However, for me, this tightrope isn’t tight at all. Auto-payments pay the bill, and I do the underlying accounting. If I die today, these bills get paid. It’s remarkable to me how I still earn this small income even though now all I do now is open every mail and track key facts in my spreadsheet. At first there was some work to do, but now it’s just tracking for money. Why, that sounds like… a small business! Work hard at first to get it rolling. Then it’s rolling.

You are correct about hidden xfer fees, or hidden terms of many kinds. One must read and re-read very carefully. And even then it’s possible to get bit. This is another reason I don’t recommend this approach to most people.

You are also correct that an unwise or severely pressured person might spend the money. I think the industry is relying on this!

Let me spell something else out: Most lines carry a “universal default” clause… so if you are late on one payment, it’s possible that every line spikes. One needs to be ready for this, because it might happen despite the best efforts. A money market fund can be accessed immediately, whereas CD’s cannot without penalty.

I must correct you on the credit score issue. Mine is 750, which is excellent for someone who borrows. You are correct that those financing or refinancing a home or car, or those seeking insurance, should not engage in arbitrage. But if you pay your bills on time, your FICO is not going to go below, say, 700. You also need to consider that if you’re earning, say, $10/day, whatever financial lost opportunity needs to exceed that for things to truly fail.

Instead of your $10,000, I have $70,000, so I earn $3,500/yr. I have the investment experience required to invest this money in dividend-earning stocks, so my tax is lower, or eliminated in some cases. But you are correct that the basic cost-benefit analysis is not compelling. I do this as a hobby.

Finally, your conclusion: I live in a wealthy neighborhood and earn an uncommonly high wage in my occupation. Yet I bother with this game. Mostly for the amusement, but the money doesn’t hurt. I have another small business where I create roughly equal income. You will find that many wealthy people have multiple smaller income streams… well here is one of mine.

Lastly, if I have the assets as well as the debt, I am technically debt free. Now if I could just find the assets to offset my mortgage, I’d be set.

You aren’t the first to criticize this, and criticism from a personal finance blogger inspired me to get back into it. To summarize my conclusions: It’s no grand leap to wealth, in fact it’s hard work at first and is only appropriate for someone who can handle major financial transactions and deadlines. But I’ve done much larger transactions in the past, and this is just a side-hobby for me. For most, it’s quite enough rope to hang yourself… and that’s exactly what the industry is hoping!

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1. In Australia taking out additional credit doesn’t affect your “credit score” as there isn’t any such thing here.
2. It took me a total of 1 hr to fill in apps, withdraw the 0% funds and deposit them into an online account earning 6.2% pa
3. I’ve setup automatic electronic payments from my bank account to the CCs for slightly more than the minimum payment due each month a few days prior to the due date. So there’s no chance of missing a payment. Also, I done such electronic payments for all my bills for around 5 years now and none have failed to go through on time – so there’s no basis for assuming a CC repayment would suddenly not get processed on time.
4. I’ve borrowed $24,000 at 0%, and invested it at 6.2% – so I’m earning $1,488 in extra interest. Total fees paid are $40 pa for the CCs I’ve used.
5. I have to calculate and fill in the tax item for “bank interest” each year anyhow, so there is absolutely no extra tax effort involved.

All up, this has earned me $1448 (or $1041.60 after taxes) for 1 hrs work. This is an hourly rate equivalent to a job that pays around $2M pa. So I think it’s worth while and don’t think spending this 1 hr of effort on any side business would earn the same amount of return. There’s also plenty of time left to do other things.

Regards
http://enoughwealth.com