Potential To Earn Some Easy Money ?

[ClubMan]

Assuming a credit limit of €10,000 (not sure if this is considered high generally for credit cards?) one stands to earn c. €110 net of DIRT but before the other possible expenses outlined above over six months on the highest yielding deposit account currently available ([broken link removed] currently paying 2.75% CAR). In any case, if the minimum payment is 3% then presumably that requires monthly payments of c. €300 thus wiping out the scope for any gains?

Personally, even if there is scope for making money on such a scheme (which I doubt) I'm not sure that the complexity and potential risks of such a scheme is worth the potential marginal returns. It's certainly not a recipe for "easy money".

 

[daltonr]

The bigger problem is that you are drawing down cash
from the cards. The interest clock starts ticking straight
away.

0% offers tend to apply to the balance transferred, not
to new purchases. Some banks offer 0% on new purchases,
but I doubt any offer that kind of rate on Cash.

Also be wary of these low interest offers. I know in the States there are all sorts of reasons why a card company can decide that you can no longer avail of the rate, even if you keep up minimum payments.

Read your terms and conditions.

-Rd

 

[valeriana]

stamp duty loophole now closed

- Government Duty on each credit card. If it is still charged to a credit card account each April, then in theory you could open the account, use the cash for 6-months, then return the funds & close the account withouth having to pay the Government Levy.

This doesn't work any longer - last April was the only time you could have got away with it. From this year on, if you've had a cc at any time during the previous year you'll have to pay the €40 stamp duty, even if the cc account has been closed before 1st April.

Unfortunately, that wipes out most of the potential for the exercise to be worthwhile.

 

[garrettod]

Hi,

I was thinking there is reasonable potential to earn a little easy money, given all the credit card promotions about.

Say, for example, one signs up (& gets approved) for a number of the credit cards offering promotional rates of between 0% & 1.9%. Then draws down all funds available & lodges them to the best paying deposit account, for a period of just under 6 months (the time period normally on offer, for promotional rates from credit card providers).

In theory, one could earn a little between the rate they are borrowing at & the rate they are earning on their deposit account.

However, things to consider:

- Government Duty on each credit card. If it is still charged to a credit card account each April, then in theory you could open the account, use the cash for 6-months, then return the funds & close the account withouth having to pay the Government Levy.

- Management of funds. Obviously, good self control would be vital here, otherwise one might give into the temptation to spend some of the cash drawn from the credit cards, landing themselves in a lot of debt !

- Monthly Servicing. All credit card companies expect a minimum level of payment to be made each & every month. As such, you must be in a position to meet monthly repayments of between 3% & 5% depending on the credit card providers requirements.

- Effort Required. It would take some effort to structure the above correctly. Be prepared to spend a day or three doing your research, completing application forms etc.

- Credit Limits. Each credit card provider would need to give you a decent credit limit, in order to make the above exercise worthwhile.

Just some food for thought

Regards


G>

 

[rainyday]

Re: stamp duty loophole now closed

Hi G - I played around with this scam without much success. The real problems were;

- new stamp duty rules as outlined above
- low credit limits being offered by lenders for new cards (e.g. €1200 from UB, up to €3200 from AIB). Only MBNA were willing to give a good credit limit (€17k).

Note that MBNA did offer a very low interest 1.9% on their credit card cheques at that time. The other you have is to use your card to buy prize bonds, which can be sold for cash at the end of a three month holding period.