I'm semi-new to the whole Credit Card scene... quick question for you

[Clintonista2]

I've noticed that the minimum payment required each month is generally low (20-30$). Let's assume that I (very poor student) can't afford to pay a monthly payment. What would happen if I were to make a cash withdrawl from an ATM, using my credit card,and then deposit it into my savings to simply pay the monthly minimum. Is it illegal or something? Is there some detrimental effect when doing this? It seems like a pretty big loophole to me.

[some guy]

1. I don't know if it's illegal

I am almost certain it's stupid. Most cards (though I can't say for certain about yours) charge one interest rate for purchases, and a different (higher) rate for cash advances.

So to make a $30 payment on a $100 purchase using the method you contemplate, would leave you with a $70 debt, plus interest, plus $30 debt with an even higher interest.

They alsoscam you in subsequent months by applying payments partly to the purchase debt and partly to the cash advance debt, so you tend to have cash advance debt (at the higher interest) owed for longer periods of time.

[Clintonista2]

3. But higher interest would be worth being able to make the payment

I'm 19 and already WAY over my head in debt. The last few months I've paid only the minimum, so I just need a plan B incase one month I can't pay.

[some guy]

5. okay Plan B

Go see a reputable consumer credit counselor Tuesday.

Cut up the card, immediately.

Let the CCC help you figure out a way to dig yourself out from under the debt before you dig yourself even more deeply into debt.

Good Luck!

[barb162]

9. best suggestion!

[pinniped]

11. Some sneaky credit card companies let you accumulate....

interest on the higher interest cash advance portion while only the lower interest purchase portion gets paid off.

They have this sneaky "lower interest balances get paid off first" crap.

If you have $5,000.00 in purchases and $5,000.00 in cash advances, and it takes you 10 years to pay the purchases off, you will still have a balance of $5,000.00 in cash advances after 10 years.

They also try to trick you by sending checks they encourage you to deposit directly into your bank account. These sneaky checks will undoubtedly offer an interest rate lower than both purchases and cash advances. If you cash this thing, you will be paying off the seemingly low interest check while tons of interest accumulates on your higher interest balances, purchases and cash advances.

The credit card companies have all the tricks at their disposal to maximize profit and put you in the hole. Be careful.

Crapital One is one company that has perfected this interest/payment scam.

[Kali]

2. that cash withdrawal will likely be at a higher interest rate

and be last to pay off.

If you are already in the mind set of making minimum payments you would be better off cutting that sucker up right now. Trust me.

[Omphaloskepsis]

4. You can do it, it is legal... IT IS FUCKING STUPID.. DON'T DO IT.

Of course this will only work for a few months. You fuck yourself if you do this. legal = yes, smart = fuck no. This approach will cost you tons in fees.

edit :: I should add. Do you have any plans to fix your finances within, say six months?

[Clintonista2]

6. If absolutley necessary

My parents would probably bail me out. But that is extreme "don't go there" territory!

[Omphaloskepsis]

7. Don't starve.. Buy food and pay rent if you need to..

Don't buy a new iPod on the card.

[PoconoPragmatist]

8. You Mean Like Paying Your Visa With Your Mastercard?

LOL...I know folks who have done it. I don't recommend it, really, but, if there is no other way, hell, don't deny yourself basic survival necessities like food and stuff.

It will catch up to you if you do it for a really long period of time, but...to get by in a tight month here and there, I don't see anything wrong with it, really.

[Omphaloskepsis]

10. More of a...

Take a cash advance on your Visa to pay your Visa.

[Contrary1]

12. Don't Do It!

Both of my kids got into trouble with credit cards in college, and they paid for it for years.

Need more money? Get a job. Already got a job? Get a second job....
or quit buying crap you don't need.

[krispos42]

13. They charge for cahs advances, too. Here's some advice

Take it. Trust me, bankruptcy SUCKS...


Go to the store. Buy the biggest Ziplock plastic container you can find, the kind made out of translucent plastic with a blue snap-on lid. Probably about a half-gallon or so. And a package of clothespins, the spring-loaded type. And pay cash.

Fill the plastic container to the brim with water. Clip two clothespins to the bottom of the credit card, pointing straight up, so the card has legs.

Gently place the credit card in the water, letting it rest on the ends of the clothespins so it stands up like a little billboard.

Gently snap the lid on tight, then carefully move the entire thing into the deep back corner of your freezer. Cover it with a bag of Tater-Tots or two.

Leave it there until you are in the absolute deepest, darkest pit of financial despair, then wait two more days before taking out the container and letting it defrost in the sink.



If you absolutely must use it, do something like arrange to pay ONLY your car insurance every month automatically, then arrange to pay off your credit card every month, also automatically. I think this way you get that nice consistant on-time payment for both accounts. No interest, no penalties, no fees.

And put your credit card in the freezer as described above as soon as you're set up for automatic payments!