Bah. I still haven’t gotten my cancellation letter from Citibank regarding the discontinued Dividend card. I don’t want to assume, but I think it’s likely just a matter of time. According to the people who have the letters, you still get 5% until October 13th, so another month and a half. Here are what I see as the top 4 3 current alternatives, in no particular order as each has it’s own pros and cons:

1) HSBC Direct Rewards Card

Pros: 5% back at groceries, gas, and drugstores with $500 annual cap. 1% back on purchases over $3,000.

Cons: Rewards only paid out annually. Only 0.5% on first $3,000 of purchases. Relatively unknown card issuer. People report having FICOs of above 700 and still being denied.

2) Citi Driver’s Edge Platinum MasterCard

Pros: 6% back at groceries, gas, and drugstores with $1,000 annual cap. 1% back on all other purchases. You also get Drive Rebates of $100 for every 10,000 miles driven, increasing potential cashback to over 7%.

Cons: Rewards redeemable in cash only towards car expenses (tires, repairs, parts, etc.) or student loans. Otherwise redeemable as gift cards or gas cards. 6% only for first 12 months, 3% after that.

3) Chase Cash Plus Rewards MasterCard

Pros: 5% back at groceries, gas, and drugstores with $300 annual cap. 1% back on all other purchases. $50 bonus after first purchase.

Cons: I thought they killed this card. Like the Citibank card, there is no mention of it on the website. This specific application link appears to work, although it is unknown if the rewards on this card will also become extinct in the near future.

I already got the Citi Driver’s Edge card before all this Dividend doom and gloom, so I’m already switched. It’s working out well since I’ve already sent in my first mileage documentation and I’m going to be driving a good deal this summer. According to my calculations, I’m getting over 7% cash back due to the mileage rebates. Instead of trying to time it to get free tires, I’ll probably just take the easy route and get gas gift cards.

A possible strategy to get to $50 cashout mark for Dividend owners is to buy some gift cards at the grocery store you usually shop at anyways. For example, I could just buy a $100 Safeway card, get the $5 back, and wait until after October 13th to use it.

Here is the 3rd half of questions submitted to me. Yes, 3rd half. I thought I could finish last time, but some of the comments had 6 questions within one comment 😉 Not a problem, just took another post. This should just about finish my series on How To Make Money From 0% APR Balance Transfers (index of all posts).

[Read more…]

Here is the 2nd half of questions submitted to me. 1st half is here. All are part of my series on How To Make Money From 0% APR Balance Transfers (index of all posts). And off we go:

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Alas, could it be true? I was alerted two days ago that you can no longer apply for the Citibank Dividend card which is one of my favorite rewards cards. If you try to apply, you get this:

Changes are underway to the Citi Dividend Card, so we are unable to process your application at this time. Please check back soon for more details…

At first, I thought “no big deal, probably just temporary”. But according to commenters, Citi says that the card is discontinued and there are currently no more straight cash-back credit card options. No more 5% back!! I would be more distressed, but I just switched over to the Citi Driver’s Edge Card which gives 6% back on gas, groceries, and drugstores for a year, but it’s via car expenses or their ThankYou points. Instead of going for the tires though, I may just cash them out for gas cards for the convenience. After that, looks like I’ll have to start looking for another card…

Ok, I’ve been thinking of ways to handle all the questions on this topic I still haven’t answered in my 4-Part series on How To Make Money From 0% APR Balance Transfers. I decided simply to answer them all, Cramer-Lightning-Round-style. Questions may have been edited for length, spelling, and clarity. Remember, the answers are from me – one imperfect man with an opinion.

Here’s the first half:
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[This is Part 4 of an ongoing series about how to make money from 0% APR balance transfers.]

So now you have the money and are ready to earn some interest. How do I set this up so I don’t spent all day on it?

Overall, It’s Easy
Seriously, when people say it’s too much trouble to keep track of, I just don’t understand. It’s a credit card bill. I’m sure most people already get 5 bills a month. You get a bill, you pay the bill. What’s so hard about that? The only thing slightly taxing is to remember to pay it off completely by the end of the 0% period.

Put another way, the risk here is in your control, unlike stock market risk or even real estate. If you make your payments, your profit is virtually guaranteed.

Now, there are three main objectives here – pay the minimum payment on time, keep earning max interest, and then pay off the entire balance before the 0% period expires.

Minimum Payment Setup
There are two basic ways to pay your credit card bills, either “push” them the money via check or online BillPay, or have the credit card compnay “pull” the money out of your bank account:

Manual Push
This is what I do. It’s a bit old-fashioned, but it just makes sense to me. The 0% balance transfer is just another bill I have. I get the paper (or online) bill, put it my ToDo box, and then within a few days I pay it online with my bank’s online billpay. I can schedule the payment ahead of time, and the bank tells me when the payment will arrive. This way, I keep earning interest on my money as long as possible. You may want to test out your online billpay system if you don’t trust it just yet. You could do this with checks too, but why waste the stamp these days?

