Is it possible to pay one credit card with another? Is that a recommended way to handle a small amount of debt? If one has 3 cards and just shuffles the money around on each of them every month so that each one is getting paid off eventually but there is still a debt somewhere, is that possible to avoid getting late fees? Is that legal?

It's called a balance transfer and yes it's legal.

You can do it, but it's a very very bad habit to get into.

One CAN do it maybe even for quite some time, but it WILL eventually catch up to you and they you will be hit with astronomical interest rates.....

Why would you get fees if you pay the full balance (with another card) every month?

If your credit will allow it, find a cc that has a 0% intro rate for 1 year and no or low balance transfer fees. Transfer the small balance to that card and just pay it off within the year while making the minimum payments.

ETA: Why would you ask this question on this website. There are better places.

Is it illegal to transfer a balance to get "reward points"?

You don't get reward points for making a balance transfer. That's ridiculous.

Of course not. I am talking about buying something with a credit card that gives rewards (e.g.: get 1 mile for every $1 spent on an airline credit card) and then transfer the balance to somewhere else where they have lower interest fees.Where are better places? I have also been looking for somewhere to ask about investing with little to no risk.

try creditboards.com

Deferring payment is a bad habit?

Yes.

What's your real question?

No, but you WILL eventually "run out" of cards and then you will be in trouble...

Believe me I know people who have done this for a few YEARS, and eventually it ALWAYS catches up with them... It's one thing if it is a temporary measure and you expect money to come in and be able to pay off everything in the future, but if you push your luck and make this a habit, eventually you have to "pay the piper"....

When done properly, transferring credit card debt can effectively be a free loan. I'm not an advocate of the practice in general however because most people are not savvy enough to pull it off. But deferring payment is not a bad habit...

See K-Rebbe's post above. Maybe for a very brief amount of time it could work, but if you do this for a prolonged amount of time it will definitely come back to bite you.

You can't just withdraw cash from a card without a severe penalty. Cash advance APR's are usually 18% or higher on cards with low purchase and BT APR. So you can transfer if you have promotional balance transfer or relatively low APRs. Three cards is not enough, you want something like twenty.

So suppose you have two credit cards, C1 and C2. You spend $1000 buying stuff on C1, but you don't feel like paying it out of your pocket. So you decide to do the following:



Forever.

Why won't it work?

Because they don't let you....
Most cards you can only do this ONCE when you sign up as an "introductory bonus"...

Because you can't pay off one credit card with another card..they won't allow it.

Fine, forget credit cards.

I will borrow $1,000,000 from Reuven and at the end of one year, I will borrow the same amount from Shimon and pay Reuven. Then at the end of second year, I will again borrow from Reuven and pay Shimon. And so on and so forth, forever.

In the meanwhile I will spend the original $1,000,000 on a luxurious yacht and house and women. And enjoy life.

And both Shimon and Reuven can't charge me interest. It's ribis. And they can't (or shouldn't) really refuse to loan me the money. It's a mitzvah.

A year is a long time.

Nu. No one thinks it's a great idea?

A year? Nah, you could probably pull it off for a year. A long time is maybe 4-5+ years.

Sorry, I couldn't respond because I was at Reuven's house getting some cash.

So did he give you any?

Yes, he gave me one dollar...er I mean, 1 billion dollars!

Haha you got some.

I knew it was a setup, yet I took the bait anyway.

Dude that is what CREDIT is.. It means you are "good" for the money and can find someone to take the risk and lend it to you...
If you really could convince Reuven and Shimon to keep lending you the money, I see no problem as long as you intend to pay it back at some point.....

Unfortunately most gemachs won't stam lend you than kind of money, finding two is even less likely......

Now that is exactly how chasidim marry off their 17 kids. And provide each of them with an apartment with brand new appliances and furniture. That and take endless mortgages against their house and get involved in dubious tax practices.

Believe me, the credit card companies have hundreds of people who are up day and night thinking of how to fool you and get away with it. You are not going to outfox them. Trust me on this.

About gma"chs, the people who run them (mostly) are kind, but not stupid. Remember women have the phone and men have the mikvah. Maybe if your sources of credit are people from completely different kehillos in different continents like a satmarer from monroe and a bnei akiva guy from sweden. And I said maybe.

Absolutely. Like I noticed that my Bank of America online billpay is set up so that you have to manually change the payment to the full amount due. If you leave it as is, you only pay the minimum $15 or whatever and get stuck paying interest. Not only that, they don't tell you what you owe them unless you actually go to a different page. Citibank is hospitable enough to at least give you three options: the full amount due, the minimum payment and another box where you can fill in the amount. Now that is nice. I don't like companies that try to trick me into screwing up.

lol, that's the problem with not charging interest. Because what happens here? If this goes on forever, Reuven and Shimon both don't see their $1,000,000 every other year. For an entire year. So in let's say a 50 year span, each one of them didn't see the million for 25 years (when combined together). This is basically the same as if they had lent out $1,000,000, and got it back only in 25 years, while the guy who borrowed it from them bought a house, etc. and enjoyed all that the money bought him for free, for all that time. That's (partially) why interest exists - to repay the creditor for the opportunity costs, and the benefit he would have enjoyed had he not parted with the money. In cases where such interest is waved, these kinds of schemes are possible, where you can basically live your life on someone else's money for free.

Yes, but you have to first convince Reuven and Shimon to give someone with no collateral, investment plan or means to repay the loan $1000000 in cash "out of the goodness of their hearts"...... If you can do that, you should really go into business for yourself and you will have 100X that amount in a few years.......

Who said there's no collateral?

You could have, for example, a pre-existing $1,000,000 stock portfolio that you can pledge as collateral for another $1,000,000 loan.

You will still be using that million that you borrowed for free, with my scheme.

Many people DO this, or some similar variation. The "corporate world" is all about shuffling virtual money around that doesn't really exist. The problem is that you need the initial capital to begin with, that and when all the Reuvens and Shimons ask for their money back at the SAME time and you are quickly SOL.......

No, the corporate world charges interest for lending money AND they charge an extra credit spread based on your credit risk.

Collateralized lending is common practice in the corporate world, in fact a standard mortgage is a type of a collateralized loan. The collateral reduces the credit risk, and thus you end up paying less interest.

That's not the point, the interest is just incentive for the rich people to loan money in the first place. But it really doesn't matter from the point of view of the borrower if he never actually intends to pay it back, his debt just goes up slightly all the time. The problem is the same finding creditors who will continue to allow you to play "shuffleboard" with their money...

Besides people are constantly coming up with "schemes" to get what are basically "interest free loans" in one way or another....

Yes, but the incentive has value and that value is well calculated. For instance, when you buy a corporate bond, you are lending money to a company.
The price of the bond will depend on these factors:

1. The risk free interest rate (e.g. treasury curve). This is the baseline you want to receive, if there was zero risk (as the government issued securities are assumed to have). This should hopefully take care of inflation, which is already an incentive for investing.

2. The credit spread of the bond. This is the spread of the credit risk of the security relative to the risk free securities. A given company may have multiple bonds issued with different credit spreads - they will be in what are called "tranches".

Given the rate r1 from credit risk, and the risk free rate r2, R=r1+r2 will be the interest rate you want to get from your loan. [You will then calculate the discounted present value (using R) of future coupon and principal payments, and that will determine the current price of the bond].

I don't see how ANY of this is relevant to the subject at hand....

My argument still stands, if you have enough money/collateral/credit to be able to pull this off, you either don't need to or already ARE doing something similar.......

Variations of the above ludicrous sounding practices are pretty much how the big banks manufacture money out of thin air. Then everyone is so darned shocked when it all falls through.