Quote:
Originally posted by jarsh
who do they make the additional monies from? is there interest incurred before the first payment? using the example above, would the first bill be 20.05 (arbitrary number) then the next bill for card B be 20.10? this would be a cheap way to make the points he wishes for, but not free right?
|
Well, most, if not all credit cards charge a fee, usually 1-3% for a cash advance, with a minimum fee of $X, usually $5.00. Not only that, but interest usually begins accruing immediately when you take a cash advance.
So, he takes a balance on credit card A of $20, and pays it with a cash advance from B (most cheques from credit card companies count as a cash advance). Total balance on card B is $25.00. If he waits until the next billing cycle, and pays be off with card A, he'll have a balance of $31 dollars on card B (Usually a $1.00 minimum finance charge). He again pays off card B with card A, and now carries a balance of $37.00. The cycle continues until he stops...
His idea certainly would work if you could find a "rewards" card out there with no cash advance fee, no minimum finance charge, no annual fee, and also not begin to charge interest on a cash advance immediately. However, most, if not all cards, have these charges to prevent cycles such as this.