Balance Transfer Arbitrage

If you can ever borrow money and then earn more “interest” than what you’re paying out to service that loan, then you’ve made yourself some money. In the real world, it’s called business. Someone takes out a loan, starts a business, and, ideally, makes more money operating the business than they pay out servicing the loan. In an real world, you can guarantee the loan’s interest rate but you usually can’t guarantee the amount you can earn off that loan… until today.

The beauty of balance transfer arbitrage is in its simplicity because it requires absolutely nothing special, other than the ability get unsecured credit cards from companies like Citi. Balance transfer arbitrage is the practice of applying for a 0% balance transfer and depositing the funds in a high yield savings account, earning money on difference. The arbitrage refers to the spread between the 0% loan, in this case the balance transfer, and the yield on the high yield savings account, which at a bank such as Emigrant Direct is 5.05%. Arbitrage also refers to the nearly guaranteed nature of the deal because of the parties you’re dealing with, the credit card company and the bank.

So, are you ready for balance transfer arbitrage?