Originally Posted by
pgary
How about the improved lifestyle achieved by having more money, courtesy of the banking industry paying interest on a free loan?
I think this is a classic case of YMMV. The improved lifestyle achieved of having more money is not the case bcs you are assuming that you have paid in full the balance HENCE more money, yet your not keeping under consideration the COSTS. FICO, points/miles, time (opp cost) for these dealings. Hence its a YMMV case. Lets keep in mind that there is no actual return on investment but return on deficit, since deficit is moeny you never had you can not disguise it as money made.
Originally Posted by
pgary
What issues, other than the math that determines if the money after taxes earned in interest on the bank's money via a free loan exceeds the fee? (I'm not sure I want to fight the IRS over whether or not the fee is a tax deductable expense.)
Again, the issues vary by consumer and how he/she determines their payment frequency based on liabilities. If he/she is a serial balance holder than yes you could discount the applied APR from one card to the other for moving those liabilities in a non-interest bearing account. You could deduct the off-set as money saved, NOT money earned.
The gist of this trade is negative carrying imo bcs you can achieve much higher returns than the spread this thread is all about. Therefore the issues implies a case where someone is subject to short-term returns on a long-term liability. While you COULD apply the long-term return on a long-term liability and in the long run you will win, and this trade WILL loose
PS - sorry for the delayed response... was FLYIN!