Pouye
04-11-2008, 04:13 PM
I usually hate talking about money, but I thought I would share a little trick I learned the other day. Maybe you all know this trick, but I thought I would share it anyway.
Here was the scenario:
My wife and I have good credit, and a fair bit of it, too -- because we use credit cards for international travel (which we do a fair bit of).
The other day we booked some airline tickets for our family to come back to the USA. We found out that the agent we used no longer took credit cards (for whatever reason). Fortunately we had saved up most of it (about 8 thousand dollars), but what we usually do is make up the rest by putting the total outstanding on our card and then applying what we have saved up to the balance so we aren't too deep in debt.
So... we were short a couple thousand bucks, and weren't sure what to do, since there were time constraints on the bookings to get the good deal we were getting. (It might not sound like a good deal to you, but you also have probably never bought tickets for a family of four from Papua New Guinea to the USA, either).
I looked around for those "credit cheques/checks" -- you know, those checks that your credit card company sometimes sends you in the mail that can act like "cash". Well, all of them were expired. They don't last long. Since our credit card company charges us $75 bucks per check, we are never in any hurry to use them, anyway.
So now what do we do?
Well, we bank online for both VISA credit and our regular banking (both checking and savings). We didn't have enough in our checking/debit account to make up the difference, and so we started trying to come up with a plan. My wife, who is a smart cookie, came up with an idea. Here was our conversation:
Me- What about a "cash advance"?
My wife- Those things are terrible! Not only is there a fee, but the interest rate on the advanced money is around 30%! Instead, how about doing one of those "transfer a balance from one credit card to another" online transfers?
Me- What do you mean? We don't have another credit card -- and what good would that do?
My wife- No... I mean (she pulls up our online VISA account) transferring a balance from another "credit card", which is actually our VISA debit card account.
Me- But our VISA debit card isn't really another credit card, it's a debit card. Besides, we don't have enough in our checking account to transfer anything to anywhere. We only have a couple hundred bucks in there.
My wife- Our VISA debit/check card does has a credit card number.
Me- But like I said, we don't have enough money in that account to transfer to our credit card.
My wife - Honey, you aren't getting it. When you transfer a balance, the credit card company PAYS money TO the other card account -- it doesn't actually take any money from it. For instance, if you have, say, a "SEARS" credit card that has $1000 dollars on it, and you want to transfer that balance to your VISA card, your VISA company pays money *to* SEARS -- $1000 dollars to be exact -- paying off your balance. Then you owe your VISA card company the $1000 dollars instead of owing SEARS the $1000 dollars.
Me- (Finally starting to get it), but honey, our bank account is linked to a debit card, not a credit card. I don't think it will work.
My wife - I don't see why not... our debit/check card works like a credit card. It even has a VISA credit card number.
Me- But don't you have to have the money in the account that you say you are going to transfer?
My wife - Maybe it doesn't matter...
Me- This sounds like something I would have schemed up; I must be rubbing off on you.
My wife- (smiles) so... do you want to try it?
----------
So here is what we did. We did an online "transfer balance from one credit card to another credit card" transfer. We told our VISA credit card (not the debit card, but the "real" credit card) to transfer $2000 dollars from our VISA debit/check card account into our VISA credit card account.
What happened? Well, our VISA credit card put/paid $2000 dollars in our checking account, just as she thought would happen, even though our checking account didn't have hardly any money in it before the transfer.
Now, it did cost some money to do the transfer (there was a fee to transfer the balance of around 100 bucks), but it was *way* better than doing a cash advance (which charges high interest on the advanced money, as well as a fee). By doing a "balance transfer", we actually got a BETTER interest rate on the $2000 dollars than our normal rate, rather than a worse one (I think the cash advance interest rate was something like 30%!)
So to buy our airline tickets, we took the cash we had saved up ($8000 in a savings account) and wrote a check for the rest ($2000) from our checking account. So in a round-about way we were able to use our credit card anyway to accomplish what we wanted to accomplish.
