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Credit Card Arbitrage Update

It worked! Two weeks ago I applied for two 0% credit cards, and today I received the second in the mail and verified that everything has unfolded according to prophecy.

Well, not quite. The hitch is that I did this too soon. I got spooked by the fact that Citi hadn't sent me another of their regular solicitations for the Citi Diamond Preferred Card, and that the card had disappeared from their website. I thought it was no longer being offered, and that the replacement was less useful for my purposes. It turns out that they were simply late on this month's solicitation — I received my new credit card and the solicitation on the same day! Due to this, I missed out on a month of interest accumulation. My 0% rate is only good through August, not through September.

I noted earlier that they only allowed a $9,600 balance transfer. It turns out that $9,600 is the total credit limit they granted me, so this card is maxed out. (That amount is slightly more than my other card's balance, so I actually have a small credit on it right now.)

The more interesting side of this adventure was converting a $14,900 Discover balance transfer check from 1.9% to 0% by using the introductory balance transfer offer on an American Express Blue card. I was afraid this wouldn't work. (1) I applied for two credit cards a mere week apart from each other. (2) I used up almost my whole credit limit on my Discover card, more than doubling my total credit card debt at the same time I applied for the American Express card. (3) Given the unexpectedly small credit limit on the Citi card, I feared I wouldn't be able to transfer the whole balance to the American Express, even if they weren't freaked out by #1 and #2.

Well, it worked. I got the new card today and verified online — at both American Express and Discover — that the balance transfer happened. My credit limit was set to $1,500 above the balance transfer, so it appears that they deliberately left me some spending room. (Thanks!) Another nice thing was that I discovered just how quickly today's banking system moves. After I took the $14,900 balance transfer check to deposit at my bank, I got a phone call from Discover's fraud protection people the very next day. That's impressive! It seems their suspicions are aroused by a single gigantic transaction on an account that had been idle for months…

Tantalizingly, I still have three balance transfer checks remaining, and their offer doesn't expire until late next month. I could try to do this again and get another $15,000 to another 0% credit card. But I'm not going to try. I don't think it would work again; I suspect my FICO score has taken a serious plunge. I'll check it next month to appraise the damage.

My only gripe is that the minimum payments will be higher than I expected, with Citi requiring 1.5% of the balance and American Express requiring 2%. My old credit card has been spoiling me with a mere $10 minimum payment. I don't see this as a large problem, though. I see it as an incentive to use the cards for purchases during the year. I made sure to only apply for cards where purchases would also be 0% during the introductory period.

Tiny Island