Financial hacking

[dougo]

For the past few months I've been doing a juggling act between my Fleet credit card and my Fleet checking account (with reserve credit line). The credit card purchase APR is 8.9%; the cash advance APR is something painful like 18%, but they've been sending me these magic checks that have a 2.9% APR for a limited time (but usually at least 6 months). They're handy for making payments to places that don't accept credit cards, e.g. my landlord, and if I had a bigger cash advance limit (which is about 30% of the total credit limit) I'd just use them for everything instead of using the higher rate for purchases. Then I realized that the $35 fee per check is actually not insignificant if I'm writing a lot of these checks—but it turned out I can just write one big check to myself and deposit it into my checking account!

Okay, so now the only hitch is that when I make payments to the credit card, they get applied to the lower rate first, which means until I pay off the cash advance in full, any credit card purchases will sit there at the higher interest rate (although there's still the one-month grace period before the interest starts accruing). Well, I recently cashed out a mutual fund that had been going nowhere for a while, and used that to pay off the cash advance as well as most of the purchase balance. But then I realized that I could pay off the whole balance using my checking account reserve credit line (which automatically kicks in whenever the balance goes below $0), and then write another cash advance check to myself to pay off the reserve credit line, thus transferring the 8.9% balance to a 2.9% balance (with a short stop in reserve credit, which has a painful 18% rate).

So now here I am with zero balance on my credit card finally, having moved it all to my reserve credit line. But, oops, I noticed that they had stopped sending me the magic 2.9% checks, and the last ones I still had had expired in mid-June! Umm, did I just outwit myself and actually transfer my debt into the highest available interest rate for good? Starting to panic a bit, I called the bank to see if I could maybe get one more check, or else admit defeat and transfer it back to the 8.9% balance. Well, without my having to beg or anything, they offered me a balance transfer to my checking account—at 1.9%. And even better, it's not subject to the cash advance limit! So now there's a nice big check in the mail (which I then have to deposit manually—don't ask me why they can't just transfer the money directly, since it's all the same bank) with no transfer fee and practically zero interest until January. And I can still use the cash advance funds in an emergency.

Anyway, the moral of the story is, if you need to borrow money, don't just use whatever offers you get in the mail, call your bank and see what secret special offers they have waiting for those clever (or desperate) enough to ask. Security through obscurity, I guess? Or maybe it's like the Monty Hall Problem and you should always hold out for door #3?

Comments

[stoneself.livejournal.com]

the amex blue had (and might still have) 0% for one year on balance transfers. so even if your existing card won't let you transfer, you could always try to move it to a new card.

[dougo.livejournal.com]

Yeah, I have about four or five other cards with 0% introductory rates, but (1) I don't think they'll actually send out checks, just transfer from card balances (2) since I'm still unemployed, the credit limits have been getting smaller and smaller, so it's probably not worth it to try for more until I actually graduate. Also (3) doesn't AmEx have fixed fees regardless of balance?

[stoneself.livejournal.com]

1) don't know. i haven't need that, but you could move a cash advance into checking, and transfer that balance.
2) bleah.
3) less than $35 per check. :)

[shannon_a]

You can also often call up a credit card and browbeat them into giving you a very low interest rate under the threat of moving the debt elsewhere. It's less work than moving the money around too.

When I was running a decent amount of debt a couple of years ago the AT&T Universal Card was my friend, because they kept sending me checks at 2.9% or 3.9% for the lifetime of the debt.

[mshonle.livejournal.com]

I just paid off my MBNA Master Card yesterday. Those theifs gave me a 24% APR which I could only talk them down to a 21%. I told the woman on the phone at the time that she was taking the master in the name too seriously.

Anyway, I did have to sell some index funds to pay it off, but given that the *interest* payments were $90 a month, what I thought I could shrink away became a monster. Anyway, no more credit cards for me. That's it.

[dougo.livejournal.com]

Wow, do you have a really bad credit rating or something? I have an MBNA "Engineers" card with 0% for six months, then 7.9% afterward.

[dougo.livejournal.com]

Yeah, that's what was weird, I didn't even hint that I wanted to transfer to another card. Maybe it's just that I had already transferred balances to other cards several times before, and someone had flagged my account as "do anything to keep him". Or maybe they just figure anyone who actually calls them on the phone is serious enough already.

[greyaenigma.livejournal.com]

So much of the world seems to be like that -- if you know who to call, they'll give you a special deal.

Meanwhile, so much of my dealings with financial institutions involve people that won't even do their job, much less give me a special deal, so I tend to avoid trying to call them when I don't have to.

I can't imagine trying to out-finesse a credit card company since it seems like it would definitely come crashing down on my head -- sort of like cheating at a casino -- if it was that easy, they'd be out of business.

[mshonle.livejournal.com]

Not bad. I had a couple of "late" payment, which by late I mean 6-10 days. Don't credit reports only worry about late after 30 days?

It's an MBNA alumni card. Was supposed to help my school. But they have also been ripping off another friend I knew from college. They sent him a letter telling him about the APR increase and he could chose to go with it, or keep his current, but never charge anything new to the card again.