By Rebecca Lennox
BETHESDA, Md. – Tuesday is just another day on the internet for 25-year-old WalletMan81. He pulls up his RSS feed reader and checks out what’s happening in the world of geek culture. Maybe he kills a few minutes playing his favorite Flash point-and-click games. But there’s always one thing WalletMan81 is sure to do each morning before logging off and piling onto Interstate 495 along with 100,000 other D.C.-area techies.
He clicks a few magical buttons and increases his credit score.
“A little bumpage a day keeps the FICO score… uh, happy,” he says. While I wasn’t surprised to learn that WalletMan81 is not his real name, maybe it should be. WalletMan says he spends at least an hour every day using the internet to orchestrate his vast financial holdings.
“Well, maybe not vast,” he corrects me. “I mean, I do have about $175,000 sitting in the bank right now, but most of it isn’t mine; it’s the credit card companies’.”
WalletMan has mastered the little-known personal finance tactic known as the App-O-Rama. Every six months or so, WalletMan will take a day off of work just to apply for credit cards–often dozens of them in a single sitting. But from his relatively modest one-bedroom apartment setting, you can tell that he’s not signing up for these credit cards to load up on luxuries and plunge himself into debt.”
“I’m after the zero-percent bee-tee money, man.” He points to a computer display showing his current savings account balance. “This… this money here I’ll have to pay back in the next six to twelve months. But this right here…” He points to the interest paid column. “That’s all mine.”
App-O-Ramas: Making Free Cash With Credit Card Company Money
WalletMan is one of hundreds who participate in an online discussion forum that talks about secret financial techniques like the App-O-Rama that aren’t generally known to the public. He explains that the purpose of the App-O-Rama is simple: cram as many credit card applications as possible into a short period of time. With each subsequent application, WalletMan knows his credit score will take a hit since credit scoring bureaus see applications for credit as a reason to ding his creditworthiness. But if he applies for 30 cards all at the same time, the credit card companies will all see the same higher credit score than if he spread those applications out over several days. The gradual approach would allow the first batch of applications to dent his score, threatening the likelihood that the subsequent applications will be approved.
“Once the apps go through–takes a few days or a couple weeks–I’ll do a zero-percent bee-tee–a balance transfer–from the new credit line to my savings account.” WalletMan takes out a credit card mailing advertising a no-fee, zero-percent balance transfer, essentially a cash-out of a card’s credit line to another credit card or even a bank account. Unlike most credit card balances which carry interest rates upward of 30%, these promotional offers allow cardholders to borrow money at low or no interest for six to 24 months, requiring only a small balance transfer fee (usually $75 or less, though sometimes as low as zero) and monthly payments of 2-4% of the current balance.
WalletMan provides a cheat sheet for friends and family to try their own “bee-tees.”
- Sign up for a bunch of credit cards with good BT offers.
- Log on to the website (or call) and move about 90% of the total credit line to another card or request a paper check.
- Pay the minimum each month for the length of the offer.
- Pay it off at the end.
- Pocket the interest and repeat.
“I only use about 90% of any credit line because going higher than that can really trash your score.” WalletMan refers to the Fair Isaac Corporation (FICO) credit score, a number between 300 and 850 every American has that indicates his or her ability to handle credit. WalletMan shows me his latest FICO score pull–755, near the top of the range. “I’m planning another App-O-Rama in August, so that’ll probably drop back down to 600 for a bit.”
WalletMan reveals that he learned about App-O-Ramas and making interest from credit card company money four years ago from a personal finance website. “The trick was pretty new back then, but a lot more people have gotten into it since. The card companies are starting to get wise to us and’ve been dialing back on the bee-tee offers. Now they usually come with a higher fee or non-zero interest rate.”
He explains that card companies give out balance transfer offers to attract new customers–hopefully new customers who will carry lengthy balances and cough up more in interest payments than it will cost the companies during the promotional offer period. But WalletMan is no fool. “I’ve never paid a dime in interest to credit card companies. I let them pay me instead.”
Of all the credit card companies, WalletMan points to Citibank as the friendliest to App-O-Rama’ers like himself. “You can move balance transfer money to your Citi cards and request a check to deposit right into your savings account. Not a lot of companies make it that easy.”
WalletMan even started his own business whose sole purpose is to allow him to apply for business credit cards. He takes out a copy of his LLC’s Articles of Organization. Sure enough, on the line “Purpose for which the Limited Liability Company is filed is as follows:” appears the typed-in text “To apply for business credit cards and perform balance transfer arbitrage.”
