Results from Playing the Arbitrage Game

May 11, 2008 @ 10:37 am by EMS

In June of last year, I decided that I was going to experiment with earning interest off of a 0% credit card promotional rate. Ideally, I would have liked to have found an offer where I could write a credit check to myself, cash it, and then just let that balance sit in a high-yield savings account for the full year. Unfortunately, I couldn’t find an offer that didn’t tack 3+% off of fees for the total amount cashed, so this didn’t work out.

Rather, I opened a 0% for one year credit card with Chase.  I used that card solely for daily purchases until I came to within about $1,000 of the card’s credit limit.  It took me about 5 months to reach this level, all the while paying just the monthly minimums when I received statements.

The money that I traditionally would use to pay these purchases was deposited into EmigrantDirect.com’s high yielding savings account.  Unfortunately, high yielding wasn’t so high once the Fed starting cutting rates last fall, so I didn’t make out quite as well as I would have hoped.

I’m going to pay off the card in full this month (Yes, I know I have another month to work with, but I’m playing on the side of caution here).

During this time period, the interest paid on my EmigrantDirect account was about $325.  I’m estimating that about 66% of that is from this scheme.  Therefore, I figure I’ve made about  $214 (before taxes) on this plan

All in all, it was pretty easy money.  I was able to keep up on the status of the accounts via Quicken, and I was very careful about making sure the payments were made, etc…  Once simple screw up could end up costing me money.

That being said, I don’t think I’m going to do this plan again unless rates get back up to 4.25%+.  The 2.75% that Emigrant’s offering now isn’t enough to entice me back into the game.

April 2008 Net Worth Report (+9,779)

May 01, 2008 @ 10:49 am by EMS

April was an overall good month, although I have to admit that the 5.13% jump that I’m showing here is a bit misleading.  Close to half of the net worth increase came as a result of adding the cash value of my wife’s and mine term life insurance to the equation.  I’ve never reported it in the past, but since I received the yearly statement this month, and the fact that it does have a cash value made me change my mind.

In other news, our investments have had their first positive month in quite a while.  I’m not happy with holding close to $10,000 in credit card debt, but that number will be reduced greatly next month as the first of my 0% for one year offer expires.  I’m hopefully going to write an entry on that experience soon.

May will present us with our $2,100 tax rebate, along with some significant cash outflow from the large credit card payment due as well as some serious home improvement projects that we’ve been planning.

Net Worth April 2008



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