Strategy
My original plan was to invest in Lending Club using funds from credit card balance transfers. However, after investing $100,000+ over a year, I realized this platform was not suitable for my strategy due to the following reasons:
- Cash Drag
- Tax Inefficiency
- Liquidity
For the investment of over $100,000, opting for fund route may be the best option to maximize returns. I picked Direct Lending Income Fund on the basis of past performance. In theory, a 12% ROI over 12-months with a borrowing cost of 3% will generate 9% profit.
Total Balance Transfers: $219,497
Date | Credit Card | Promotion | Cash | Balance |
---|---|---|---|---|
03/02/2015 | Citi Diamond Preferred | 6m/0%/3% | $19,000 | $19,570 |
03/02/2015 | Citi Dividend Platinum Select | 6m/0%/3% | $16,000 | $16,480 |
04/02/2015 | Citi Double Cash | 15m/0%/3% | $6,398 | $6,590 |
04/13/2015 | U.S. Bank FlexPerks | 12m/0%/4% | $15,500 | $16,120 |
04/14/2015 | Chase Slate | 12m/0%/0% | $14,952 | $14,952 |
04/15/2015 | Citi ThankYou Preferred | 12m/0%/5% | $19,000 | $19,950 |
04/17/2015 | Chase Slate | 12m/0%/0% | $14,947 | $14,947 |
04/20/2015 | Discover More | 12m/0%/5% | $15,500 | $16,275 |
05/09/2015 | Discover More | 12m/0%/5% | $16,000 | $16,800 |
05/11/2015 | Citi ThankYou Preferred | 15m/0%/4% | $24,000 | $24,960 |
05/28/2015 | BankAmericard Cash Rewards | 15m/0%/3% | $19,400 | $19,982 |
05/28/2015 | BankAmericard Cash Rewards | 15m/0%/3% | $19,400 | $19,982 |
05/28/2015 | BankAmericard Platinum Plus | 15m/0%/3% | $19,400 | $19,982 |
Total | 12.25 months, 0% APR, 3.23% fee | $219,497 | $226,590 |
I’ve transferred a total balance of $219,497 from 13 different credit cards. The cost of borrowing was 3.23% or $7,093 for 12.25 months.
Return On Investment (ROI): 8.18%
Description | Net Profit/Loss | Net Return |
---|---|---|
Short-Term Small Business Loans (DLI Fund) | $25,044 | 11.17% |
Balance Transfer Fees | ($7,093) | (3.23%) |
Total Return On Investment | $17,951 | 8.18% |
An estimate returns of DLI Fund over 12 months is 11.17%. After subtracting the balance transfer fees, my estimated ROI for this round is 8.18%.