Credit Card Arbitrage: Turning a 0% APR Offer into $2,000 in Free Cash

The Offer

American Express extended a 0% APR credit card offer to me, valid for 12 months. This card isn’t just about the interest-free period; it also offers approximately 5% cash back on purchases. To his the first bonus you have to spend $5,000 which earns you a $250 bonus. With a credit limit of $30,000 and no interest for a year, this presents me with an opportunity.


In a previous post, I discussed how to earn a risk-free 5.5% in a high-yield savings account (HYSA). You can find that discussion here: Maximizing Cash Returns in a Rising Rate Environment. But in this scenario, since we have a whole year before we need to pay off the balance, we can look at even more lucrative options, like a 6-month CD yielding 5.66%. So the strategy is simple. You take the money you otherwise would have spent and paid off and instead use this card. You extend the balance to its maximum of $30,000. Now with the saved cash you simply put this into a HYSA or CD. Before the credit card starts to accrue interest, month 12, you simply pay it off.

My Scenario

Let’s break down the numbers in my situation. If I max out the card to its $30,000 limit, here’s what happens:

  1. Cashback Bonus: On the first $5,000 spent, I trigger a $250 bonus due to the card’s cashback offer.
  2. Interest Earnings: By investing this $30,000 I would have spent in a 6-month CD at 5.66%, I would earn approximately $1,698 in interest over a year (assuming I reinvest the initial interest after 6 months).


Combining the cashback bonus with the interest from the CD, we’re looking at a total gain of around $1,948 over the year. This is essentially “free money,” earned by smartly utilizing the credit card’s features and pairing them with high-yield investment options.


While this strategy sounds promising, it’s essential to consider the risks and responsibilities:

  • Credit Score Impact: Utilizing a large portion of your credit limit can impact your credit utilization ratio, a key factor in credit scoring.
  • Payment Discipline: You must make at least the minimum payments on time every month to avoid interest and fees.
  • Investment Risk: While CDs are generally safe, there’s still a risk in any investment, including the potential for early withdrawal penalties.


Credit card arbitrage, like the scenario I’ve outlined, can be a clever way to make your credit card work for you. However, it requires discipline, a good understanding of credit and investments, and a willingness to manage the risks involved. If done correctly, it can be a rewarding strategy for boosting your savings.

This exploration into credit card arbitrage is a prime example of how understanding and leveraging financial tools can lead to significant gains. It’s a strategy that fits well with my approach to finding and exploiting opportunities in the financial world. As always, I recommend readers do their due diligence and consider their financial situation before diving into such strategies.

Maximizing Cash Returns in a Rising Rate Environment

In this time of rising Fed rates, it’s a good time to explore the best spots for your cash. To give you a hand, I’ve compiled some auto-updating options.

To summarize: For easy access, high-yield savings accounts are hard to beat. Want to lock in a rate? Consider CDs or government bonds

For those who prioritize accessibility, high-yield savings accounts are unbeatable. And if you’re aiming for a little more yield, CDs could be your ticket. Right now, Total Direct Bank is offering a 3-month CD at 5.66%. Stretch that to a 6-month term, and West Town Bank & Trust ups the ante to 5.88%.

I’ve been a fan of keeping my cash within easy reach, so while those CD rates are attractive, I’m leaning toward‘s high-yield savings account at 5.5%. I’ve typically parked my funds in Vanguard’s VMFXX through my brokerage account at Vanguard, but Milli’s rates got me. Plus they appear to just be a subsidiary of First National Bank of Omaha. I’ve got some money in the 3-month CDs, but is a tiny bump in interest worth the lock-in? For me, not so much. Unless I know I won’t need the cash.

Remember, there’s a cap on insured amounts in the bank accounts—$250k per person named on the accont. So $500k per join account. Sure, the Fed always bails out the banks but why roll the dice? My strategy? Max out the savings and CDs to the insured limit, and then overflow goes into Vanguard’s VMFXX. If you’re the type to diversify, and Popular Direct‘s accounts are both competitive choices.

Staying informed on the optimal places for your cash is key in this climate of rate hikes. Whether you prioritize security, liquidity, or a bit extra on your return, the options are there.

I’ve created these sites that dynamically monitor for the best yield on your cash. Feel free to monitor them if you’re looking for easy updates.