Date Posted: Dec/05/2006 2:18 PM
Rating:

EmilM said:

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From my recent (undocumented) AOR I think you will probably be disappointed with the HSBC GM Card. I was approved with a $700 credit limit. I asked for more, and they said they would resubmit to credit analysts, and then sent me a letter the next week saying they weren't going to increase the CL. So basically you're probably going to get the $35 referral fee, but an almost useless amount for BT transfer purposes. My credit score was 760-780 when I did my AOR, and most other issuers gave me 12-20K Credit limits.

Emil

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Thanks Emil. I am going to take your advice and not apply for GM Card.

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I second that. I received couple of pre-approved offers from HSBC and HSBC GM Card and I decided to apply for HSBC card but they denied me a card saying I had lots of accounts open. I applied for Discover card and they instantly and gave me a 3k CL.

Surprisingly I am not seeing any new inquiries on my credit report. I applied for 16 cards and so far I see only 12 inquiries (some cards actually pulled from 2 bureaus). I applied for 3 chase cards and so far they haven't made a single pull. Is this common with chase?

Not all issuers pull the same day I guess.

tgif777 said:Same here. But here is my terms and condition on the balance transfer: However, there is no fee with the 0.00% APR balance transfer offer described above. No mention on the $75 fee. I have printed out the t&c, in case there is a dispute. =)

Hindustani said:This did work. In fact I got an offer for 15k points ($150) and also 0% for 12 months with max $75 fee. I am not sure if I will get the cardoffers bonus as I did closed the main window to get this offer.

Maybe I am confused, probably I too got a no fee offer. Lets wait and see.

lakhania said:Date Posted: Dec/05/2006 2:18 PM
Rating:

EmilM said:

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From my recent (undocumented) AOR I think you will probably be disappointed with the HSBC GM Card. I was approved with a $700 credit limit. I asked for more, and they said they would resubmit to credit analysts, and then sent me a letter the next week saying they weren't going to increase the CL. So basically you're probably going to get the $35 referral fee, but an almost useless amount for BT transfer purposes. My credit score was 760-780 when I did my AOR, and most other issuers gave me 12-20K Credit limits.

Emil

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Thanks Emil. I am going to take your advice and not apply for GM Card.

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I second that. I received couple of pre-approved offers from HSBC and HSBC GM Card and I decided to apply for HSBC card but they denied me a card saying I had lots of accounts open. I applied for Discover card and they instantly and gave me a 3k CL.

Interesting. In this thread UNTFAN got a pretty decent limit on the HSBC GM Card, but a lower limit on another HSBC card. I am looking to do a AOR and debating between the two HSBC cards. I'm leaning toward the GM Card due to the $35 card offer and the lower BT cap.

Card----------------------- Bonus --------------------- BT Offer
Citi Simplicity Rewards---- $100 ---------------------- 0% for 12 months with no fee
Citi AT&T Universal-------- $50+$30 cardoffers -------- 0% for 12 months with no fee
Discover Miles------------- $75+$40 cardoffers -------- 0% for 12 months with no fee

I was just curious is you had tried to balence transfer on any of these and qualified for the no fee balence transfer.

Thanks


Edited: for simplicity

Hindustani, congrats on your AOR! It will be interesting to see the outcome. Do keep us updated.

Has anybody accurately calculated a rate of return for doing an AOR? Yes, I do realize that its free money (and therefore who cares whatever the rate of return is because its all good) BUT strictly for academic curiousity how much is the real rate of return given that with every payment that you need to make on that free money, some amt of principal is being paid

Any quant gurus here? Anybody have any links to a handy dandy financial calc?

I do believe I saw some discussion about this in another thread but cannot find it.

Hindustani said:nmithani said:Hindustani, congrats on your AOR! It will be interesting to see the outcome. Do keep us updated.

Has anybody accurately calculated a rate of return for doing an AOR? Yes, I do realize that its free money (and therefore who cares whatever the rate of return is because its all good) BUT strictly for academic curiousity how much is the real rate of return given that with every payment that you need to make on that free money, some amt of principal is being paid

Any quant gurus here? Anybody have any links to a handy dandy financial calc?

I do believe I saw some discussion about this in another thread but cannot find it.



I remember seeing a UK website with a calculator for this purpose. I am not able to find the link now.

Maybe you meant the stoozing calculator. Your mention of a British site jogged my memory too. The British define(dunno if this defn is official!) stoozing as making free money from 0% credit cards. http://www.whatsthecost.com/stoozing.aspx has a pretty cool stooze calc and at reference.com you can also find a link to quite a detailed description of stoozing and app-o-rama!

