Credit Card Debt Management

Not sure of the ethical qualities of this one, but then again I’m not sure of the ethical qualities of raising interest rates on good customers at will. Anyway, the Four-Hour Work Week blog had an interesting post recently about recycling credit card rewards points.

The specific method is a fairly simple three-step process. Set your cash advance limits to $0, in case the credit card company decides to change policy mid-stream. Failure to do this could result in a “nasty surprise,” as blogger Tim Ferris put it.

Then purchase a Visa or MasterCard gift card and use it to purchase a money order that is in turn deposited into your bank account. Alternatively, Ferris suggests that you sidestep the whole giftcard hassle and purchase traveler’s checks at a travel agency, then turn around and deposit the checks in your bank account. Of course, the key is to use the bank account boost to pay off your credit card balance in full. Carrying a balance on the card not only shoots the whole plan in the foot, but it’s financial stupidity.

It seems Ferris’ blog readers are equally crafty. In the comments section, there are other suggestions for racking up points. They include adding other people as an authorized user on your account (actually using the cards when they arrive is optional) and calling your credit card company to cancel your card. According to one commenter, the latter strategy can result in anything from 1,000 free points to one free companion airline ticket. I felt bad for a minute (but only a minute) even spreading this information, because it seems a little wrong. But if you have a vacation or business trip coming up, it just might be worthwhile if your conscience doesn’t get in the way!