Yesterday I got a new credit card in the mail. It’s a gold card from CITI Bank. I don’t really need another credit card, in fact I now have a total of almost $18000 worth of credit available to me (more than I will use for the foreseeable future). The reason I applied for the card was that they offered 0% interest for a year on balance transfers from another card.
To make money off this deal I need to go to the bank with my current credit card and get a cash advance. That cash goes into an investment account. I then go to the bank and have the balance transferred to my new card. The new card then goes into a drawer never to be used again.
A year later, just before they start charging interest on the credit card, I pull my money from the investment account, take my cut of the interest gained over a year, and pay back the new card in full.
Then I can take the new card and cut it up. Apparently it’s better not to cancel cards, but just to leave the accounts open. I’ve heard that it improves your credit score, which makes sense. If I had $100 000 worth of credit available to me and only ever used $2000, then the bank companies know that I probably won’t max out a new card and default on it. Whereas if I had $2000 limit and was constantly maxing it out it’s hard to say if given $10 000 would it be unmanageable.
The real question is what kind of investment would you invest in if you knew you only had the money for 1 year before it had to be paid back? At first thought you’d want it to be pretty safe, and reliable, there’s no time to weather any storms in the stock market. That leads to a couple of options, there’s GICs, bonds, and high interest savings accounts. I don’t like GICs. I don’t know much about bonds, but there should be some around that offer pretty good returns, the corporate and municipal bonds especially. Savings accounts are easy to set up and it’s possible to find them that offer >4%
At 4% a $3000 investment will make just over $120, hardly a lot of money.
What would be nice would be to make 15% which would be closer to $500. What kind of investment could return that much safely?
I’m going to have to do some research on that.