M is for Money

My mom gave me a $100 bill for Christmas. This doesn’t sound unusual, except I’ve never gotten cash from her before. My family seems to have a strict taboo against giving money as gifts. But as noted in the card, the money was to help pay for C’s surgery.

C had his surgery the Monday after Christmas. The vet used a laser to cut away the excess tissue that was blocking his throat. The $1400 bill was charged to Care Credit, which is a type of credit card for medical expenses. They have various 0% financing plans. Mine is no interest for the first year, after that the interest rate is around 9%.

I didn’t use the $100 bill to pay for C’s surgery, instead I put the money in my FNBO savings account. I have budgeted to pay off the surgery this year, but I will only pay the minimum due each month. The difference, $90 per month, will be put into savings. Once I have the balance saved, around the first of December, I’ll pay the account off. When interest rates are good this is an easy way to make extra cash.

Credit card arbitrage is a way of earning 'free money' from interest. You take cash as a 0% balance transfer offer and put it in a high yield savings account. Make the minimum payments each month and pay off the balance before the 0% offer expires. This has been a popular way of earning extra money during the last few years, when credit was loose and limits high. I personally have never tried it, but my method for paying off the Care Credit balance is a variation on the theme, a sort of reverse arbitrage.

Free or low cost balance transfers are now hard to find, but cards offering an initial 0% on purchases still exist. You could use a no interest card for your family’s spending for a year, only paying the minimum each month and banking the balance. You need to be organized and never late with your bills for this to be a success. The longer the 0% offer, the longer you have to earn interest.

BIG FAT WARNING - If you have a debt or spending problem, do not try this.

Unfortunately rates are low right now, so the amount you earn is limited. Also, this method doesn’t have as high a payoff as traditional credit card arbitrage. Rather than having lots of money earning interest from the start, you are slowly building up the savings balance each month. But, it is still an easy way to earn some free money and once interest rates recover, your earnings will improve. It is another tool to keep in mind when you are looking for that extra buck.