I would like to know if what I am about to write is possible:
Go to the bank, apply for a huge loan, and when they ask me what it is for, I tell them it is for one of their high interest bank accounts. I put the money in there for a year, at the end of it, re-pay the loan, pocket he interest.
No?
Ok how about this. Apply for a student loan, which here in Australia, anyone who is a full time student can get (and it’s also interest free). Get similar loans from banks, put it all in to a high interest account. One year later, pay back the cash, pocket the profits.
No?
(BTW… I am a poor uni student dreaming up ways to make some easy money. I have no assetts to speak of.)
Would you mind telling me where a bank is that charges less interest for a loan than it pays on an account, at the same time? I really would like to know how they stay in business.
You can’t convince me that:
1). Your “interest free” student loan isn’t somehow subsidized, by, say, the government.
2). in any case, I can’t believe that when they give a student loan they let you convert the entire loan to cash, instead of making a check out to the institute you claim to attend. I was only allowed to keep a certain amount of my student loan for housing costs. The rest went directly to the college.
The only real way to get a lot of money out of the bank without paying it back is to take a gun into in and hold it up.
Which you can’t do either because you Aussies foolishly gave up most of your good guns. You’re shit out of luck, Doc! Go back to college and get a job!
I think that what pkbites was trying to say was that there is no free lunch. If there was such an easy way to make money like that it would either be illegal or impossible. It takes money to make money. Get a job, then invest.
In the US, people grudgingly or unknowingly accept Canadian change for the same value as their American counterparts. So, I would go to Canada and buy $1000 US-worth of Canadian quarters, about $1500 Canadian. Then bring them back to the US and use them where I could (vending machines wouldn’t take them of course). After I’ve used them all, I’ll have gotten $1500 US worth of goods and services for $1000.
Problem is, there’s no quick way to unload them. Merchants will overlook one or two per transaction. But if I try to buy a Value Meal #3 with 20 Canadian quarters, they’ll probably balk. And banks would only give me the exchange rate of the day, minus a fee.
I have a buddy who claims to have pulled off an interest rate scam in the early 80s. It supposedly worked like this:
At the time, American Express would let its cardholders buy AMEX travelers checks, with no fee, with their AMEX cards. You then have as many as 50 days to pay them back, if you time things carefully. Effect: Interest free loan for 50 days. Second effect: Your credit rating goes up and up and you can buy more and more travelers checks.
My buddy claims that he put himself through grad school this way, then once he got a job, he paid off his “interest free loan.” Alternatively, you could invest the money in a CD account and pocket the interest. Note that to make real money, you’d have to be buying LOTS of travelers checks.
In any event, my buddy says that shortly after he graduated, AMEX got wise and stopped letting people buy travelers checks with credit cards.
There are a couple of ways you could pull this off:
Get a bunch of credit cards. Rack one up by taking all the money in cash, then invest the money in something that pays good interest (probably won’t be found at your bank). Be sure to read the fine print on your card to ensure that interest and finance charges don’t accrue from day 1 when you do a cash advance. If they do, find a friendly merchant to help you do a $5,000 “purchase” (he then gives you the cash).
When the bill comes, in about a month, transfer the balance to one of your other cards that offers something like 2.9 APR on balance transfers for the next 6 months. Make minimum payments until that 6 months is almost over, then transfer balance to another card.
The only other way I can think of is for you to become a lender yourself. My grandmother buys up other peoples’ mortgages, essentially giving them a break on interest (imagine being dumb enough to lock into a mortgage rate when they were 18 percent or higher), then they make the payments to her. Bank loans are higher than they were, but you should still be able to get one for 12 percent or so. Between the 12 you’re paying and the 18 you’re getting is where you make the dough.
It can be done much more simply than this, if you actually know somethign about where you’re putting your money.
Frex: About three months ago, I took out a $2000 cash advance on a CC that charges 9.9% interest, plus fees ($30). I invested the money in a stock which was then at 1.25. The stock hovered for a while but then, as I’d expected, started growing–it’s right now at 2 1/8. When it hits $3 a share, I’ll sell off about 40% of the stock and send that $2000 back to the credit card company. At that time, I will have lost about $100 to interest and fees, and gained $3000 which I can then invest as I please with no fear of actual loss.
Doing what you’re suggesting, I would have ended up gaining maybe $50 or $60… and spent ten hours trying to figure out where to put the money next. My time’s worth more’n $6/hr, so I can deal with the minor loss.
I’ve done something similar to this by accident. It works as long as you have good credit.
Open a new credit card, preferably one that does balance transfers upon opening and has a good rate (be very careful here, a lot of cards that offer 1.9% and less introductory interest charge 9.9%+ on a transfer). I have recently seen balance transfer rates as good as 2.7 for 9 or so months.
Have them send a transfer check to another of your credit cards for more then you owe that card. Once it’s been received, call that bank and ask them to send you a check for the credit on your account. There are no fees (other then transfer terms of the new card, which are usually a lot better then cash advances).
So, you have about 8 months at 2.7 then it goes up to at least 9.something. Given that the amount is probably not more then $5000, was it worth it? Depends on the investment, but I’d be cautious about doing one that isn’t insured. Some (NOT ALL) banks have privately insured their money market accounts, if the rate is good… but still, 15-20% (minus 3%) for 8 months on $5000 isn’t that much. If you had a stock you were sure would go up… but you’d be screwed if it went down. Probably is easier to set up then a margin account though.
I wasn’t talking about a cash advance, I was talking about misusing a balance transfer to get better terms then a cash advance. Quite possibly violates both credit cards’ agreements, but that wasn’t the point.
Besides, those bastards will let you take cash advances in a casino. So if they do disallow using credit for real investment then they are a bunch of two-faced, conniving, lying bastards. Wait a minute, we already knew that… what interest do you think THEY PAY YOU when you have a credit on your account?
I don’t think I’d be taking out a loan for something that doesn’t have a guaranteed return. In the aforementioned case, what if the stock went down? You’d be losing money, not even making the $6/hr that my scheme would supposedly bring. Don’t tell me it was a sure thing. If you were 100 percent accurate on stock picks, you’d be too busy making money to post here.