Any other takers?
Rock
Here was the scenario:
My wife and I have good credit, and a fair bit of it, too -- because we use credit cards for international travel (which we do a fair bit of).
The other day we booked some airline tickets for our family to come back to the USA. We found out that the agent we used no longer took credit cards (for whatever reason). Fortunately we had saved up most of it (about 8 thousand dollars), but what we usually do is make up the rest by putting the total outstanding on our card and then applying what we have saved up to the balance so we aren't too deep in debt.
So... we were short a couple thousand bucks, and weren't sure what to do, since there were time constraints on the bookings to get the good deal we were getting. (It might not sound like a good deal to you, but you also have probably never bought tickets for a family of four from Papua New Guinea to the USA, either).
I looked around for those "credit cheques/checks" -- you know, those checks that your credit card company sometimes sends you in the mail that can act like "cash". Well, all of them were expired. They don't last long. Since our credit card company charges us $75 bucks per check, we are never in any hurry to use them, anyway.
So now what do we do?
Well, we bank online for both VISA credit and our regular banking (both checking and savings). We didn't have enough in our checking/debit account to make up the difference, and so we started trying to come up with a plan. My wife, who is a smart cookie, came up with an idea. Here was our conversation:
Me- What about a "cash advance"?
My wife- Those things are terrible! Not only is there a fee, but the interest rate on the advanced money is around 30%! Instead, how about doing one of those "transfer a balance from one credit card to another" online transfers?
Me- What do you mean? We don't have another credit card -- and what good would that do?
My wife- No... I mean (she pulls up our online VISA account) transferring a balance from another "credit card", which is actually our VISA debit card account.
Me- But our VISA debit card isn't really another credit card, it's a debit card. Besides, we don't have enough in our checking account to transfer anything to anywhere. We only have a couple hundred bucks in there.
My wife- Our VISA debit/check card does has a credit card number.
Me- But like I said, we don't have enough money in that account to transfer to our credit card.
My wife - Honey, you aren't getting it. When you transfer a balance, the credit card company PAYS money TO the other card account -- it doesn't actually take any money from it. For instance, if you have, say, a "SEARS" credit card that has $1000 dollars on it, and you want to transfer that balance to your VISA card, your VISA company pays money *to* SEARS -- $1000 dollars to be exact -- paying off your balance. Then you owe your VISA card company the $1000 dollars instead of owing SEARS the $1000 dollars.
Me- (Finally starting to get it), but honey, our bank account is linked to a debit card, not a credit card. I don't think it will work.
My wife - I don't see why not... our debit/check card works like a credit card. It even has a VISA credit card number.
Me- But don't you have to have the money in the account that you say you are going to transfer?
My wife - Maybe it doesn't matter...
Me- This sounds like something I would have schemed up; I must be rubbing off on you.
My wife- (smiles) so... do you want to try it?
----------
So here is what we did. We did an online "transfer balance from one credit card to another credit card" transfer. We told our VISA credit card (not the debit card, but the "real" credit card) to transfer $2000 dollars from our VISA debit/check card account into our VISA credit card account.
What happened? Well, our VISA credit card put/paid $2000 dollars in our checking account, just as she thought would happen, even though our checking account didn't have hardly any money in it before the transfer.
Now, it did cost some money to do the transfer (there was a fee to transfer the balance of around 100 bucks), but it was *way* better than doing a cash advance (which charges high interest on the advanced money, as well as a fee). By doing a "balance transfer", we actually got a BETTER interest rate on the $2000 dollars than our normal rate, rather than a worse one (I think the cash advance interest rate was something like 30%!)
So to buy our airline tickets, we took the cash we had saved up ($8000 in a savings account) and wrote a check for the rest ($2000) from our checking account. So in a round-about way we were able to use our credit card anyway to accomplish what we wanted to accomplish.
Any other takers?
Rock