Tuesday, May 17, 2005

My Devious Interest Rate Schemes

Everyday I live with a little niggle of fear that my credit card company is going to find me out. I fear that they are going to find out how I've been cheating them out of their exhorbitant fees and they are going to back charge me for all of the interest that I should have been paying them. Each time I get a piece of mail with the words "Important Account Information Enclosed" I cringe and think "the jig is up, they've found me out." But each time it turns out to be more blank checks with a low 2.99% or 3.99% interest rate that they claim I can use to "purchase new furniture or a computer....take a vacation or even write the check to yourself and deposit it into your checking account to use however you like." And that is exactly what I did.

I wrote the check to myself, deposited it into my checking account and immediately made a payment for that same amount to my credit card. Technically, they are supposed to pay off the payments that have the lowest APR first but I knew from previous experience that they took FOREVER to actually post the check to the account after it had already cleared the bank. They charge a $50 finance fee so if it didn't work, I would be out $50. It was a risk I was willing to take because if it worked, I would be saving almost $50 a month in interest payments and the interest rate wouldn't change for the entire life of the loan.

I checked my credit card statement and checking statement literally every hour to watch when they posted the payments. Like I had hoped, it took them more than a week to post the check to my credit card after it had already been available for withdrawal in my checking account for a couple of days. When I got my next statement in the mail my entire balance was locked in at 3.99%! It worked!

I was so elated and giddy that when I received another set of checks in the mail with an interest rate of 2.99% I contemplated doing the whole thing over again. Instead, I opted to transfer my 3.99% vehicle loan onto my credit card. So now, I have it all consolidated into once payment at an average interest rate of 3.5%. So, the tip of the day: dare to be devious. Beat them at their own game.

The thing that really bothers me about the whole thing was that once my balance got to be more than 80% of my credit limit they raised my interest rate from 8% to 23%! Thank god it doesn't really matter because the whole thing is locked in at a low rate. But come on, why do they still send me checks encouraging me to spend more money on my credit card if they are going to penalize me for it? Geez, some people.

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Tricia said...

Wow. That is all I can say. I think you may have just helped me solve a problem with the order I am going to tackle my credit cards! I've never thought of using the checks like that.

Hmmm...was it a large check that you deposited in the bank and made payment from right away? I'm just curious if the bank might hold it a few more days before I could draw funds from it.

Thanks for sharing the tip :)

Barb said...

I do this too!!!