Don't try this at home. How credit card arbitrage funded my first company.

tl;dr: "And, so I raised my money through credit card arbitrage: $22k across 14 different cards. So, yeah. That's about it... For me, it worked out both terribly and perfectly. The terribly part is that our startup failed, and I never paid myself enough to pay the cards back. At the end of Openvote, I was saddled with all this credit card debt, plus opportunity cost loss from no salary, plus no job. It was a tough time."

It's a lesson in what not to do, as the author acknowledges. Though he seems sanguine enough and has got back up on his feet.

Then again, I think there are easier ways to learn it's not a good idea to rack up five figures of credit card debt on top of existing debt and no savings... but whatevs.

Wow, a very pleasant read! For someone who was seriously considering doing this I have to admit your perspective is quite admirable.

The only question I am left with is how much did you end up settling for or how long did it take to eventually pay it all off?

i'm not really well versed in funding or business operations, but this just sounds stupid.

> For some personal background, I do come from a financially stable family. My parents could have covered the $16k to help me follow my dreams. But I didn't ask them (and neither did they offer). The financial pressure and responsibility of my startup was to be fully on my shoulders.

Even though he wasn't accepting money from his parents, he was implicitly using their financial security to shoulder this risk. If everything had really gone to hell, they would have helped him back on his feet. (Much like some banks could take huge risks knowing the government would probably bail them out, even if there wasn't an explicit agreement or exchange of money beforehand.) Other people, like maybe his friend, don't have such a financial safety net and so can't take on those kinds of risks.

As long as you have the ability to start earning quickly and are smart about it, you can get through that without breaking your credit record.

The key to dealing with credit cards is understanding the terms -- it's all written down in a little document that nobody reads. In particular, you need to understand precisely how each lender defines "default". "Default" == no more 0%.

Also, this guy had the business networking chops required to jump into consulting gigs immediately upon declaring failure. The exit strategy is essential.

I did something similar to this with a house that I needed to get out of quickly. I borrowed $52,000 over several cards and ended up using $40k. The $12k was used as a pool to make the automatic payments from. End result? The value of the home increased by $80k.