For the first round of credit card arbitrage investment strategy, my plan was to combine credit card balance transfer arbitrage with Lending Club investment. After investing a total of $100,000 over a year, I realized this platform was not suitable for my strategy due to the following reasons:

  • Cash Drag
  • Tax Inefficiency
  • Liquidity

For the investment of over $100,000, opting for fund route may be the best option to maximize returns. I picked Direct Lending Income Fund on the basis of past performance. In theory, a 12% ROI over 12-months with a borrowing cost of 3% will generate 9% profit.

Total Balance Transfers: $219,497

Date Credit Card Promotion Cash Balance
03/02/2015 Citi Diamond Preferred 6m/0%/3% $19,000 $19,570
03/02/2015 Citi Dividend Platinum Select 6m/0%/3% $16,000 $16,480
04/02/2015 Citi Double Cash 15m/0%/3% $6,398 $6,590
04/13/2015 U.S. Bank FlexPerks 12m/0%/4% $15,500 $16,120
04/14/2015 Chase Slate 12m/0%/0% $14,952 $14,952
04/15/2015 Citi ThankYou Preferred 12m/0%/5% $19,000 $19,950
04/17/2015 Chase Slate 12m/0%/0% $14,947 $14,947
04/20/2015 Discover More 12m/0%/5% $15,500 $16,275
05/09/2015 Discover More 12m/0%/5% $16,000 $16,800
05/11/2015 Citi ThankYou Preferred 15m/0%/4% $24,000 $24,960
05/28/2015 BankAmericard Cash Rewards 15m/0%/3% $19,400 $19,982
05/28/2015 BankAmericard Cash Rewards 15m/0%/3% $19,400 $19,982
05/28/2015 BankAmericard Platinum Plus 15m/0%/3% $19,400 $19,982
Total 12.25 months, 0% APR, 3.23% fee $219,497 $226,590

I’ve transferred a total balance of $219,497 from 13 different credit cards. The cost of borrowing was 3.23% or $7,093 for 12.25 months.

Return On Investment (ROI): 8.18%

Description Net Profit/Loss Net Return
Short-Term Small Business Loans (DLIF) $25,044 11.17%
Balance Transfer Fees ($7,093) (3.23%)
Total Return On Investment $17,951 8.18%

An estimate returns of DLIF over 12 months is 11.17%. After subtracting the balance transfer fees, my estimated ROI for this round is 8.18%.