“Lack of money is the root of all evil.”

This was only known to a small group a couple years back.  Those that knew about it were able to make over $10,000 per year plus free plane tickets, hotel stays, iPods, PDA’s, and other kinds of handy perks.  What we are talking about has been on CNN Money, Fox News, and most recently, featured on the Wall Street Journal.  The idea in discussion is known as App-O-Rama.  When this idea is couple with the simple economic idea of “interest rate arbitrage,” it can make you risk-free money the smartest way: by using other people’s money.

Here is the simple logic: Banks and Credit Card companies compete fiercely for customers by offering cash back bonus, waive fees, free plane tickets, free cash, and most commonly – 0% APR introductory offers.  If you get 5 credit cards with a total of $100,000 in credit limit and 0% APR for the first 12 months, you can put the $100,000 in a high yield savings account.  Just pay off the credit cards at the end of the 12 months and you earn $5,000 or more.  You will not get rich off this but as one of the 71 year old partaker commented: “It does pay for my vacations.”  The hard core individuals are known to have over $500,000 of credit card money in their banks.

Now, in order to get approval for all the applications, one needs to prepare ahead of time.  You will need to have a good credit score at the time of the application frenzy.  The goal is to apply for 10, 20, or maybe even more credit cards within a few hours (like a Fire Sale in Live Free or Die Hard).  The rule is:

Get approval before your multiple applications damage your credit score!

Your credit score will drop as a result of the new credit cards and credit pulls, so this is not for those getting ready for a mortgage.  For the rest, your credit score will get back to the previous range as you pay off your debt towards the end of the term.  You will probably end up with a higher credit score because you have now proven to be a responsible person that pays off debt in time!

1. Get your credit score – you should at least be in the low 700’s to do this.
2. Mark your list of 0% Introductory Credit Cards - focus on cards with long 0% durations.
3. Transfer your fund to high yield bank accounts – different banks if needed to diversify your fund.
4. Pay your credit cards on time and pay them all off when the 0% promotion ends.