$10,000 Free Spending Spree (or Scam)

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$10,000 Free Spending Spree (or Scam)

Question: Would this clever credit idea (scam) work? Apply for $10,000 credit from credit company XXX and also from company YYY. Upon receiving both credit approvals, merrily shop at your favorite merchant, spending up to $10,000 using credit XXX. Then, when the bill arrives, simply payoff credit XXX with credit YYY. Then, some time later when the bill for credit YYY arrives, simply pay it with credit XXX (which had previously been paid off by YYY). This credit flip-flop continues till you contently die with $10,000 worth of free toys. How could this NOT work? There are some minor details such as timing the payment schedules. Also, all of the work could be alleviated with credit account auto-payments.

Answer: These days, you would eventually get caught, if you could even get off the ground for that amount of money. However, in the past it was much more possible and, I understand, done, because it would take days or weeks to process transactions, versus seconds today.

I once had a friend to went to the bank for a loan of $200. Easy enough. Then he went to another bank, told them he had $200 of his own money and could he borrow $2000. Etc.Etc.Etc. He then took all this money and bought stock in an oil company which was regulary splitting its stock in two or three every year. When I last saw this fellow, he told me that the following year would either make him or break him. That next year, the bottom fell out of the oil industry. I’m not sure if he escaped jail or not! Each time you use credit card X to pay off credit card Y, credit card company X is effectively giving you a cash advance which starts accumulating interest the day you get it. Definitely cheaper to get a personal loan.

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$10,000 Free Spending Spree (or Scam)

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