Understanding The Risks of App-o-Rama
Before trying an App-o-Rama, you must first and foremost remember it is an investment. Though the risks of a properly executed App-o-Rama are practically none (it can appropriately be described as arbitrage, or riskless profit), you need to be well disciplined and pay careful attention to detail in order to do it properly.
In an App-O-Rama, you are looking for a way to essentially make free money. While many people earn hundreds of dollars each month with this strategy, some are not as successful. While you don't need to invest any money in an App-o-Rama, it does require time and diligence.
Let's break down the risks of App-o-Rama into their three main categories:
Payment Risk: Interest free credit cards are not payment free credit cards. The most common mistake in App-o-Rama is neglecting to pay the minimum monthly fee on each card. They are still due each and every month, and if you miss just one or two payments, you may kiss your 0% rate goodbye! You'll also incur steep late fees and could see your interest rate shoot as high as 30%, not to mention the added damage to your credit report. Make sure that you set aside some cash to cover the minimum payment due each month.
Be sure to mark down the expiration date of each 0% offer on your calendar as well. You'll want to take cash out of your savings account to pay off your balances right before your rates skyrocket. Or, you can execute another App-o-Rama to transfer the balances to new cards and keep the free money rolling in!
Investment Risk: Your App-o-Rama proceeds should be invested in something that is safe (preferably risk free) very liquid and short term. A high yield savings account is usually the best option, since they are FDIC insured and you can usually access your money within a day or two. Nearly any online bank is FDIC insured and several currently pay rates as high as 5%! Avoid riskier investments, like stocks or mutual funds, since you may need to pay for any losses out of your own pocket. Resist the urge to spend your newfound credit windfall, as it is an
easy way to quickly find yourself deep in debt!
Credit Risk: App-o-Rama is only appropriate for people with good credit who don't foresee any need to borrow other money within the next year. If you're thinking of buying or refinancing a car or home, this is not the strategy for you! Your credit score will decrease significantly within days of completing your App-o-Rama, though if you make all of your payments on time, it should recover within a few months. A credit monitoring service is a must have for any serious App-o-Rama strategy.
