Points instead of interest charges

Discussion in 'General Discussion | Credit Cards' started by TUMD, Feb 3, 2014.  |  Print Topic

  1. TUMD

    TUMD Silver Member

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    I'm curious if anyone else implements this method.

    A year or so ago I had unavoidable expenses that I had to place on my credit card to the tune of several thousand dollars and have been trying to slowly pay them down over the time since. In Oct I got a BlueBird card (and one for my girlfriend) and with the help of VRs I immediately started charging one credit card and paying off the other between statements. By doing this I have been able to artificially pay off that several thousand each month by moving it back and forth between the cards. In essence instead of paying $50-80 in interest I am paying this amount in VRs and getting points for it. Eventually I will get to a point where everything is paid but in the mean time it is great avoiding interest charges and getting points at the same time!!

    Obviously this works best if there is 2 weeks or so between statements.
     
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  2. MX

    MX Gold Member

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    It's cool to use the float of VR's and CC grace period to avoid carrying a permanent balance on one card. Just don't forget that it's a temporary measure, and don't become dependent on it. There's only one sure way of not going into high-interest CC debt -- reduce your net spending to less than your income.
     
  3. TUMD

    TUMD Silver Member

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    Yes, I can do the basic math of income minus spending but when u have an unexpected serious situation that requires you to put an amount you are not use to on your credit card it is nice to be able to make the best of a bad circumstance.
     
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  4. gconnery

    gconnery Silver Member

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    Also this isn't of course "interest free". You are effectively paying $3.95 per $500 per month. Which means that over a year you're paying back $6,047.40 on your $6,000. Working out the interest rate ($503.95 payment 12 times on $6,000.00) and you find that you're paying an annual interest rate of 1.45%. So certainly lower than you'd be paying any credit card, though probably higher than what you're getting for your savings these days in a bank...
     
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  5. MX

    MX Gold Member

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    Fortunately, the value of points even from a 1X card will always cover the $3.95. So as long as OP doesn't lose track of his net spending, he's got a good method to quickly refloat the offending balance.
     
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  6. WilliamQ

    WilliamQ Gold Member

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    Not a qualified financial adviser but you seem to know what you are doing and doing it in a way that gets you something in return (points, minimum spent etc).

    As the saying goes, when Life throws you a Lemon, make Lemonade.... (Did I get that right?)
     
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  7. misterbwong

    misterbwong Silver Member

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    Certainly an interesting strategy-one I hope I will never need but it's another tool for the toolbelt. Thanks for sharing, OP.

    Another alternative is consolidate balances on a 0% no BT fee card (Chase Slate comes to mind). Might be a good choice if you can pay everything off within the promotional period.
     

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