Surf's Up for Cardholders

For most of us, it's easiest to just toss out those flashy solicitations that fill our mailboxes with promises to transfer our balances to new low-interest-rate credit card accounts.

An enterprising few, however, have found a benefit from these colorful mailings by using the offers as investment tools.

These consumers accept the low-interest-rate debt that credit card companies offer to entice new customers, but they avoid getting smacked with the more onerous rates that come once the lower promotional rates expire.

The industry calls them "rate surfers," but as credit companies grow wiser to their craft, there's a growing chance that the wave of low-rate balance transfers that they and less-skilled consumers have been riding will crash.

Balance-Transferring Acts

To rate surf, one has to be prepared to think outside the box in terms of credit card use, says Ira Stoller, who posts regularly on CardRatings.com, a consumer Web site that tracks and compares credit card offers. "Credit cards are part of your financial arsenal -- use them," he says. Arsenal sounds awfully aggressive, but so is Stoller's approach to credit.

Stoller has 15 cards in his wallet that he uses for balance transfers. He bought his new car with a 3.99% offer and earned $2,200 in the past two years, he says, by using balance transfers to invest in money market accounts or certificates of deposit.

Is Stoller's approach likely to become a popular tactic? "We've got 10 or 15 members who do what Ira's been doing for years," says Curtis Arnold, who founded CardRatings.com in 1998. Arnold, who includes himself in that number, says he paid for his wedding, two condos and a minivan with balance transfer offers.

Another proponent is Lawrence Goldberg, who self-published a book titled Balance Transfer Magic. Why "magic" in the title? Because credit card strategies are tricks, says Goldberg. "I started learning all the tricks -- three months, six months, nine months, upfront fees, maximum caps, default rate." After two years, Goldberg, a rare-coin dealer who uses balance transfers to buy and sell collections, says he cut his debt from $82,000 to $60,000, "and in another four years, I'm done, instead of paying for 15 years if I had only paid the minimum."