Comments on: Credit Card Arbitrage: Making Money from Balance Transfer

By: Victoria

Victoria — Tue, 18 Sep 2007 03:58:36 +0000

Its more for Charging the limit on a card has a negative impact. But from what I see, credit score calculation takes into account the utilization ratio which is the total balance over total limit. So if the total limit is high, I don’t think charging a little bit more on one card will necessarily affect credit score significantly negatively.

By: Sun

Sun — Thu, 06 Sep 2007 20:55:43 +0000

sunnyview: The reason I didn’t anything related to house (as well as items related to cars) in the net worth calculation is that I don’t know the market value of the house. Thus, including it could artificially inflate the number if I can only guess how much the house is worth. Instead, I choose to focus on the assets and liabilities that I can manage such as investments and credit card bills. Those are that I can control.

By: Sun

Sun — Thu, 06 Sep 2007 20:54:21 +0000

Jeff: Regarding credit limits, I think it’s true that you will need to wait several months before asking for a credit increase. Though I didn’t ask for any increase recently, I had the same experience before when I tried to get an automatic increase for my Citi cards. It sometimes told me something like I had to wait 3 months since last increase to request a new increase. Actually, if you have several cards (for your case, Chase), you don’t have to ask an increase to make a big balance transfer. You can simply move lines from other existing cards to the new card and do the BT with the new card. I did that with Chase and there was no problem at all.

Charging more than 50% of the limit on a card has a negative impact. But from what I see, credit score calculation takes into account the utilization ratio which is the total balance over total limit. So if the total limit is high, I don’t think charging a little bit more (for example with BT) on one card will necessarily affect credit score significantly negatively. Of course if you have only one card, that’s another story. I have obtained multiple copies of credit score in the past couple of years and some don’t show any downside of high utilization ratio. Plus, any negative impact will be short term. As soon as the high balance is paid off, the credit score bounces back immediately. So I am not too worry about the ratio.

By: Jeff

Jeff — Thu, 06 Sep 2007 16:38:53 +0000

Two issues I see.

a) Even with my A+ credit, initially, most credit card companies only approve you for up to 10k if you’re lucky. I’ve even called immediately after approval and they indicated I must wait a few months to increase the credit line.

b) When you charge more than 30% of the credit line on any credit card, your credit score will go down. Just try it. Take any card you have, and charge 75% of the entire credit limit to it. You will see your credit score go down within 1-month as soon as the credit agencies know about it. I’ve done a lot of research on this.

By: glxpass

glxpass — Tue, 04 Sep 2007 02:14:38 +0000

MoneyNing, the reason for paying above the minimum is mostly one of perception, esspecially if you’ve a large balance. Paying the minimum amount due makes it appear that you can’t afford to pay any more than that. Also, when using credit card arbitrage, it’s best to “stay under the radar” i.e. not to attract too much attention from the credit card company — after all, you’re an unprofitable customer to them. Paying more than the mininum may make you less visible to them and less subject to the dreaded “adverse action.”