans I didn't need to buy financial stocks with nice dividends in the mid-2000's. Worked great until 2008 when they crashed an average of 70%+ and never recovered (what's a CMBS or CDO? I sure as hell didn't know at the time).

However, I have manufactured some spending with an alternative investment with high possible returns. See this thread for more details. Investing in inventory for eCommerce and retail businesses with short-term investments (3-9 months typically) offering 10-25% annualized returns. I've invested about $8k in the last six months and collected about 16,000 CC points on that spending.
https://forum.mrmoneymustache.com/reader-recommendations/kickfurther-earn-20-annualized-returns/

[El_Viajero]

I've currently got around a $10k balance across two credit cards. I currently pay no interest because I'm in the promo period. As long as I make the minimum payments, I'm getting an interest free loan for another year or so. I'm currently on track to (easily) pay these off before the promo period ends. I actually have the money to just buy the stuff with cash, but I'm using the 0% cards to float the costs for awhile and maximize cash flow.

Though I'm not planning to go this route, I was thinking: In the event I didn't quite pay down the balance on one card by the end of the promo period, couldn't I just do a zero-fee balance transfer to another "0% for 18 months" card? Assuming these offers don't go away (they've existed for many years now), what's to keep me from just carrying a balance forever and never paying a dime of interest to any bank?

In the meantime, I'd get to buy new stuff any time I wanted with a same-as-cash payoff arrangement and use my continued cash flow to maximize profitable investments in the meantime. It would be the long-term version of what I'm doing now, I guess, but it would involve perpetually transferring balances from one 0% card to another for... I don't know. The rest of my life?

[Optimiser]

Where is everyone parking their cash while take advantage of their 0% cards? Not a big spread between risk free interest rates and 0% at the moment.

[kittykat]

I've currently got around a $10k balance across two credit cards. I currently pay no interest because I'm in the promo period. As long as I make the minimum payments, I'm getting an interest free loan for another year or so. I'm currently on track to (easily) pay these off before the promo period ends. I actually have the money to just buy the stuff with cash, but I'm using the 0% cards to float the costs for awhile and maximize cash flow.

Though I'm not planning to go this route, I was thinking: In the event I didn't quite pay down the balance on one card by the end of the promo period, couldn't I just do a zero-fee balance transfer to another "0% for 18 months" card? Assuming these offers don't go away (they've existed for many years now), what's to keep me from just carrying a balance forever and never paying a dime of interest to any bank?

In the meantime, I'd get to buy new stuff any time I wanted with a same-as-cash payoff arrangement and use my continued cash flow to maximize profitable investments in the meantime. It would be the long-term version of what I'm doing now, I guess, but it would involve perpetually transferring balances from one 0% card to another for... I don't know. The rest of my life?

Except you have to pay a fee for the balance transfers of around 3-5%. I think there's something to be said for that fee.

[El_Viajero]

Except you have to pay a fee for the balance transfers of around 3-5%. I think there's something to be said for that fee.

True. I think Chase Slate was the only one that did 0% balance transfers with no fee, and it looks like Chase just retired it.

Still, if the investments you're able to buy with your improved cash flow = more than 3 to 5% of the amount being transferred, then it's worth it. Kinda speculative, I guess.

[moneypitfeeder]

The only time I've bothered with the 0% interest cards are 1) my ex racked up cc debt I didn't know of, and I had him payoff that debt in mo payments he could handle between 2-0%'s until it was paid off, and 2) I wanted something that I had the money to purchase outright, but was offered 0% on a store card for x amounts of months, bought a washer/dryer and flooring that way. The zero xfers always came with fees (and since ex dug his hole, he paid for it, better than claiming bankruptcy) and the store offers were always fee-free unless you didn't pay-off in time. With the 3-5% fee I don't think I'd use it other than to dig out of trouble.

[secondcor521]

For many years credit cards have offered 0% interest on purchases (typically for 12-15 months), and/or 0%  interest cost on balance transfers with 0-4% fees.  Although terms have tightened up in the past year there are still many 0% interest offers available.  Borrowing 0% money from credit cards for arbitrage/investment opportunities is called "stoozing".

Can anyone share a story of how they've "stoozed" 0% credit card debt and how they've leveraged it into profit?

Back in 2008/2009, I stoozed about $500K across about 20 credit cards and put the money into online savings accounts that were then earning about 5%.  I think I also got some account opening bonuses on both the credit card and savings account sides.  I wrote about it on fatwallet at the time, but that site is now defunct.  I think I grossed somewhere north of $12K plus a golf glove.

The most interesting thing I remember was that I had about $250K of that money at IndyMac Bank when it went under.  Because I try to avoid risk, I had structured the accounts such that I had $300K of FDIC insurance coverage, so I didn't lose a penny.  But it was a mildly stressful weekend.

I don't do it now because my expenses are low, all the offers I get have 3% transfer fees, I can't get 5% online savings accounts now, and there are other games that are more profitable and easier for me at the moment.

[solon]

BECU has a Visa card with $0 balance transfer fee and 0% interest for 12 months. I just signed up and transferred $12k from my other card with an expiring 0% period.

https://becu.org/everyday-banking/credit-card/cash-back-visa

I think as long as there are cards like this available, I'll keep stoozing.