Automatic Push
Since your first minimum payment will be the largest minimum payment (unless they change it on you), you can just try to send the same amount every month at the same time. Bill due dates are usually about the same time of each month. For example, let’s say my MBNA card is due from the 25-27th of each month and the first payment was $245. Due to weekends and stuff, I could schedule a repeating monthly payment of $250 every month on the 20th.

This way, it’s all done for you. Every month your job is to just to glance at the bill and make sure the minimum payment is not bigger than your previous payment, which would indicate they changed the minimum payment rules (uncommon, but possible).

Note that both of these is assuming you use a checking account with billpay. If you can absorb the minimum payments using your usual checking account, great. Nowadays Citibank and Washington Mutual also have savings accounts earning 5% APY right now. I just move money into my checking account twice a month from savings to cover bills.

Manual Pull
This method has the benefit of being able to use high-yield savings accounts. You must make sure that they accept such external requests (Emigrant Direct no longer does.) If this is the first time doing this, I try to pay very early the first month and ensure that it posts correctly.

I’ve done this with HSBC Direct, WaMu, and others. You just have to give your credit card company your bank’s routing number and account number. Then each month, after getting the bill, you log in, and have them take out the minimum payment. You can also specify the posting date – again, waiting until the due date gives you more time earning bank interest.

This method allows you to just move all the money into a high-yield account and have it sit there the whole time. You just pay the credit card company back a bit of their own money each month, and watch interest accumulate.

Automatic Pull
I thought more credit card companies did this, but I just did a quick look and didn’t find any. The idea is for you to authorize the credit card company to pull out a set amount (the minimum payment for example), every month from your savings account. No fuss, no muss. I dislike the lack of control here, but others may not mind.

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Payment Reminders

There are several ways to remember to pay your bill:

1) Most credit card companies also offer free email alerts to remind you to pay your bill. For example, I think I have one set to remind me 5 days before the due date.

2) If you use Outlook or a PDA, just stick in recurring monthly reminder on there. Use Snooze as needed, but not too often 🙂

3) I used to use Yahoo Calendar, but now my favorite is Google Calendar. Both allow you to set up both e-mail and SMS text message reminders to your cell phone, which I like.

Pin down the period end and set multiple reminders
You want to make sure of the end date of your 0% APR. Check the fine print. Call your card issuer and confirm. It should coincide with your statement cycle end date. If the CSR doesn’t sound confident, call and speak to another one.

Examples: The Discover Miles Card says “0% until the last day of the billing period ending during April 2008”. So if your billing period ends on every 23-25th, then be sure to pay it off by April 23rd, 2008. Give yourself a buffer, maybe have it paid off by the 17th.

The Citi Home Rebate Platinum Select MasterCard says “0.00% for 12 months from date of first balance transfer.” Check your statement to find out the actual date for the balance transfer.

Set multiple reminders! I usually make a little list of deadlines, which I check against each month whenever I get a bill.

Ok, I think that’s the bulk of the walkthrough. If you’re ready, use one of the cards I mentioned or see this list of the best cards with no-fee 0% balance transfers.

If you still have some concerns, I made a list from your questions and gave my answers. See Part 1, Part 2, and Part 3. Please read through it, I think 95% of questions should be answered by the end. If not, leave a comment. Thanks!

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Skip To Another Part
I. Introduction and Warnings About 0% Balance Transfer Offers
II. Scouting For 0% Balance Transfer Offers
III. Application Tips and Getting Cash From 0% Balance Transfers
IV. Setup And Management of 0% APR Balance Transfers
V. Best Pre-Screened No Fee 0% APR Balance Transfer Offers

[This is Part 3 of an ongoing series about how to make money from 0% APR balance transfers.]

Before I start, someone said that it’s too easy with Citibank, and can I do an example with another issuer. Sure. Let’s run through it with the Discover More Card this time.

First, you do all the scouting and find the following:

Annual Fee: NONE

Balance Transfers APR: 0% until the last day of the billing period ending during May 2009*, then the standard APR for purchases

Annual Percentage Rate (“APR”) for Purchases: 0.0% until the last day of the billing period ending during November 2008;* then the standard APR, a rate between 10.99% and 18.99%**

BALANCE TRANSFER FEE: 3.0% for each balance transfer made under this offer, with a minimum of $10 and a maximum of $75.

Ok, no annual fee, 0% APR until May 2009 (as of this most recent update, perhaps even longer than 12 months) on balance transfers (note the specific wording though, also the exact date may be different depending on how long ago I updated this post). The balance transfer fee is 3% capped at $75.

This means if you transfer $7,500, then $75 is only 1% of that balance. Transfer $15,000, and that’s only a 0.50% fee, and so on. You can still make this up and create profit.

Application Process
Credit card applications are pretty much the same all around, but there are some things to note.

Housing Information
They always seem to ask if you rent or own, your housing payment, and how long you’ve stay at your address. Part of this is probably identity verification, and part of it is screening on their end. So I wouldn’t lie here because you think owning is better. Any mortgage should show on your credit report anyways. I both rent and move a lot, and I haven’t had any problems getting cards.

Employment Information
Same deal, tell the truth. I’m not sure about all companies, but often if you are a full-time student, credit card companies will be more lax with you and still give you a card even with low income.

