Balance Transfer Arbitrage

Are you thinking about doing some balance transfer arbitrage? If so, you will need a credit score of at least 650 points and a helpful list of 0% balance transfer offers. We have your back on the list, but you’re on your own in getting a strong enough credit score to be eligible for the offers out there on the table.

Do you know what your credit score is? If not, the best place to go is MyFICO, a service run by Fair Isaac and the originator of the FICO credit score. If the credit score you’re getting isn’t a FICO score from Experian, TransUnion, or Equifax, then the credit score you just paid for is worthless. That’s right, if it’s not FICO, no one cares. It’s a sad monopoly but if you want to play the game, those are the rules.

What’s MyFICO? It’s really just a service that gives you your credit score from one or all of the credit unions. Fair Isaac pulls your reports from the three bureaus, calculates your score, and then spits it back out to you. You can either go to MyFICO and get the score for each bureau or you can go to each bureau individually and get the scores that way. Either way you’ll have to pay for it.

For a limited time, you can get 20% off the regular price for requesting your score.

What about the government program that gives you one free report from each bureau for free? You can get your credit report via Annualcreditreport.com but it won’t give you your score. You can use it to check for inaccuracies and errors but that’s about it. It’s still very useful to check once a year, you just won’t get your score out of it.

Yes, you can use balance transfers to pay off debt and in fact, you can use balance transfers to do whatever the heck you want. You could, if you were to be so bold, take the money an invest it in the stock market, fund a new business idea, or just use lit hundred dollar bills to start a campfire. The credit card companies don’t care what you spend that money on… as long as you make regular payments on it. That’s why balance transfer arbitrage works so beautifully!

For the purposes of arbitrage, I would strenuously recommend against using the balance transfer for anything other than to pay off a higher interest debt or stick into a high yield savings account. Investing it is a huge mistake. Spending it on frivolous things is a huge mistake. You want to make debt work for you, not the other way around. So, stick to paying down debt or saving to earn the arbitrage interest – avoid everything else!

Not everyone can get a 0% APR balance transfer, it’s a fact of life. If your credit isn’t stellar or you have too much credit already, credit card companies may not be willing to extend to you any of that juicy 0% offer because, frankly, you’re too risky. They know that no one else will offer you a 0% balance transfer so they aren’t going to either, but they will offer you something that’s a little worse than 0% – like 7.99%. 7.99% is great if you’re goal is to reduce the interest rate of your loans, it’s awful if you’re trying to find a 0% arbitrage funding source because you can’t get 7.99% guaranteed from anywhere.

So, what should you do? Improve your credit. Research online to see what you can do to improve your credit because that’s the only way the credit card companies are going to give you any decent offers. They aren’t in the business of giving credit to anyone and everyone, they want to give it to people they can trust to pay it back and people they can earn money from – you want to be extended credit because you’re in category 1 (trust).

Some quick tips for improving your credit are to reduce your utilization (how much of your total credit limit you currently owe), make your payments on time, and simply wait. There are other ways to improve it but ultimately those ones are the main ingredients. Sometimes you don’t have enough history, sometimes you are borrowing too much, sometimes it’s something else – all of it improves with time as long as you keep paying.