Author Topic: Convenience Check Arbitrage  (Read 15196 times)

rawraw

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Convenience Check Arbitrage
« on: September 28, 2013, 10:45:51 AM »
Hey guys!

Figured I'd update on my convenience check arbitrage.

NSR Stats:
Average Age of Notes: 140.14   
Weighted Interest Rate: 14.20%   
Return on Investment:13.44%

Credit Card Balance
Initial Balance: $7,500 @ 3% flat fee for roughly 2 years
Current Balance:$4,954.50  (Took a few months to understand how to achieve my credit card act scheme, resulting in over payments.)
Current Outstanding LC Balance:$6,975.00

Credit Card Act

The credit card I used for my arbitrage has a clause where if the balance isn't paid in full each month, interest is charged on the average balance.  Given the fact I get 5% cash back on categories I spend every month on that card that no other card offers, I am currently charging up to the maximum spend threshold for 5%.  The current apr is roughly 1.17 percent a month.  So I'm paying 1.17% percent and earning 5% on all charges, netting  3.83% profit that I wouldn't otherwise generate.  First time I've ever paid interest on a credit card, but hey -- it's part of the game :) 

So currently I'm generating around a 11.50% spread so far.

Fred

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Re: Convenience Check Arbitrage
« Reply #1 on: September 28, 2013, 12:08:17 PM »
So currently I'm generating around a 11.50% spread so far.

For 1-hr/month and $0 outlay, nice!

brycemason

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Re: Convenience Check Arbitrage
« Reply #2 on: September 28, 2013, 12:16:06 PM »
Nice work! I may have to do this. Do you think I could get a couple $20,000 advances? Just one turn of leverage...It would probably take a good month or two to deploy.

rawraw

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Re: Convenience Check Arbitrage
« Reply #3 on: September 28, 2013, 05:27:27 PM »
Nice work! I may have to do this. Do you think I could get a couple $20,000 advances? Just one turn of leverage...It would probably take a good month or two to deploy.
I was allowed to take up to my credit limit allows based on what I read with the offer, which would've been $15,000.  But I wasn't prepared for what that may do to my FICO score.     I'm sure the amount depends by credit card company.

pplinvestor

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Re: Convenience Check Arbitrage
« Reply #4 on: September 29, 2013, 12:06:31 AM »
Interests on Credit Card loan is not tax deductible.  But one must pay taxes on interests earned from LC notes in taxable account.   So actual gain will be lower.

rawraw

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Re: Convenience Check Arbitrage
« Reply #5 on: September 29, 2013, 08:54:20 AM »
Interests on Credit Card loan is not tax deductible.  But one must pay taxes on interests earned from LC notes in taxable account.   So actual gain will be lower.
Yea, at a 25% tax rate its only a 8.625% spread :) But who cares?  Only AmCap I bet

New Jersey Guy

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Re: Convenience Check Arbitrage
« Reply #6 on: September 29, 2013, 10:31:05 AM »
Rawraw.....I've been following your experiment from the start.  I know those LC notes are still young, but how are they holding up?  Anything in there hinting they might go south?  Have you had to sell anything?
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

brycemason

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Re: Convenience Check Arbitrage
« Reply #7 on: September 29, 2013, 01:50:19 PM »
I think Rawraw bought hundreds of notes. The more appropriate question is how they are performing vs. all other notes of a naive strategy issued during the same timeframe. I only care because I think he used P2PP for loan selection. =)

New Jersey Guy

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Re: Convenience Check Arbitrage
« Reply #8 on: September 29, 2013, 03:59:08 PM »
"I only care because I think he used P2PP for loan selection. =)"

Well, he lied to one of us because he told me he used a pair of dice and a Magic 8 Ball.
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

Rob L

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Re: Convenience Check Arbitrage
« Reply #9 on: September 29, 2013, 07:50:51 PM »
Geeez... I got 2200+ of Bryce's notes and NOW you tell me what I should be doing!

Randawl

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Re: Convenience Check Arbitrage
« Reply #10 on: September 29, 2013, 08:27:47 PM »
Nice spread, rawraw.  Hope it continues to go well for you.

rawraw

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Re: Convenience Check Arbitrage
« Reply #11 on: November 06, 2013, 03:22:42 PM »
I think Rawraw bought hundreds of notes. The more appropriate question is how they are performing vs. all other notes of a naive strategy issued during the same timeframe. I only care because I think he used P2PP for loan selection. =)
Sorry, just seeing this.  I actually track my P2P picks vs my manual picks vs my arbitrage p2p picks in various portfolios.

And NJ man, I've had a few go south but sold them in the secondary market beforehand for gains.  This allows me to achieve a 1-2% increase in my returns it seems like.  I'll update this with stats soon

rlv99

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Re: Convenience Check Arbitrage
« Reply #12 on: December 10, 2013, 03:21:05 PM »
rawraw-  If I am understanding this correctly, you have a loan from LC.  I am curious- has LC sent you any marketing materials relative to refinancing that original loan at a possible reduced interest rate?  If so, when did you first receive the solicitation?  Were there others?

I am trying to analyze my Fully Paid notes to see if there is some common element that would guide me in the future in avoiding loans that might go Fully Paid at the first payment due date.  Any help you can provide would be appreicated.  Thanks.
« Last Edit: December 10, 2013, 03:27:32 PM by rlv99 »

rawraw

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Re: Convenience Check Arbitrage
« Reply #13 on: August 08, 2014, 05:37:44 PM »
Update on my Strategy from my original portfolio:
NSR Stats:
ROI= 11.16%
Loss=2.18%
Interest Paid=787.22
Average Age (Months)=14.95
Remaining Principal=$3,126
Amount In Grace Period or Past Due= $37.68

The payments of P&I have been reinvested into other portfolios with a higher weighted average interest rate than this one.  The amount of the credit card debt left outstanding is $4,207.98 and I have roughly 15 months left of 0 APR before having to roll it over, pay it off, or roll it over and increase my leverage again. I'm leaning towards the latter.

This portfolio was a combination or PM <10% and LM <10% from Bryce's service.  I engage in selling negative FICO trend notes in the secondary market.


rawraw

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Re: Convenience Check Arbitrage
« Reply #14 on: August 08, 2014, 05:39:51 PM »
rawraw-  If I am understanding this correctly, you have a loan from LC.  I am curious- has LC sent you any marketing materials relative to refinancing that original loan at a possible reduced interest rate?  If so, when did you first receive the solicitation?  Were there others?

I am trying to analyze my Fully Paid notes to see if there is some common element that would guide me in the future in avoiding loans that might go Fully Paid at the first payment due date.  Any help you can provide would be appreicated.  Thanks.
Just seeing this.  No I took a credit card advance, not a LC loan.  But if I got a LC loan, I would've been A1 so I doubt they'd send me refinance letters.