One of the absolute dumbest messes you can get yourself into, where the insanely high interest rates kick in and rape you in the behind while you're not looking. Often caused by the It's not like I'm really paying for it argument, heard time and time again from people who don't understand that they will in fact have to pay for the items they've just purchased. Often the situation is remedied by paying one credit card bill with another credit card, which obviously makes the debt disappear. Just pay the damn bill on time, folks.

Not that I'd advocate dishonesty, not credit card debt, but the point of paying off one credit card with another can be taken to a ridiculous conclusion. It's based on the fact that credit cards essentially offer unsecured loans.

Firstly, one needs to make sure you have enough credit cards. This can be achieved by applying for any credit card that a company offers you.

Secondly, it's advisable to start with a good credit rating. This will help convince the companies that they want to give you a card, and also lots of credit.

All one has to do then, is run up a bill on one and the following month, pay it off with a different one. Keep repeating this process and you will find that you have an excellent credit rating, being a prompt payer, and therefore the companies are falling over themselves to give you more credit. Result, you keep spending other peoples money, and never have to pay it back.

All one has to do then, is to die before they work out that you haven't ever paid back a penny :)

If you're hoping to make a killing in the stock market, and you're still carrying credit card debt, you're an idiot when it comes to personal finance. You might reasonably expect to make 8 to 10 percent on your investment in equities in the long term, but if you're carrying 18 to 20 percent debt on your credit cards, and paying finance charges or late fees, you're not doing the math right.

Besides, paying down debt at high interest rates is a sure thing, whereas investing involves risk.

The only flaw with the endless rotating credit card balance method, is that usually, they consider balance transfers as a cash advance. Cash advance fees are usually 2% of the transaction amount. So now you've gone from paying about 18% APR a year, to 2% compounded monthly, which is quite a bit higher.

Just paying in full every month and only using cards that have no annual fee means you're using other people's money to buy stuff--at least for the grace period of the card. Whose money are you using? All the dolts that don't pay off their balances in full.

Not usually my style to write response writeups. But in something that could be taken as financial advice, it's important to be thorough!

mrichich says "The only flaw with the endless rotating credit card balance method, is that usually, they consider balance transfers as a cash advance. Cash advance fees are usually 2% of the transaction amount. So now you've gone from paying about 18% APR a year, to 2% compounded monthly, which is quite a bit higher."

In most cases, the advantage of taking these offers on credit cards is that the balance transfer is interest free for about six months.

gm_food says the following three things.

  • Firstly, one needs to make sure you have enough credit cards. This can be achieved by applying for any credit card that a company offers you.
  • Secondly, it's advisable to start with a good credit rating. This will help convince the companies that they want to give you a card, and also lots of credit.
  • Keep repeating this process and you will find that you have an excellent credit rating, being a prompt payer, and therefore the companies are falling over themselves to give you more credit.

This is where the whole argument falls part. Not that many things hit your credit rating as badly as you'd think. But one of the worst things is... applying for lots and lots of credit, because it gives the impression that you need it.

Therefore, to take gm_food's first point, "This can be achieved by applying for any credit card that a company offers you", this is the best way to hit your credit rating in the first place. You will quickly end up being denied credit (and possibly credit related service such as paying your phone and utility bills in arrears rather than in advance). So the whole scheme falls apart.

NB: I'm not a financial advisor, and what I say here shouldn't be taken as formal legal or financial advice. Just remember. Things that seem too good to be true, usually are.

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