Using a 0% Balance Transfer to fund a CD

Wednesday August 27, 2008
One of my favorite blogs frequently brings up the topic of using 0% Balance Transfers from credit cards to fund other low risk investments. Jonathon, the author of My Money Blog, has written up an entire series of posts on the topic and backs his methods by having borrowed an impressive $30,000 to put to work. He earns $1000+ dollars a year on this investment approach, but also realizes that in doing so his FICO score takes a hit since it lowers his Cash flow to Debt ratio.

Although I mostly likely would never follow this investment approach, I thought it would be fun to crunch the numbers and see what you would end up with if actually took the leap and borrowed against your credit card to stick in a low risk investment, like this 5% 12-Month CD offering by Washington Mutual (WaMu). read more...