Aside from discussions on defintion of Arbitrage etc.... The idea works out. But with recent interest rate diffrentials that have gone down while volatility has gone up this idea tends to be not rewrding nowadays. It takes far longer to break even and one needs bigger bags of deposits on the long and short side to substain open positions. Risk free is definately a NO!!! Credit risk with brokers is even more the before an issue here.
Its swap (interest) arbitrage, not spot price arbitrage or catching a lagging price feed arbitrage or anything like that.
I actually did this for a little while about a year ago. The broker with the interest free accounts charged a $5 fixed rollover fee, and at the time, i was earning about $30 a lot on the GBPJPY with a different broker. Its not going to make you rich unless you have millions. Eventually though the interest free broker told me I couldnt have an interest free account anymore and the ride was over