Money Tips: Pay Off Credit Card Balance with Another Credit Card?

Posted On: August 19, 2006

Guest: Bikshu
Post subject: Pay Off Credit Card Balance with Another Credit Card?
Posted: Sat Aug 19, 2006 1:39 am

ASBrainstorm: Yes you are absolutely correct. You can certainly use that method to payoff a credit card with its own promotional rate. But it requires having that second account, having some available credit on one of the two accounts, and paying two seperate BT fees for the two seperate BTs. I was under the impression that we were discussing the possibility of using a promotional rate to payoff an existing balance using just one transfer on just that one card. I guess I misunderstood the question, my bad…

As for your first question, yes the bank most certainly cares what you do with the funds once they are in your checking account. Banks are very heavily regulated, now more so than ever due to anti-terrorism and money laundering laws. A bank can actually get fined or much worse if it is discovered that proper precautions were not taken to prevent improper use of funds. Additionally, many banks have internal policies that stipulate how loan funds may or may not be used. As an example, this is why MBNA cards will be declined if you try to use one at an online gambling site.

Finally, if we didn’t at least attempt to discourage people from using a cash advance to payoff the existing balance, there would be no need for the “payment allocation method” in the first place. I do see cardholders that have taken a promotional cash advance on one of our accounts and then sent in a payment for that exact same amount on another account with us. Sometimes, but not always, the payment department will notice the two coinciding actions and reject that payment on the second account. We will consider it a bad check and assess all the fees that go along with that. You are right that it is rare and most people do get away with it, but some are not so lucky. This is why modifying the amount you take and then pay back is advised.

Guest: hdporter
Credit Expert (100+ Posts)
Posted: Sat Aug 19, 2006 7:32 am

Just a clarification: I had a bank (and I’m very sure it was BA) last year present me with a BT offer where the fee went to my standard purchase account. As sometimes happens, I didn’t read the fine print carefully up front and was caught by surprise when the first billing arrived.

I pitched a fit by phone and their website, making clear that I thought this non-standard process was an insult. It was to no avail.

- Harry

Guest: Polonius
SENIOR MEMBER (Member for 2 yrs.+)
Posted: Sat Aug 19, 2006 10:51 am

I’ve also had balance transfer fees charged as purchases. What I try to do is overpay my account by the amount of the balance transfer fee before doing the transfer. Then the fee is offset by the credit balance and there’s no interest paid.

Again, I don’t understand all the fuss about such things. Assume the BT fee is capped under $100. Even if you’re charged your normal purchase interest on it, you’re talking about how much money? $20 at most over a year? That’s not a deal-killer. In fact, by paying some interest on your account you probably make your card look more profitable to the bank than someone who doesn’t do that, thus encouraging more offers and higher limits in the future.

I look at it this way. I’m earning far more than that $20 from the offer–and the bank that’s charging me that “finance fee” is paying for the fee itself with the interest I earn from that 0% loan for a year.
_________________
Polonius
“Neither a borrower, nor a lender be; For loan oft loses both itself and friend”

Guest: toby
Posted: Sun Aug 20, 2006 12:20 pm

Speaking from experience, MBNA simply adds the cash advance fee to the cash advance balance.

I regularly do cash advances from my credit cards to my online bank account. But only when the cash advance offer is 1% or less for at least an 8 month term and will allow at least $ 10,000 in cash advance monies. These monies are then kept on deposit currently earning 4.88 % APY.

You won’t get rich doing this, but it is making the money work for YOU!

Some people collect stamps, I collect bank statements. *laugh*

I prefer using MBNA for these transactions for several reasons:

1. In my opinion, MBNA has one of the best customer service departments in the industry.
2. MBNA has higher than average credit limits per card. Mine is currently $ 43,000.
3. MBNA allows for the entire credit limit to be used for cash advances (most cards limit cash advances to far below the cards credit limit).

Bikshu: I would be happy to ask for you (or your extension) for my future cash advances from MBNA to help with your volume numbers, if you are allowed to do so. I always look to support those that take the time to contribute to these types of public forums.

Toby