Anyway, my unscientific use of that calculator shows that with 150k of free money, making the assumption that one would be putting 70% of this amt into a high yield a/c at 5.25%, one can expect to make around 1883 gross. This amt assumes that no costs(balance transfer fees) were incurred. Again let me repeat, this is an unscientific estimate but I'd be happy to provide the numbers I used in getting to this estimate(and there's every possibility that my estimated numbers are not correct)

062703 said:nmithani said:Hindustani said:nmithani said:Hindustani, congrats on your AOR! It will be interesting to see the outcome. Do keep us updated.

Has anybody accurately calculated a rate of return for doing an AOR? Yes, I do realize that its free money (and therefore who cares whatever the rate of return is because its all good) BUT strictly for academic curiousity how much is the real rate of return given that with every payment that you need to make on that free money, some amt of principal is being paid

Any quant gurus here? Anybody have any links to a handy dandy financial calc?

I do believe I saw some discussion about this in another thread but cannot find it.



I remember seeing a UK website with a calculator for this purpose. I am not able to find the link now.

Maybe you meant the stoozing calculator. Your mention of a British site jogged my memory too. The British define(dunno if this defn is official!) stoozing as making free money from 0% credit cards. http://www.whatsthecost.com/stoozing.aspx has a pretty cool stooze calc and at reference.com you can also find a link to quite a detailed description of stoozing and app-o-rama!

Anyway, my unscientific use of that calculator shows that with 150k of free money, making the assumption that one would be putting 70% of this amt into a high yield a/c at 5.25%, one can expect to make around 1883 gross. This amt assumes that no costs(balance transfer fees) were incurred. Again let me repeat, this is an unscientific estimate but I'd be happy to provide the numbers I used in getting to this estimate(and there's every possibility that my estimated numbers are not correct)

70% of 150,000 is basically 100,000. $100,000 @ 5.25% is $5250.

Absolutely! but can 5250 be really claimed as profit? With every minimum payment that you make, you're paying [Principal + Interest] and the interest that you pay is likely higher than what you're collectiong in a high yield account. So essentially with every payment pieces of that free money are being returned to the lender. Granted you're also collecting interest but the interest that you collect does not completely offset the PI that you're paying out each month.

Update: I looked at the stooze calc numbers again and do believe that they're incorrect BUT never the less, my original point still is true. The profit to be made from an AOR is not = to the APR/APY of the high yield account. It most certainly is less, question is how much less?

Its been my experience(folks please correct me if I'm wrong here) that lenders charge essentially 2% of outstanding balance as minimum payment every month. So for example you started out investing 105k of 150k free money(70% assumption), the very first payment will be 2% of 105k which comes to $2100.00. In a high yld saving a/c at 5.25% the int you will earn on 105k after the first month is (approx) $460.00. So you earned $460 but had to pay out $2100 and so on.....

So technically, you cannot possibly even make 5250 gross since the free money will reduce every month.

cbm128 said:Your minimum payment due is 2%, but the interest you pay for 0 % BT offers is $0.

You are correct in that the return on AOR is not simply the interest rate * outstanding balance. But the largest expense is the tax due (assuming a high income bracket) on the interest YOU make, not interest that you pay to the card issuer on money you owe on a 0% BT offer.

Agreed, that the payment you make each month is still coming out of free money and not out of your pocket. My original question essentially was, what is the $ value of real solid gross profit that one can expect to make by getting 150k of 0% offers for 12 months. From the several threads that I have read(on FW and other forums) it looks like quite a few people are under the misconception that their profit from this exercise is a simple fn of HYS Rate * Amt of credit used and this like you agreed is simply not the case.

062703 said:No, the misconception here is your definition of gross profit. Gross profit of your scenario is roughly $5250. NET profit would be after taxes and everything else if there was any.

Gross profit is taken into consideration after you factor in fees or interest paid and in this scenario there weren't any.

Respectfully I must disagree that the gross profit in my scenario is 5250. The ONLY way that gross profit can be 5250 is if I got the privilege of investing 105k for 1 yr in a high yield savings account and did not have to make a single dollar in minimum pmts for that entire yr. In this scenario I'd collect 5250 + 105000 from the HYS and cut a check for 105000 to the lender leaving me with 5250 gross(before fees, taxes, etc).

If I'm required to make minimum pmts on the 105000 that I have invested in a HYS, statistically(with the numbers in my example) I cannot make a gross profit of 5250 since the amount of free money that I have invested will reduce every single month after starting out at 105000. In my earlier post, the balance at the beginning of the 2nd month will be 105,000 + 460 - 2100 = (approx) 103,360, the balance at the begining of the 3rd month will be 103,360 + 453 - 2067 = 101,746, etc.

Since the starting point of 105,000 is being whittled down each month, the int earned for 12 mos cannot possibly equal 5250. Essentially if I extrapolate this calc 10 more times, I will have answered my original question BUT I was hoping that somebody had already done it AND done it in a more precise fashion than the way I'm doing it.

I'll make an attempt to extrapolate in MS Excel and see what I end up with.