Citi e-Savings 4.5% APY for App-o-RamaWhat exactly is APP-O-RAMA? It is the term that has been coined for those that take full advantage of credit card balance transfers (and the respective banks) in order to make money by taking 0% “loans” and getting up to 5% from high yield savings accounts. In essence, this is interest arbitrage that almost anyone starting with good to excellent credit can take advantage of.

Be forewarned: doing app-o-rama will temporarily cause your credit rating to be lowered since every time you apply and open a new card, you’re credit rating reacts negatively. This is due to the fact that you now have a higher total exposure to credit and FICO, the credit score people, so not know how you will react to this extra credit and assume you will have a higher chance to default. But we’re all here, and we’re all smarter than that! Over time, as you manage the credit appropriately and pay the balanced off, this can in turn improve your credit now that you have proved that you can handle higher credit exposure and debt ratios.

So, here’s the common steps to do app-o-rama:

1. Apply for numerous (the number is up to you) credit card offers that offer 0% (or very low) balance transfer rates. You can find and compare top Balance Transfer offers here or I suggest the following credit cards with 0% and no fees:

It is very important that you apply for the cards all at once. This is important since every application show up on your credit report and can negatively affect subsequent application. However, the loophole is that it takes a few days to show on your credit report. Thus, you have a window of opportunity to take advantage of multiple credit cards.

2. So, now you should’ve gotten instant approval or approval after a few days. Lo and behold you have tens of thousands of dollars available in your bank account! Be careful - I cannot stress enough how important it is to have restraint and not spend any of this new found temporary (and not real) wealth.

3. Take your money and deposit it into a high yield savings account. I would suggest the following:

  • Citibank e-Savings Account - 4.50% APY
  • Washington Mutual Savings Account - 5.0% APY
  • ING Direct 9 Month CD - 5.25% APY (no flexibility to withdraw within 9 months)

4. Watch the interest payments roll in!

Let’s assume we managed to balance transfer $30,000 total and put it into the Citi e-Savings Account at 4.5% APY.

  • Month 6 = $30,681 (That’s $681 pure profit!)
  • Month 11 = $31,260 (That’s even more!)

So, in 11 months we made $1,260 for doing absolutely nothing. Not a bad deal if you ask me.

5. Repay the credit card debt before the interest rates kicks in at up to 14%. You may ask why I stopped at month 11 on the above calculation. Well the answer is easy. I want to make absolutely sure that the payment to the credit card companies clear on time in advance of the bill date. A lot of profit will be sucked up if you all of a sudden pay 14% on $30,000.

6. If you are wise, reinvest the profits to accrue even more interest…but buy yourself something nice as well.

Stay tuned for more money making ideas. Don’t let the banks take advantage of you, take advantage of the banks!

Share This


Tags: , , , , , , , , , ,