How to Make Money off Balance Transfers

Credit card balance transfers are tools that many people choose to utilize at some point. While many people use transfers to eliminate interest charges, certain individuals use them as a way to make money. Here are the basics of how to make money off of credit card balance transfers.

Locate a Credit Card

The first step of this process is to find a credit card that has a zero percent introductory interest rate. Many times, credit card companies will offer these interest rates for a period of somewhere between 12 and 18 months. They offer this program in order to secure debt from other credit card companies. You should shop around for the best interest rate offers in the market before deciding on a credit card. Once you have located a card that you like, fill out the application form and apply for the card. Within a few days, you should receive an approval notice, and your card will be in the mail soon after.

Transfer Balances

Typically, when a credit card company sends your new card, they will ask if you want to transfer any balances from other credit card accounts. If you have credit card balances on other cards, you can then transfer these balances onto your new card. Many times, you will have to fill out a balance transfer form and give it to your new credit card company. Sometimes, they will provide you with a book of checks that you can write to perform balance transfers. You will write the check in the amount of your old credit card balance, and then that amount of money will be transferred to your new credit card.

Invest the Money

Instead of using your money to pay off the entire credit card balance, you can just make the minimum payments during the introductory period. You can then put the rest of your money into investments. You want to choose investments that are considered high-yield and have a high level of liquidity. For example, you might choose to invest in a high-yield savings account or a short-term CD. You could also choose to invest your money into a Treasury bill or a money market mutual fund. All of these investments are relatively safe, and they will pay you a certain amount of interest. This way, you are borrowing money at zero percent and then investing to earn a higher rate of return. It is also important that you choose methods of investment that do not have any fees or have very minimal fees. If you end up paying transaction fees, you will cancel out the effectiveness of this plan.

Pay Off the Cards

The last part of the plan involves paying off your credit card bill before the interest starts to take effect. This means that you need to know when the introductory period is over so that you can pay off your balance in plenty of time.

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