Yeah, you read that right.

I was poking around the Carnival of Debt Reduction over at the No Credit Needed Blog today, and found some interesting tidbits. Via Debt Free Revolution and the Great Credit Card Debate, I found My Dollar Plan, who has almost a quarter of a million dollars in credit card debt.

Yowzah! Is she crazy? Why so much?

Madison (My Dollar Plan) uses 0% introductory credit card offers to launder her credit card debt, or what’s known as credit card arbitrage. For example, instead of getting a car loan at x% interest, she puts it on a 0% credit card and saves money on the interest. Instead of paying down a credit card balance, she puts it in savings and earns money. She makes and saves almost $12,000 a year doing this! When the introductory offer is over, she launders the money (my term) with a new 0% credit card offer.

Quite an interesting idea, although I don’t recommend it for most people. I think the average person has enough trouble handling their debts and credit cards that they don’t need to juggle 89 credit card accounts like Madison does. You’d be better off following some of the strategies and tips on the blogs in the Carnival. However, I have used 0%/low APR intro offers myself in the past, and this post actually prompts me to think it may be time to do it again. The trick is to not use this as an excuse to take on more debt, but to save money on the interest payments and (usually) lower your overall debt. Although Madison is using it to NOT lower her overall debt (she does pay just over the minimum payment due on the cards each month), she’s keeping a tight watch over this strategy and using it to make/save thousands of dollars a year.

Think hard before using this strategy. Chances are, if you’re bad with credit cards in the first place, you’ll be even worse with this approach!

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