Addendum: Feb 1st, 2008: Hello gang. This post was made assuming there would be fees involved in acquiring your 0% interest cash advance. Read my post “Addendum to Thoughts on Leveraging 0% interest cash advances to earn interest…” to get a bit more information. — Zach

So I was thinking the other day about if I could utilize 0% interest cash advances to gainme a bit more interest. I looked on creditcards.com to find a 0% cash advance card and found the “Bank of America Worldpoints Plus Visa Credit Card.” Did a bit of reading, and they charge 3% of the loan amount as fees.

I already have an eTrade Complete Savings account, which earns me an APR of 4.93%, so I figured I may be able to make some cash here. I went ahead and applied for the card, and was approved with a credit limit of $3500.

I did some research, and it seems most credit cards have a minimum monthly payment of 4% of the balance per month. Since I slug away $140 a month anyway for savings, I figured I’d run some numbers to see how much money I would make on that $3500 after the CC fees and taxes.

So here’s what I did, I started tabling data. ‘Course I used a google spreadsheet.

INTERESTINGLY ENOUGH. If you put the $3500 in immediately in a 4.93% APR account, it turns out that you make LESS than if you put $140 in per month. Seriously. I think it’s because you’re being taxed at the higher rate for the interest, and you have to use the interest pay off the 3% fee, so you wind up paying taxes on that interest befor eyou pay off the fees. Doing a little bit more tweaking, I discovered that it would take a 9% APR to even break even in this situation. Ah well. Was a fun little exercise though.

—Zach