Household Financial Information
This is important. And vague: Household Annual Income. This number is important. For one, most low-interest cards like this that target people with good credit have a minimum income requirement. It may not be that high but it’s there.

Second of all, it helps determine your credit limit. For the purposes of this activity, you want the highest credit limit you can get. In a way, I think it’s intentionally vague so they can offer you more credit (and earn more potential interest). So you want to say your household annual income is as big as possible. Include everything – your parents income, your roommate’s income, interest income, dividend income, money from grandma. If you can get into that next bracket, all the better.

In this case, Discover is upfront about it:

Except for full-time students, you must have a minimum annual household income of $15,000 to be considered for any Discover Card account. For highest credit line, please include all sources of annual household income.

There are two screens and 7 steps where you enter your information. Click on ‘Submit Application’ (don’t worry, it’s not the last page), and the next screen will ask you for balance transfer information.

Getting Your Money

As part of the application, they will ask you if you want to make a balance transfer, how much you want, and where you want it to go. They want your balances!

How much you want?
When requesting a balance transfer amount, I recommend for reaching for the sky. Ask for double or triple what your current limits are, or even higher. They won’t reject you for asking for too much, in the end they get to decide what kind of credit limit you can get. For example, if you just ask for $5,000, maybe they’ll just give you $5,000 or $7,000. But if you ask for $10,000, they may just give it to you as that means more guaranteed business for them.

When I applied for the Discover Miles Card, I asked for a $15,000 in balance transfers and got an $11,000 limit. I only had one Discover card a few years before this one, so I was pretty happy.

While you may want to ask for the balance transfer with the application to haggle a higher credit limit, other times you may want to put it off. This is so you can transfer some of the credit limits on your other cards within the same issuer in order to get a much higher limit. For example, if you got a $10,000 limit on your new AT&T/Citibank card and already had $10,000 on another Citi card, you could make it so that you had $19,000 on the new card and leave $1,000 on the old card.

Getting the Money Directly
Some card issuers may allow you to issue yourself a check for the balance transfer amount, or even deposit it electronically into your bank account with bank account and routing number. The latter is preferred since you’ll be losing potential interest while the check is in the mail and waits to clear. Two banks I have gotten direct checks are AT&T/Citibank and Chase, but this may vary. This is by far the easiest way to get your money.

Citibank is the easiest to get a check from. Click here for a step-by-step guide on how to request a balance transfer check online after you get the card.

Indirectly
If they don’t, then you’ll have to do it indirectly. This will require another credit card, and it doesn’t even have to have a balance. Let’s say you request a $10,000 transfer from Card A to Card B. Once approved, it will show up on Card B as a $10,000 payment, and you will now have a negative (credit) balance on card B. If you make a lot of purchases you could just use it up that way, but most people will have to ask for a credit balance refund in the form of a check.

It matters what card issuer you use for Card B. AT&T/Citibank is the easiest to transfer TO as well, in the fact that you can request it online directly and without even human interaction. Here is a screenshot of the menu option you should look for:

I have also done this with American Express by calling in. Sometimes they will make you wait for a few days to make sure the payment clears before issuing the check. Now, if you send a big fat payment to a card that you never use, they might become suspicious. I have sent it to my American Express Starwood card which I already use regularly as a rewards card, and they’ve never given me a hard time.

Do not send it to MBNA, they may reject the transfer. I have also reported some success with Discover in the past, but I am not so sure about Chase, Advanta, and others. If you do try one of these, it’s better to use a card that already has a balance on it to fly “under the radar”. Honestly, I almost always just use AT&T/Citibank, switching to a different Citi card sometimes if I do more than one a month. Last time I used American Express was mainly an experiment to make sure they still did it.

With my Discover Miles card, I sent $7,000 to Citibank and $7,000 American Express. American Express sent me a check for the overpayment after verifying the balance transfer with Discover, which ended up making their check arrive about 4 days later than Citibank’s.

Either directly or indirectly, you should have money now in the form of a check or online transfer.

Where do you put the money?
If you already have higher-interest loans, like a home equity line of credit or other credit card debt, you could just move it there.

Otherwise, I recommend putting the money into an FDIC-insured or similarly safe checking or savings account that is relatively liquid. Here are some online savings account options, and this is my current setup to maximize interest. One reason why is that you must still make the minimum payments on the card, with are usually about 2% of the principal. So on $10,000 that would about $200 a month, decreasing each subsequent month as you pay it down. The second reason is more practical – if somehow you make a late payment, you can minimize the damage by simply paying the entire balance off immediately. Even at 20% APR, if you can pay it off in a few days the damage won’t be devastating.

Of course, some people may place it into bonds, dividend-yielding stocks, or other investments. To each their own, but I would not take that kind of risk for short-term loaned money.

Next up: Setup and management of the balance transfer. How do you manage the payments and due dates?

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Skip To Another Part
I. Introduction and Warnings About 0% Balance Transfer Offers
II. Scouting For 0% Balance Transfer Offers
III. Application Tips and Getting Cash From 0% Balance Transfers
IV. Setup And Management of 0% APR Balance Transfers
V. Best Pre-Screened No Fee 0% APR Balance Transfer Offers