Your credit score is pristeen. You have never made a late payment in your entire life.So how can you use your rarefied credit score, which is generally considered to be anything above 700, to your advantage?
Step 1 Play the credit card game, version one. Credit card companies are dying to have you as a client, so your mailbox is always stuffed with offers. Let’s say you keep a balance on a card that charges eight percent interest. A competitor offers you a card that charges five percent. What do you do? Sign up with the competitor to pay off the card with the higher rate.
Step 2 Play the credit card game, version two. For those with absolutely pristine credit, you may get an offer for a card that offers zero percent interest — yes, I said zero — for a period of perhaps nine months. A small transaction fee may be involved. Get a cash advance on this card for an investment, play money, anything, and while making the minimum monthly payment, keep your eyes open for the next zero percent offer that comes your way. This is practically a freebie loan that can go on indefinitely.
Step 3 Play the credit card game, version three. This is a sub-category of step two. Again, get a cash advance on a zero-percent interest card. Then find the best deal you can on an online high yield savings account or perhaps a six month CD. Stash the cash in your savings instrument, make the minimum monthly payments, and you may actually have made a profit by the time the promotional rate expires.
Step 4 Take advantage of any goodies your credit card offers. Keep one card that you pay off in full every month. It should be a card that offers you something you can’t resist, such as air miles. These cards usually have an extremely high interest rate, so it is imperative you pay the balance in full monthly. Meanwhile you’ll be earning points for a free flight, a cash rebate or any number of other cool things.
Step 5 Do use your house as an ATM. The equity in your home is an excellent source of investment money. Consider real estate. Let’s say you paid $100,000 for a rental home fifteen years ago. You used $20,000 of equity from your personal residence as a down payment on a 30-year investor’s mortgage. Where would you be today? Someone else, your tenants, would have paid off half the mortgage for you; the home would have appreciated significantly in value despite turmoil in the markets; and your $20,000 investment, as well as repairs and other costs, will have provided, and will continue to provide, a nice tax write off.
Tips & Warnings
- Check interest rates regularly. Your success is dependent on that.
- Read the fine print. Credit card issuers are not out to make things easy for you. Make sure you understand every last detail before signing up.
- Call the credit card issuer before signing up. Confirm with the customer service person that your understanding of the card’s terms is indeed correct. If you are not satisfied with that person’s response, ask to speak with a supervisor.
- If you are new to real estate investing, use a professional Realtor. And as in any investment, buy when the market is low.