build credit and make a profit
This is a really old post, and you definitely can’t open either of these accounts anymore. If you’re here, it’s probably because you found it in my “Popular Posts” section. I’m not sure why it’s showing up, because it’s definitely not my most popular post, so I’ll have to figure out what’s wrong with that plugin. Meanwhile, I suggest you disregard this post and just move on to another one, because this post is really out of date.
I thought of an idea to take advantage of a credit card contract, but it only works for people who have self control. If you are one of those people who can never hold onto cash without spending it, then don’t do this, because you will probably only get yourself into debt. I’m sure some other people think of these things, but very few actually carry out the plan. I feel good when I think I have outsmarted the banks, though.
Things you will need to sign up for:
1. Bank of America World Points Card
2. A citi e-savings account and EZ checking account (the site will lead you to open both of these)
Alternatively, an HSBC savings account will work too and get you even more interest, but I find Citi’s online banking a lot easier to use.
So, what’s so special about the Bank of America card? Aside from a $50 statement credit after you start using it, 2000 bonus rewards points valued at $20, and no interest for 12 months, when you get the card, you will also get three convenience checks that the bank will waive the transcation fee of if you use. I couldn’t believe this at first, because I had never seen a free cash advance. Since I’ve been known to misinterpret fine print, I deposit one with a couple hundred in one of my checking accounts as a test. Sure enough, I was only charge the face value of the check. Whatever you do, don’t get a cash advance at an ATM or bank and say this doesn’t work, because only convenience checks are not subject to the transaction fee.
Side note: make sure your conveniene checks say something like There is no transaction fee for cash advance checks. I think the contract should be the same for most people, but make sure the convenience check can be used without a transaction fee before you use one for a large deposit.
Deposit whatever amount you want, 30% to 70% of the credit line, with a convenience check into the citibank e-savings account. There, watch the money grow at 4.75% APY. Do NOT use the money in this account for anything other than paying off the credit card. If you value your credit more, then it would probably be a wiser decision to use up just 30% of the credit line. However, there are people who could preserve a good credit score while using up to 70% of their credit lines. If maximum profit is your goal, then you may even want to try near 100% of the credit line. Get a little bit less than that, because you may want to use the card for a purchase in order to get the $50 statement credit offer. No matter what amount you put on the convenience check, try to avoid using this card for multiple purchases, unless you are planning to pay for the purchases in full each month. There’s a nice rewards program with the card, but you can always use that after the 0% APR promotional period.
There are two methods to paying this cash advance off:
Method 1 (more profitable): Pay the minimum payment each month until the last month of the 0% interest promotion. At that last statement, transfer enough money from your e-savings account to your EZ checking account to pay off 100% of the balance, and use a check from the EZ checking account to pay off the card.
Method 2 (better for credit): Divide the amount you charged by 12 and pay that amount each month. If necessary, then transfer whatever amount you need each month from the e-savings account to the EZ checking to pay each month’s statement. You will get less interest, but this method is slighly better for credit score purposes.
After you pay off the card in 12 statements, the e-savings 4.75% interest, $50 statement credit, and 2000 bonus reward points are yours to keep. You also did a good job paying off a medium-sized debt that will show up on your credit report.
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Wow.
One very intricate scheme.
So, you obviously CAN have very good self-control. How about trying to bring it into other parts of your life, instead of just the financial aspect?
Hope your break went as well as you wanted it to.
Hi:
I just came across this information and I think it is a really smart move on anyone’s part if they put this to use. Can it only be done with B of A though?
Information provided by me
Yes, only B of A, because only they let you use a convenience check without the 3% added transaction fee. That’s why I shared this;)
You could do it with another card if you want, but you wouldn’t make much money, because you would get charged 3% of whatever amount of cash you get initially. Other cards may also only be 6 months 0% APR. If you get one of those instead of one with 12 months, which is kind of hard to find, then you would actually be losing money if you tried this method.
Heres a better choice, with less hassle, just get the Citi Professional credit card with 15,000 bonus points upon approval and activation, use the 12 months interest free balance transfer to do the same thing, except, even if you don’t hassle with this little scheme, the 15,000 bonus points are good for a $150 giftcard at any major stores including dell.
I’ve seen that card, but I don’t think most people can sign up for it. It says you’re supposed to be an authorized officer of a business or something.
Not really, just have great credit and you’re good to go. I got instant approval for both my parents.
Ok, if you could get the card, then you can get that gift card, but you’ll be hurting your credit if you get the credit card for that reason only. Part of my plan was to build up and balance and pay it down to earn credit score points. You’re hurting your credit if you apply for the citi card just for the gift card, because when you apply for a card, you get a credit inquiry which slightly lowers your credit. If you just get the card for the gift card, it might not be that good of a deal, because the points it takes off your credit score might make a difference in the interest rate you get the next time you apply for a loan.
Here’s a better idea to take advantage of the 0% APR on balance transfers:
Get the Bank of America card first, and hold off on getting the Citibank card until about a month before the Bank of America card introductory rate expires. You might not be able to get the 15,000 thank you points for the $150 gift card anymore, but they always have the 10,000 points offer (or at least they have for a long time), so you can get at least a $100 gift card. By this time, most of the Bank of America balance should be paid off, so use another convenience check to get a few thousand more dollars to put in a high-yield savings account. Then, transfer the full balance to the Citi card and pay it off over 12 months. I recommend dividing the balance by 12 and paying the same amount each month. This way, you get to collect interest again for an additional 12 months, and you’re actually using the credit card to borrow and pay down a balance.
hey,
this looks really intriguing and i might give it a try…but the thing i noticed when i went to the BOA site is this:
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Transaction fees for cash advances (including Balance Transfers, Cash Advance Checks, Bank and ATM Cash Advances) 3% of each such cash advance (minimum $10)
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are those 3 checks that you got just a freebie for the first time?
Oh, it used to be free. At least it was when I tried it, which is why I wrote this. It might not be anymore, because banks are constantly changing their contracts.