Author Topic: Convenience Check Arbitrage  (Read 14021 times)

turing

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Re: Convenience Check Arbitrage
« Reply #15 on: August 12, 2014, 11:11:46 AM »
Can you link to where you initially laid out this strategy?  I'm interested to know more details.  I searched on boards but couldn't find anything.

 

rawraw

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Re: Convenience Check Arbitrage
« Reply #16 on: August 12, 2014, 12:46:57 PM »
www.lendacademy.com/forum/index.php?topic=960.msg6002#msg6002

and

http://www.lendacademy.com/forum/index.php?topic=1754.0

I used the idea someone else suggested in my first thread and did 0 APR purchases of business expenses, to increase leverage somewhat without having to do another convenience check.  That's my preferred method of funding this strategy now.  Also, in case anyone was interested this strategy shot my FICO up to the 800s (until recently when I got 3 new cards, now I'm slightly below).

« Last Edit: August 12, 2014, 12:51:22 PM by rawraw »

turing

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Re: Convenience Check Arbitrage
« Reply #17 on: August 12, 2014, 03:51:48 PM »
Thank you for the links.   I did the 0% balance transfer thing back in 2003-2007 or so.  Eventually the 0% offers stopped coming.  Luckily I had paid it all off and now pay off all cards every month.

Great way to get very cheap capital.  I look forward to reading more updates.

rawraw

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Re: Convenience Check Arbitrage
« Reply #18 on: August 12, 2014, 05:40:23 PM »
Thank you for the links.   I did the 0% balance transfer thing back in 2003-2007 or so.  Eventually the 0% offers stopped coming.  Luckily I had paid it all off and now pay off all cards every month.

Great way to get very cheap capital.  I look forward to reading more updates.
Yea, the key with these is that you can sell them. It may eat into your returns though, but once they are matured assuming asset quality has taken a dive, you can sell for pretty deep discounts and still come out ahead.

swifter1984

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Re: Convenience Check Arbitrage
« Reply #19 on: August 16, 2014, 10:06:55 PM »
www.lendacademy.com/forum/index.php?topic=960.msg6002#msg6002

and

http://www.lendacademy.com/forum/index.php?topic=1754.0

I used the idea someone else suggested in my first thread and did 0 APR purchases of business expenses, to increase leverage somewhat without having to do another convenience check.  That's my preferred method of funding this strategy now.  Also, in case anyone was interested this strategy shot my FICO up to the 800s (until recently when I got 3 new cards, now I'm slightly below).

hey rawraw, how does this strategy improve your FICO? do you max out your cards when taking advantage of 0% APR checks? thanks!

brycemason

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Re: Convenience Check Arbitrage
« Reply #20 on: August 17, 2014, 03:15:51 AM »
The problem is that so many offers require a 4 point fee for the cash advance. If I had cheap debt I'd probably give it a go.

rawraw

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Re: Re: Convenience Check Arbitrage
« Reply #21 on: August 17, 2014, 07:26:08 AM »
The problem is that so many offers require a 4 point fee for the cash advance. If I had cheap debt I'd probably give it a go.
I initially paid I think three point, which isn't bad depending on the maturity.

Just Run expenses through a zero APR card. If you don't have enough business expenses or personal, you could do manufactured spending

rockinray

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Re: Convenience Check Arbitrage
« Reply #22 on: August 18, 2014, 07:56:07 AM »
Geeez... I got 2200+ of Bryce's notes and NOW you tell me what I should be doing!

If you do not mind my asking, how have these note performed for you?

Thanks - Ray

runnovato

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Re: Convenience Check Arbitrage
« Reply #23 on: August 19, 2014, 11:51:21 PM »
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.

Actually, you can form sole proprietorship and file Schedule C or use credit card interest as interest expense in your investing activity.  Either way, you should be deducting this interest.

rawraw

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Re: Convenience Check Arbitrage
« Reply #24 on: September 07, 2014, 07:27:44 AM »
Just in case anyone is interested, this may be useful to know related to this thread:

I was just reading on the Bogleheads forum about getting a "The Anything Loan" for 1.99% from lightstream.com  For highly qualified borrowers, it could be easy to get a low interest loan online without having to provide much documentation, supposedly.  See bogleheads thread at:  http://www.bogleheads.org/forum/viewtopic.php?f=2&t=146234&newpost=2181418 
Bogleheads there are saying it is possible to get as low 1.99% "unsecured" loans there without much hassle.

I did some online review of LightStream and found an article at http://www.reuters.com/article/2013/10/28/us-loans-unsecured-idUSBRE99R0YI20131028 
that indicates that the banking industry is waking up and trying to compete with online peer-to-peer lending

"LightStream, the online lending division of SunTrust Banks Inc., is taking aim at a niche space: Low interest unsecured loans for highly qualified customers. It's all part of a broader bank industry plan to woo and keep so-called mass affluent customers, and to avoid losing marketshare to new peer-to-peer lending sites that cut out banks altogether, says Greg McBride, senior financial analyst for Bankrate.com."

I just applied for a $30,000 new car loan with Lightstream with advertised interest rate to be 1.99-2.74% for 36 months.  Using the rate table provided at Lightstream.com, a new car loan seems to have the lowest rate. I will see if it is as easy to get "unsecured" car loan as some other users say.  They claim they did not have to provide any documentation on the car vehicle to be purchased.   ......

brycemason

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Re: Convenience Check Arbitrage
« Reply #25 on: September 07, 2014, 12:05:12 PM »
I saw that loan and leverage was the first thing that came to mind. Their application has a pull down menu box and if you select anything but new car, the rate jumps up past 2%. I'd be wary of misstating the purpose.

cfb

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Re: Convenience Check Arbitrage
« Reply #26 on: September 08, 2014, 05:20:59 PM »
If you own a car with no loan on it or have a car with a higher blue book value than what you owe on it, then it might be a legit finance or 'refinance' of the vehicle.  It'd certainly be a more legit usage than what the majority of our LC loans actually get put to vs what they say they're going to use it for.  If LC doesn't check to see if you paid down loans or credit cards with your LC loan, not sure how these guys would check into how you spent your lightstream loan.

That having been said, a <2% unsecured loan seems to land on the too good to be true button.  That's below the rates for a secured heloc.  I could see that rate on a dealership financed loan where the dealer or automaker is subsidizing it.  There's a catch.

brother7

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Re: Convenience Check Arbitrage
« Reply #27 on: September 08, 2014, 06:33:16 PM »
The "catch", if you want to call it that, is that LightStream's target customer has "excellent and substantial credit" to receive the lowest LightStream rate.
From my experience (yes, I applied for a LightStream loan), I recommend an 800+ FICO on Experian and Equifax AND income and savings in-line with your requested amount if you want to maximize your chance for approval.

Djnate

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Re: Convenience Check Arbitrage
« Reply #28 on: September 08, 2014, 06:40:43 PM »
Hi!

I also have the Chase freedom card that gives 5% back. However the maximum annual rebate @ 5% is $1500. Just be careful you don't run over or it will cost you! If you have a brokerage account with Interactive brokers you can get a margin loan for 2% APR.

Nathan
« Last Edit: September 08, 2014, 06:44:18 PM by Djnate »