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Credit Card Arbitrage: How Does It Work?
Credit card arbitrage is a popular strategy for making money. Here’s how it works…
A credit card company offers low or no interest rates as part of their introductory offer. The arbitrager borrows money at the low rate. And then reinvests that money into T Bills or a high-yield savings account.
They pay-off the card before the introductory offer expires, avoiding any penalties. And they keep whatever interest was earned as profit.
I’ll walk you through a real-life example of how this could work.
As well as sharing whether or not this strategy is worth the effort.
How Credit Card Arbitrage Works
I recently received an email that the Discover It Cash Back Credit Card is running a special offer.
Users pay 0.9% APR on all new purchases for the next six months.
An arbitrager could use their card to buy a Visa gift certificate, avoiding any cash advance penalties that the credit card issuer might charge.
Then, the arbitrager could deposit the funds into a short-term T Bill or high-yield…
