Gaming Capital One Credit Cards $2.99 At a Time

by JT McGee

Capital One is the bomb.  Well, maybe they aren’t exactly an Amex Centurion, but Capital One credit cards definitely offer some rockin’ deals to their users.

Some offers go undiscovered; others are used how Capital One wants customers to use them, not how the customer should use them.

Either way, I’m here to explain my Capital One credit card gamin’ strategy.

The Capital One Bridge Loan

The three biggest advantages of credit cards are pretty clear-cut:

  1. Rewards (especially cash rewards)
  2. Payment protection for purchases (Great for sketchy ebay vendors)
  3. A short-term float on your cash (the credit card companies float the money for you up to 55 days)

Capital One cards have an additional benefit, actually, and it’s one of the reasons I think everyone should get a CapitalOne credit card: they offer free 30-day balance transfer bridge loans.

Check it out, every time I log into my account there’s an option to transfer balances to my Capital One card.

Usually there’s some random transfer offer like 5% for 12 months (plus a 3% balance transfer fee…pfft!) that they have mailed me in the past week, but there’s also a rockin’ zero-fee balance transfer at your normal purchasing APR.

Purchasing APR on Capital One Cards, I believe, goes no lower than 10.99% annually.

WTF! 10.99% ANNUALLY!

Yeah, great deal, right? Well, it is if you hold a balance for only as long as the billing cycle plus grace period.

So what do I do? I charge up all my expenses on the card on which I’m closest to receiving rewards then, one week before that payment is due, I BT it over to Capital One for another full billing cycle of interest free money!

Pretty cool? Awwww yeah!

One billing cycle at one credit card company plus one billing cycle and Capital One is an effective 78 day* loan, which I calculate to be worth…$2.99.*

Shoot, that’s like a gallon of gas.

*Math:

Total loan-length: 30 day billing cycle + 30 day billing cycle + 25 day grace period – 7 days lost on an early transfer to CapitalOne)

Value of Loan: .70% annually in money markets / 365 days X 78 X $2,000 = $2.99 profit.

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Like it? Hate it? WTF why didn’t I think of it? Comment below, or hey–blog back!

Link to this post, please, so I can post the trackbacks in the body of this post!

This post was submitted to the Totally Money Blog Carnival hosted by Saving Money Today.

{ 6 comments… read them below or add one }

Anne Sales | Coupon Codes February 10, 2011 at 10:45

Neat calculation, J. I read a similar article on money savings dot com where it talked about stoozing. It’s a pretty clever idea but one has to be watchful and vigilant for the end of the interest-free period.

Reply

Robert @ The College Investor February 11, 2011 at 14:48

I’ve done a similar thing about 2 years ago. Capital One offered me a 0% for 12 months deal, and they sent me a purchase check to encourage me to use it. Well, I wrote myself the check for $10,000, deposited it in my high-yield savings account, and earned 2.5% for the year for free! Thank you Capital One for the extra $250!

Reply

JT McGee February 11, 2011 at 15:15

Those were the days, huh? I’m afraid those deals are gone for good. The credit card reform bill made it incredibly unprofitable for banks to offer them. Too bad, they were great for people who used them responsibly.

Reply

Andy Hough February 12, 2011 at 09:40

Capital One used to send me purchase checks that allowed me to do basically the same thing. There was no fee for using the checks but they charged the normal interest but you had the same grace period as if you were using the card. I would put the check in the bank and pay it off right before the grace period expired. Interest rates were a lot higher then so I’d make about $20 from doing that. I guess they caught on because I haven’t seen any purchase checks for a while.

Reply

JT McGee February 12, 2011 at 11:09

They’ve cut back on the purchasing checks, it seems. Shame, too, because as you said they were a very powerful tool. Actually, they recently sent me a thick thing of checks, which I originally thought were purchasing checks. After further review, they were balance transfer checks–with a 3% fee, no less!

Reply

Charles @ CreditDonkey March 7, 2011 at 12:54

A word of caution when gaming credit card promos, if you forget or miss a cycle, you might be in a world of hurt. Something to factor in when you’re trying to arbitrage the spread between their introductory promo and what you can get in interest via savings accounts, CDs, money market, etc.

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