credit card bonus ?
credit card bonus ?
What would be potential pitfalls with using the credit
transfer checks from the GM, GE and Discover cards to make a
deposit into your checking account (or Schwab One account
in my case) and at the same time making out a payment check
to GE, GM or Discover.
If I'm correct, I will pay no more than a couple of days
of interest, but get back 5%, 2% and 1% for the GM, GE and Discover
cards, respectively ... even if I had no money in my checking
account.
Is that right? Is there a catch?
- it may be considered check kiting, which is illegal.
(I believe if it is done between interstate institutions, it
would be a federal crime -- federal crimes are usually punishable
by much longer prison terms than comparable state crimes, so
you may end up with a 2-5 year term for small scale check kiting)
-Can you say "cash advance fee?" I'm not sure in any particular case
if they charge or waive this for the credit card checks, but if it's
there, the effective interest on your very-short-term loan will
skyrocket unless you have an extremely handsome credit line and use
all of it. Last card I looked at maxed out the cash advance fee at
$20. Also, make sure that the card will actually pay the rebate on
cash advances and not just on purchases. Another possible drawback is
how long will it take the credit card to receive and process your
payment; also will you run afoul of any check hold periods on your
Schwab One "deposits." Finally, how long will it take Schwab and/or
your credit cards to get annoyed w/you and decide to terminate the
business relationship?
Hey, if you can make it work, more power to ya. If nobody exploits the
loopholes, they'll never get filled. Recall that Discover used to have
no cash advance fee and folks could make money by taking an advance early
in the cycle and then paying it back more than a month later; in the
meantime
collecting interest on the money. Discover must have noticed, 'cause they
closed the loophole.
-In most states (and maybe there's a federal law about this), writing a
check when the funds are not ON DEPOSIT at the time you write the check
is a crime. However, the chances of getting caught seem slim, and how
many of us have written and mailed checks on our way to the bank to
deposit the money? However, as with all "crimes," the more you do it,
the more likely you are to get caught.
Personally I don't see anything ethically wrong with this one, but I
should point out that most credit cards do not give "bonuses" for cash
advances, and convenience checks are considered a form of cash advance.
Read your credit card agreement CAREFULLY.