Interest Arbitrage via Churning
May 29, 2018, 11:30 pm
#16
Join Date: Feb 2012
Posts: 19
Must be a 1-2 year AAA corporate bond that is in default that will go up in price just before it matures allowing a sale with a capital gain. They work just like treasuries if the treasury is Argentina or Venezuela in a debt crisis.
May 30, 2018, 10:22 am
#17
Join Date: Jul 2014
Posts: 369
I think this is slow and stupid.
Assuming you were able to get the 30k limit on the 3% cash back card, and paying yourself through Ptiq would be a non taxable event, why not just continually churn to earn the .5% cash back. IE charge 30k through ptiq, have Ptiq send you a check, paty back credit card and repeat. You will make much more than the bond investment. You can probably cycle through 2x a month with zero investment risk, earning about 12% on the 30k charge annually. You seem smart, much better ways. I love this game. I have other ways to cash out from Ptiq so that part I know can be done. I am not sure if Alliant will let you cycle though. I have no experience with them.
Good luck
Assuming you were able to get the 30k limit on the 3% cash back card, and paying yourself through Ptiq would be a non taxable event, why not just continually churn to earn the .5% cash back. IE charge 30k through ptiq, have Ptiq send you a check, paty back credit card and repeat. You will make much more than the bond investment. You can probably cycle through 2x a month with zero investment risk, earning about 12% on the 30k charge annually. You seem smart, much better ways. I love this game. I have other ways to cash out from Ptiq so that part I know can be done. I am not sure if Alliant will let you cycle though. I have no experience with them.
Good luck
Jun 3, 2018, 8:52 am
#18
Join Date: Mar 2007
Location: Midwest U.S.A
Programs: Too many to list. Since the early 90's.
Posts: 1,407
This thread lets me drag out one of my favorite "old timer" stories. Back in the good ol' days (early 2000s), you could buy US savings bonds with credit cards directly for a while. No fees, no cash advance. Risk free, and interest rates made it worthwhile (about 5%) (plus miles on the purchase, of course). I bought a bunch (maybe $20000 worth or so eventually) that I was able to float for nearly the entire 5 year vesting period through stringing together a series of introductory 0% (no fee) balance transfer cards. I think I eventually got tired of it, and interest rates dropped, and it got harder to find new BT cards. Fun while it lasted.
But there's no way I'd go through that hassle for the 1% margins the OP is talking about.
But there's no way I'd go through that hassle for the 1% margins the OP is talking about.
Did similar back in the good 'ole days, but only when I could make at least 5% and I kept it short term. Anyone know if the repeal of some of the Dodd-Frank regulations will allow banks to again be able to offer 0% interest AND 0% trans fee on convenience checks to credit card holders? I'm talking about promotional deals they would run (sometimes 12 months or 18 months...), not on initial purchases or balance transfers, but on current credit card holders. And, I'm talking about the big national institutions. Of course, once they started including some sort of fee, the interest rates dropped on CD's for example and it wasn't worth the trouble anyhow. I would always get more than what I would place in interest earning items so I could make the monthly payments with what I borrowed. Not recommended for those about to get a mortgage, equity or other type needed loan, but it was a way that I made money, and banks actually made money too (from a CD investment, for example). It also caused me to stay with the institution that promoted the convenience check and I would use their other cards for spending. It was a good relationship and no one lost money...win-win.
Jun 3, 2018, 3:53 pm
#19
formerly known as Frugal Travel Guy
Join Date: Jul 2001
Location: Greenville, SC
Programs: UA Gold, HH Gold, SPG Gold, Marriott Silver, Hyatt Platinum
Posts: 1,925
Margins are Way Too Thin
I can remember the thread on Fatwallet from SisStaplesSucks that laid it all out in the "good old days". 0% balance transfers with $0 fees, We reallocated existing credit to the new cards with the 0% offer and then balance transferred up to 50% of personal card credit limits to savings accounts at 5% to 6%. Business cards we'd take up to 80% of credit limit.
We did $250K at 0% for either 12 or 18 months and made minimum payments only.
$250,000 at 5% = was roughly $12k in interest a year with descending balance based on minimum required payments.
Now THOSE were acceptable margins.
We did $250K at 0% for either 12 or 18 months and made minimum payments only.
$250,000 at 5% = was roughly $12k in interest a year with descending balance based on minimum required payments.
Now THOSE were acceptable margins.
Jun 5, 2018, 4:36 pm
#20
Join Date: Aug 2017
Posts: 3
yes those were the good ole days. i remember floating 200k at 9 12 and 18 month terms at 5 and 6% money market accts. banks were so nice to give out zero percent money with no fees. i hope those days come back when savings rates start rising
Jun 6, 2018, 10:59 am
#21
Suspended
Join Date: Sep 2014
Posts: 350
But your credit score takes a big hit while your floating...
Jun 7, 2018, 5:52 am
#22
formerly known as Frugal Travel Guy
Join Date: Jul 2001
Location: Greenville, SC
Programs: UA Gold, HH Gold, SPG Gold, Marriott Silver, Hyatt Platinum
Posts: 1,925
Jun 10, 2018, 10:35 am
#24
Join Date: Jan 2014
Location: Chyona
Programs: Anywhere I can ski...
Posts: 401
With rising interest rates, I've been considering leveraging Alliant Cashback, Plastiq, and Chase Slate to gain access to 0% interest margin to invest in conservative corporate bonds. The main flow of money is:
Sign up for Alliant Cashback (3% cash back) -> send myself a $30,000 check via Plastiq (2.5% lost to fees) -> buy 1-2 year corporate bonds yielding 2.8% -> transfer Alliant balance to Chase Slate for 15 months of 0% margin -> enjoy the .5% cashback difference and 2.8% interest from bonds to gain a quick $990 in taxable capital gains ($30000*[2.8%+.5%])
Some variables I need help understanding that could erase my thin margins are:
*Alliant classifying the 30k as a cash advance
*Chase Slate limits the 0 fee balance transfer to 30k per card (could open another one with one of my EINs)
*Somehow the IRS considering the entire 30k Plastiq check as income during an audit
What does everyone think about this idea?
Sign up for Alliant Cashback (3% cash back) -> send myself a $30,000 check via Plastiq (2.5% lost to fees) -> buy 1-2 year corporate bonds yielding 2.8% -> transfer Alliant balance to Chase Slate for 15 months of 0% margin -> enjoy the .5% cashback difference and 2.8% interest from bonds to gain a quick $990 in taxable capital gains ($30000*[2.8%+.5%])
Some variables I need help understanding that could erase my thin margins are:
*Alliant classifying the 30k as a cash advance
*Chase Slate limits the 0 fee balance transfer to 30k per card (could open another one with one of my EINs)
*Somehow the IRS considering the entire 30k Plastiq check as income during an audit
What does everyone think about this idea?
Jun 10, 2018, 5:33 pm
#25
formerly known as Frugal Travel Guy
Join Date: Jul 2001
Location: Greenville, SC
Programs: UA Gold, HH Gold, SPG Gold, Marriott Silver, Hyatt Platinum
Posts: 1,925