I have a number of 0% cards totaling about 45k rolling off within the next 3 months or so. I'm planning on doing another, more aggressive AOR once these cards roll off. I'll do any planning / strategizing in this thread. I currently have a subscription to Experian Credit Manager (courtesy of MS Money) which lets me pull my Exp score daily, so I can watch to make sure my score is high enough to have a successful AOR. Currently, my score is at 747, with the two negatives being (1) # of hard inquiries (I've applied for a few cards in the past few months), and (2) CL utilization (due to the 0% utilization, I maxed out some cards to 100%, something which I plan not to do next time).

Goal of 0% funds for my next AOR is at least $100k for 12 months. I plan on trying to get my score up in the high 700's range by reducing CL utilization % on my current cards, as well as by consolidating CLs and/or closing newer cards that I don't plan on using (thereby increasing the average age of my cards).

One perk of the Experian Credit Manager is that even though you can't pull unlimited (free) full reports, they do update your credit report summary whenever you pull your score (which is free). Here's what my credit profile looks like now. I'll try to fill in more detail soon about what cards I currently have.

Hopefully this will be helpful if anyone else wants to try an AOR along with me

Credit Summary (EXP) 4/18/2007:


More soon...

interesting

A question for those more knowledgeable than I about taxation - currently, my $45k of AOR money is sitting in my Vanguard Prime Money Market Fund. Income from this comes back to me on a 1099-DIV, is not "qualified dividends", and as such is taxed at ordinary income rates.

I haven't seen a lot of discussion about favorable tax treatment of AOR funds, but this is not the best strategy for me, because my return on investment is effectively reduced by the tax rate applied to my income. I have the money in the MMF for the convenience of being able to pull funds out when I want without penalty (as opposed to a CD).

Ordinary [taxable] interest reported on a 1099-INT is equivalent to non-qualified dividends for tax purposes, correct? Therefore something like sticking my money in a high yield savings account isn't better/worse for tax purposes than my current strategy.

Strategies that would generate lower tax rates would involve the use of qualified dividends (taxed at 15%) or non-taxable interest. Any other ideas? I admit never to having purchased a CD, so I don't know how those are treated, tax-wise.

Thanks in advance for any suggestions - I hope this discussion is helpful.

CDs produce normal taxable interest income, unless you buy a CD through an IRA (Like Penfed's ROTH IRA, for instance).

Right, and funding an IRA with AOR funds is definitely not the point

The only things I can figure out so far are a federally tax-exempt investment instrument (such as a US treasury money market fund), savings bonds, or a bond mutual fund which, although it may incur capital gains or losses upon sale, tend to have fairly stable NAVs.

For people who have used 0% money in the past, where do you stash your funds, and why?

Hmm, here's a thought.

If you have a Roth IRA, you can withdraw contributions (but not interest) at any time without penalty.

It occurs to me that unless you're already maxing out your Roth, you could stick some of the AoR money in there for a year; then the interest on it would be tax-free. (Granted, you can't actually GET to it until you retire, but still)

Good idea, but both my wife and I already max out our Roths, and I max out my 401(k) as well. So basically, I don't have a choice but to go with something taxable

One thought I had was to try to figure out an investment that was relatively safe, and which, should I structure the AOR funds appropriately, I could fund long enough to sell in 1 year at the long-term capital gains rate. Something like the Vanguard GNMA fund might work nicely. Assuming I reinvested dividends back into the fund, I'd be able to sell shares after 1 year to cover the payoff for the cards, and still take any capital gains at the long-term rate. If I stagger my purchases slightly, I shouldn't get hit with having to pay off all my CCs at once. I'd then leave the reinvested dividends in the fund until they hit 1 year, or even just leave them permanently.

The amount of money you're talking about, I'm tempted to say real estate, but that's probably more risk and more work than you're looking for.

qualified dividends are one's paid primarily on stock investments. So mutual funds that primarily hold stocks would count.

Obviously the problem with investing in those are the possibility of a loss of principal or even worse...a market correction. You could possibly be on the hook at the end of your AOR.

its' a good question bluet....

I wonder if there are safer mutual fund categories that you can invest in where the risk is a lot smaller, but the gains are similar to money market rates.

hmmm...i just realized you wouldn't hold the mutual fund long enough and most of your gains would be short term capital gains and not long term gains

Blue,

Since you did a decent-sized AoR, I wonder if you could tell me if there's any info I ought to add to my App-o-rama page? Thanks!

New term, arbitrageurs, has been applied to those who play this game. Most info in the following MSN article has been stated more than once around here. I found a couple new things, while reading the article.

0% daredevils chase 'free' cash