“Business credit cards give out huge credit lines, sometimes four or five times what you’ll get with regular cards.” WalletMan opens a thick three-ring binder to the middle and reveals pages and pages of plastic baseball card sheets full of business credit cards. “Between regular and business [cards], I’m at 93.” Most of the cards still have their activation stickers on them, indicating WalletMan has never used them for purchases.
Bumpage: The Credit Report Cleanser Card Issuers Don’t Want You To Know About
WalletMan jumps out of his chair and thrusts his leg into the air. “Bumpage is like a Chuck Norris roundhouse kick to your credit report.” He laughs and adds, “That would have been much cooler if you were a video blogger.”
He goes on to reveal the best-kept secret of the App-O-Rama community, a sneaky trick formally called bumpage but often simply referred to as “B” by personal finance ninjas lurking in the back alleys of the internet.
“Hard pulls–which your credit report gets when a card company pulls your credit during an app–those ding your score anywhere from 5 to 20 points each.” WalletMan clicks his mouse, brings up a copy of his credit report, and points to the section headed “Inquiries.” He taps the screen to indicate inquiries marked “Citi” and “Chase,” two major card issuers.
“Soft pulls happen whenever you request your own credit report, like I just did. They don’t affect your score at all. Two of the main credit reporting agencies, TransUnion and Equifax, only store a certain number of soft and hard pulls. So if you can fill up your credit report with soft pulls, you can bump off all the hard ones. And that’ll bump up your credit score overnight.”
WalletMan says that his morning ritual includes pulling his credit report from numerous websites in order to plow those hard inquiries off his reports. “It takes a month or two, but I can reverse all the damage done to my score by an App-O-Rama. Then I simply repeat the whole process.”
Subscriptions to the credit reporting services WalletMan uses to fill his reports with soft inquiries, including PrivacyGuard and TrueCredit, run anywhere from $10 to $30 a month, but he says they’re well worth it.
WalletMan warns that, while bumpage is fairly effective when done right, it can lead to problems if you don’t know what you’re doing. “Some credit reporting services like Equifax’s Credit Watch will cut off your soft inquiries just before you get to the level needed for bumpage. They call that ‘choppage’.”
WalletMan peruses internet discussion forums daily, looking for warning signs that credit reporting agencies are engaging in choppage. “So far, I’ve been lucky. A lot of others haven’t been.” He bows his head as if talking about comrades who never returned from a dangerous journey. “It can be a wild ride, these App-O-Ramas and bumpage and all. One wrong move and you can severely damage your credit report. But for me and many others, it’s been worth the risk.”
“Last year, after taxes, I made $10,360 doing balance transfer offers.”
By moving the cash-outs from balance transfer offers into savings accounts and CDs, WalletMan earns interest on the interest-free money lent to him by credit card companies. “All I have to do is make the minimum payments each month and pay off the balance before the low-rate period ends. I make the interest instead of paying it to the credit card companies.”
WalletMan says he only goes for safe investments with balance transfer money since stocks carry the risk that he won’t be able to pay back the money he borrows from credit card issuers. He suggests internet-only or small-time banks as the best place to score high interest yields. “Right now, I have a few bucks in CDs, but pretty much everything is sitting in the First National Bank of Omaha earning six percent APY.”
Drawing from his research into consumer law, WalletMan says that the whole operation is completely legal. “It’s not breaking the law to borrow credit card company money for profit. And I pay taxes on every penny of interest I make.” But WalletMan confesses to a few shady actions required to rein in some of the juicier balance transfer offers. “I may have indicated that my business makes $175,000 a year on business credit card apps. In a way, I do; I just have to pay most of it back.”
WalletMan is still a long way off from turning App-O-Ramas into a full-time job. “I’m hoping to net $15,000 after taxes from bee-tees this year.” That’s not nearly enough to survive in his Washington D.C. suburb where rent on a one-bedroom apartment starts at $1,400 a month. “Now I could maybe move to some small town or the middle of nowhere and survive on $15,000 a year, as long as I had an internet connection.”
The road ahead for WalletMan and his balance transfer schemes is uncertain. More card issuers are becoming wise to App-O-Ramas, and the balance transfer offers and coming less frequently or with strings attached. “A lot of offers now want you to pay a fee of three to five percent of the balance when you do the transfer. That eats up most of the interest I’d earn right there.” He admits there are still lots of offers available out there, “But you’ve gotta take the time to find them.”
When asked if he has an accountant to handle some of his more complex financial endeavors, WalletMan sticks his thumb to his chest. “No way am I paying somebody to do this job for me. It’s too easy.”
Rebecca Lennox is a freelance writer from Baltimore, Maryland.
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