But watch out for the pitfalls

Crazy, but true.

Thanks to Trumpflation and the Federal Reserve (or, depending on your politics, thanks to Joe Biden), I can now lend money to Uncle Sam for 21 months at 4.7% a year.

Which works out, over the full period, to a total return of 8.4%.

Meanwhile, thanks to big banks' eager hunt for new customers, I can now borrow money on a new credit card for the same period at 0% interest.

Remarkably, these offers continue to exist even while interest rates rise across the rest of the economy on both borrowings and savings. (They are available, for example, from Bank of America (BAC), U.S. Bank (USB) and Wells Fargo $(WFC)$.)

It gives you an idea of just how profitable new customers really are for banks.

But can I take advantage this apparent arbitrage opportunity to make some easy money by borrowing from a bank at 0% and then lending to Uncle Sam at 4.7% a year?

The short answer is yes - but it's not quite as easy as it may sound.

I can't just open a new card and use it to buy a bunch of zero-coupon 21-month Treasury bonds, or to fund a high-interest savings account. These 0% introductory rates are for purchases only.

On the other hand, I could sign up for a new card and use it to pay for most of my living expenses over the next 21 months. And during the same period, I could take the cash that I would have put toward those expenses and put it in a high-yield savings account or Treasury bonds instead.

In other words, I could live off the card and use my salary to finance the extra savings.

Call it the extreme version of "Pay yourself first."

Or perhaps a practical application of satirist William Makepeace Thackeray's celebrated challenge: "How to live well on nothing a year."

There's some real money here. If I used a 0% card in this way to finance an extra $1,000 a month in savings over the next year, by the time the introductory rate expired, I'd have made just over $700 in extra free money.

It's not a king's ransom, but hey, it's free money.

Those who would benefit the most would be those already on the hook for extortionate interest rates on existing credit cards, some of which rise as high as 30% a year.

One snag is that you usually have to have pretty good credit to qualify for a 0% card. If the banks have their hooks into you so deep that you are paying 20% or more on existing card balances, that may not be you.

And cards with a 0% introductory rate usually claim that rate is also available on balance transfers, but that's a bit of a shell game. They won't charge you interest for 21 months, but there's usually a fee to transfer that balance.

Still, that's way better than most credit-card interest rates.

Is this sort of thing worth the hassle?

Financial planners will typically advise customers to keep their finances simple, which would usually include avoiding wasting time on gimmicks.

But the chance to borrow money at 0% interest for nearly two years, at a time when interest rates are rising (and mortgage rates are hitting 7%), can translate into a real bargain.

I have done similar things in the past. I have opened new cards to get the free sign-up bonuses. And it's paid off: For several years I barely paid for airline tickets, even internationally, as I got so many frequent-flier miles from new cards. Free money is good.

But you need to be careful. These offers are best for those people who keep close track of details. For everyone else they can turn into a pain in the neck, or worse.

There are plenty of potential pitfalls.

Once the introductory rate expires, interest rates on any balance carried over monthly can rocket above 25%.

Also, the deal only applies to new customers.

Each card has a minimum monthly payment on the balance and requires a credit score that is good to very good in order to qualify.

A bank may (reasonably) withhold a new-customer bonus if it deems you an existing customer - and that doesn't have to mean you are a customer now. It could just mean you had an account with that bank in the recent past - for example in the last two years, although rules will vary by bank.

Another pitfall is that if you miss the monthly deadline for a minimum payment at any point, you can lose the entire bonus. And if having the card leads you to spend more, you'll end up worse off than before. Wasting money isn't a bargain even if it's on sale.

Overall, the costs of screwing up can greatly exceed the benefits of getting it right.

Bottom line? The higher interest rates rise, the better these types of deals become. Yes, they can be worth it. But beware of the risks and complications.

-Brett Arends