How Your Credit Card Can Allow You To Earn Interest

The First Step: The Zero Percent Offer

First you need to find a credit card company offer which lets you have money for an extended period of time at as low of an interest rate as possible. Zero percent would be optimal. And if you can get that rate for six or nine months, you'll be in good shape.

The Second Step: The Cash Advance

Let's say you're able to get a cash advance on this introductory rate for $10,000. Now you're still going to have to pay a three percent fee on this money, so it's already costing you $300. However, if you have the opportunity to deposit that money into any kind of interest bearing account that pays a decent rate, this is your chance to make some money courtesy of the credit card company.

Money Fund, Savings Account, REIT or Bond Fund

There are not many savings accounts paying too highly these days, however, you can find some offering between four and five percent. Even better are money funds or bond funds, although some of these require minimum investments. If you had a bond fund paying around five percent per month and you kept the money in the account for the full six or nine months, you'd come out well ahead. You could also choose to take the money and buy stock or a mutual fund, make a profit and then sell the stock or fun in time to repay your loan.

Just Don't Be Late with Credit Card Payments

The detail you cannot miss, of course, is paying off the $10,000 back to the credit card company without being late. You want to make sure you don't have to pay any interest or late fee that would wipe out the money you made from the interest bearing account.

The Dangers of Credit Investment

The biggest danger you face in trying such an investment of timing is losing the money you borrow from the credit card company. The higher interest rate you are earning, the riskier and less assured the return is. That's the simple law of investment. If for some reason you were to lose the money you borrowed from you credit card, you would not only owe back the original $10,000, but now you would in addition have to pay a high interest. And if you're late repaying, you could trigger a default option credit card companies have that gives them the right to raise your interest rate through the roof. They will also report the negative information to the credit bureaus.