What is an APP-O-RAMA ???
To define it in one sentence would basically say… borrowing money at 0% interest and investing it at 5-6% interest at the bank.Sounds simple right?? well it is… sort of. APP-O-RAMA stands for applications, and TONS of them!
Background: Credit card issuers love enticing new and existing customers to join the rest of the Americans into their favorite place to be… in a crap load of debt! To do this they must first dangle the carrot via a credit card with a 0% balance transfer, usually good for 12 months or so. What this basically means is that you can make all the purchases you want during the next twelve months, provided that its not a private jet because the salesman would hate to tell you that your card has been declined… twice. All you have to do is just pay the minimum balance per month,which is usually 5% of the balance and you get hit with no interest charges.
However if you like to spend a ton of money and get yourself into a ton of debt this blog isn’t for you,and since I just gave you this brilliant idea maybe you can buy me a NYC metro card as a gift. Anyways, I will take the credit limit that is given to me and either asking the credit card company to send the money to my bank account or to “pay off” one of my other credit cards with no balance, thus creating a credit for that amount on my account.
Personal background: I have a pretty good credit score of around 735 according to the Experian credit reporting agency. Total reported household income of just over 100k (this figure shouldnt include your bummy friend that is crashing at your place). I also have a corporation as well so I will be applying for business cards too but only later on as I want to have everything organized with the personal cards first . I currently have a Citi card that was opened in 2003 with 15k credit limit (CL) ,an Amex Blue card with 50k CL, as well as a personal American Express gold card opened 7 months ago and one for business. Neither of those have a set credit limit,but like I said before If I try to purchase new Ferrari with it I *may* not be able to drive out with it the same day.
The plan: I will be applying to about 25 personal credit cards within a period of a few hours. This is because your credit gets reported everyday and if an if you apply to a bunch of credit cards and try to do so the next day a HUGE RED FLAG will go off in the credit risk department and you will get a nice phone call as well as short and sweet letter telling you that you have been rejected. Although not as painful as that prom date rejection from High School, this is really not a good thing because you want as much money from those thieving credit card companies as possible!
I’m willing to bet that quiet a few of my credit card applications will not be instant decisions so hopefully they will still approve me with that days credit report(still showing that I’m not a credit risk). I will be applying to about 3 different cards from each issuer like Citi Bank, Chase, Bank of America, HSBC, and so on.
I will find the cards I’m going to apply to at the balance transfer cards section on
Credit-Land.com in the balance transfer cards section and also apply to some of the cards that others on Fatwallet have already applied to.
The Potential: Although this isn’t a cash cow business that will make you rich, this is sort of a get rich slow scheme as you can only make as much as your credit score will allow you to. While a lot of people can make under 10k per year , there are some people that can make up to 20-30k per year doing this. Not bad for one full days worth of work huh? Seriously though, this can get pretty involving when it comes to tracking your monthly credit card payments so this isn’t for an irresponsible person that forgets to do things.
Filed under: 0% balance transfer Credit cards
Assuming you’re going to max the account out and put the money into saving accounts, what makes the payments to the credit cards?
Good luck. It works on a small scale, hover there are a few caveats:
For one, its actually against the agreement on the application to mis-state balances, so youve violated the agreement right there and they can instantly send you to the default rate of 2x% and charge you a months interest with no grace period. At its most simplistic, you state that all the info is true when you sign. Stating you have a balance you dont carry is a lie. Next is the issue that most cards will now verify you carry a balance on a card before they write a check for that card. Ive NEVER recieved a personal card application that allowed a balance transfer to a bank account, and I get a few dozen offers a week. Maybe you get special ones because you are incorporated.
Either way, this is an old scam, and its illegal and has been tested in civil court. Most card issuers are aware of the concept and actively take steps to prevent it. The ONLY way you can actually accomplish something like this is to capitalize initially using a cash advance on the card then pay that balance with a transfer. This will likely eat most of the profits you could make as cash advances are subject to substantial fees up front.
Also of note, with the current identity theft trend, measures have been put in place to prevent issuing multiple cards in short notice, so most likely all this will do is utterly crush your credit rating. Have a ball.
I agree with this method.. It can make you a lot o money! I wrote a post on my site as well.
poopy digg implied you had already done it.
Less talk more action, we want to see figures !
You forgot to mention the huge hit your “pretty good” credit score will take. I’ve been doing “APP-O-RAMA” for quite some time now and my score previously was 785, now it’s hovering around 640 and was as low as 580 at one point.
Not to mention that I have to keep meticulous records and have to set reminders for upcoming payments. This is definitely not for the care-free types since you will always have in the back of your mind the next payment and if you had defaulted on any cards by accident.
Suffice it to say, your life will be a tad more stressful. And I caution your readers against this if they plan on buying any houses or cars in the next year or two.
One big hole in this plan, other than the who-makes-the-minimum-payments one that Matt pointed out:
The 0% offer is for *balance transfers*. You give them the # of the other card and they make a payment to the card.
0% does not cover cash advances. Those, you’ll find, are hit with the 29.99% default rate from the very start. Plus there is a cap on cash advances that is usually way way lower than the credit limit (to avoid exactly what you’re planning)
But good luck, bro. I hope it works out for ya.
I did something similar the other day.
I learned about it from here: http://www.freefrequentflyermiles.com
The thing is Citibank will let you do a balance transfer or send you a check so that you can pay whatever you want yourself. I took the max on my credit limit for that car, about $41k @ 0% for 6 months. I took a chance though, a huge risk in fact, and put the money into a stock i was watching (JRJC) and sold it yesterday for a $15k profit in 2 days. I actually got out just in time, because the stock tanked in the afternoon trading.
I would never advise anyone to do the same, but for me it worked out.