Rate Chasing with Credit Card Funds

The New York Times recently ran an interesting article on rate chasers, who they describe as "savers who hunt for the best interest rates at banks and credit unions and quickly move their cash from one account to another."

Some rate chasers take advantage of 0% introductory rates on their credit cards, depositing the borrowed funds in the highest interest savings vehicles they can find. These high interest savings vehicles often take the form of online-only savings accounts, pioneered by ING Direct. By making only the minimum payments on their cards and leaving the remainder of the funds safely deposited in FDIC insured accounts until the introductory rate periods on their credit cards are over, rate chasers are able to earn significant returns on borrowed money.

One important caveat that the article neglected to mention: a late payment during an introductory rate period could return your credit card to its full interest rate. The result, of course, would be a sizable credit card bill.

The Great Chase for the Highest Rate @ nytimes.com