A New Kind of Arbitrage

By Mat Kelly

As all of the loopholes to credit card arbitrage schemes (wherein one borrows against credit on a credit card that allows 0% interest for some period) have been plugged by most institutions charging 3% of the transfer amount upon execution, many have been hunting around to find ways to replicate the concept.

The U.S. Mint allows $1 coins to be purchased via credit card, thereby allowing traditional forms of credit to be turned into cash. Using a newly acquired 0% Intro APR credit card, this would yield the same desired result as it did with arbitrage, as the cash can then be put into an interest-bearing savings or money market account. The key difference is that the the credit card charges 3% on balance transfers whereas purchasing from the U.S. Mint qualifies as a purchase.