Sometimes you need extra cash and don’t want to have a loan. Here are nearly a dozen ways to get immediate access to interest-free capital and/or earn easy money from banks. If you have a high risk tolerance, some of these might work in lieu of an emergency fund. It’s hard to keep cash around in a high-inflation environment like we’re currently in.
1. Open a new bank account
Banks offer sign-up bonuses to try and gain new customers. Some offers are aggressive and can exceed $1,000. There’s generally a direct deposit requirement (checking accounts) or cash deposit requirement (savings or brokerage accounts). This is still a low-effort way to get some extra money. Especially if you have a large cash balance in an existing checking/savings account. The size of your bonus is likely to exceed whatever you’re earning in interest (generally 1% APY at most, as of early 2022).
Opening new bank accounts doesn’t impact your credit score either. There is a pseudo-credit system (ChexSystems) which may flag you if you open several bank accounts each year. It doesn’t however affect your ability to get loans or credit cards.
Many banks don’t have minimum balance requirements or significant fees. These are ideal considerations when looking for a new account.
2. Open a new credit card account
Like the above option, banks have aggressive offers for credit cards too. If you’re able to get a 0% APR deal on top of that, it’s even better. There are 15+ credit cards with long interest-free periods. Although there are minimum spending requirements, it’s generally not a high bar to clear, especially if you have a large purchase coming up. Different cards have different requirements.
Imagine being paid a couple hundred dollars to get an interest-free loan for 12+ months, plus earning ongoing cash back rewards. If you have a high enough credit score to qualify for a 0% APR card, it can be a better deal than a personal loan.
For “free debt” you can “float” your balances. Open a 0% APR card, earn its bonuses, and put your living expenses on that card until you’re near the limit. Then, before the 0% APR period expires, open another 0% APR card and repeat. This may affect your credit score, so this isn’t a solution for everyone. If it works for you though, you can repeat this infinitely to enjoy a large amount of “free” money. The main downside is that this isn’t immediate, when it comes to personal expenses. The card is likely to fill up over time. Still useful, but not the fastest injection of cash into your life.
3. Use your full credit card billing cycles
Outside of 0% APR deals, you can still pay slowly while avoiding interest. Credit cards can be useful for slowing down your expenses/bills. This frees up some cash flow. A billing cycle is generally 25-30 days. If you charge something to your card, you don’t need to pay off the debt immediately. The balance won’t even affect your credit score if you pay it off before the billing cycle ends. Balances are reported to credit bureaus at the end of each statement period.
For example: let’s say you charge $3,000 to a card with a $5,000 credit limit on May 1st. If your statement period ends on May 25th, then you don’t have to do anything until May 22-24. At that point you can pay your balance to less than $500. (You generally don’t want balances of more than 10% to report to credit card bureaus. Note that this is more cumulative though, across all your accounts combined.) In this case, you had 3 entire weeks of free cash to use as you see fit.
Some business owners use this liberally, along with flippers. They can buy $30,000 of goods, sell them over the course of a couple weeks, and pay off their card immediately with the profits.
4. Other benefits of credit cards
Some credit cards advertise 0% APR for balance transfers. This usually has a fee though, in the range of 3-5%, so it’s more of a last resort. A balance transfer could be better than a personal loan, but it’s often better to try other options first. 0% APR on purchases is better unless you need a lot of cash right away.
For that, some credit cards have a “flexible loan” option which isn’t a true loan. Chase Bank and Citi Bank both have this. You can borrow a percentage of your credit limit at a medium APR and get the amount in cash. The APR is usually higher than personal loans, but it’s usually lower than the card’s APR. For example, this loan could be 11% APR instead of 21% APR. The benefit is no credit checks and near-instant cash. This isn’t a “real” loan, so it doesn’t impact your credit score (other than showing higher utilization ratios for the credit card). Although this option does accrue interest, the benefits may outweigh this (fast cash, no credit checks, doesn’t show as a new account on credit reports, etc.)
5. Borrow from the “three Fs”
Friends, Family, Fools: all of them may allow you to borrow money at 0% interest. Just be careful not to damage your relationship with them. Finances are a tricky thing which can complicate people’s bonds with each other. Set out a clear payment plan and be honest. You can even lend out your own belongings as collateral, in case someone isn’t sure whether you’ll repay them.
Alternatively, you can try peer-to-peer lending like Prosper or Lending Club.
6. Self-repaying or 0% interest loans from blockchains
There are several solutions in the decentralized finance community. Liquidity.org and MakerDAO will allow you to take out collateralized loans without selling anything. Alchemix enables self-repaying loans. You can also try staking in various places like Celsius or APYFinance for more than 10% APY. Arbitrage opportunities may present themselves too, so you can make a little money for clicking 2-3 buttons.
Note that there may be fees associated with these strategies, such as origination fees or transaction (gas) fees. The ROI can beat any CD or savings account though, if your balances are high enough. Centralized exchanges like Coinbase also enable collateralized borrowing (with APR).
7. Renegotiate bill payment terms
If you have medical bills or other large payments, you might be able to negotiate payment speed. Talk to the billing department to see if they can stretch things out. Even if you incur extra interest from extending the payment period, lowering your monthly payments can be a help. Some institutions have a “any payment is better than none” attitude.
8. Borrow against your investments
Although there may be interest (and margin risks) associated with this, the borrowed amount can pay for itself over time, if asset value increases. Borrowing against your 401(k) or other investments isn’t the worst idea for quick cash. Margin rates can be much lower than a personal loan’s APR, and they may be tax-deductible. Interactive Brokers, Wealthfront, and M1 Finance are some competitive options.
Also see: HELOCs (home equity line of credit) and retirement-account rollovers.
9. Buy Now, Pay Later
Pay-over-time services like Affirm and Afterpay have become popular in recent years. Having flexible no-interest payments for online purchases can be helpful like 0% APR cards. Retail stores often have options too. Banks are implementing similar services. Chase Bank for example has My Chase Plan (small monthly fee), American Express does Pay Over Time, and Citi Bank has Citi Flex Pay. Note that with monthly fees, this may not be a better idea than above options. You’ll have to run the numbers.