The Debtor Strikes Back
From time to time I report on credit card issues, how they sock it to you and me. But occasionally you can get even. I’m in pretty good shape on my credit card interest rates, except for one bad card. I don’t use it any more. I just want to pay it off.

One day, the bad card sent me some loan checks. Usually they’re a high interest rip-off, but this time they were offering 3.99% for the life of the loan on balance transfers.

I figured out a way to stick it to them with their own offer. I paid off the balance on the bad card with a check from a good card, then paid back the good card with the bad card’s good check, lowering the interest rate from bad to good on the bad card.

If I had done it in reverse, paying the good card with the bad card, then transferring it back, it wouldn’t have worked because credit cards apply all payments to the segment of your balance with the lowest interest rate first. I would have been back at square one.

The two legs of the transaction have to be done in different billing cycles of the bad card. If you pay it down then borrow it back in the same cycle, the two transactions will cancel each other and you’ll be back where you started.

In this case, I was able to pay the bad card by the due date with the good card’s check, then pay back the good card just after the closing date of the bad card (I called them to find this out) with the bad card’s good check. For the sake of elegance, I did this in the 5 day window between the closing date of the bad card and the due date of the good card, staying in the same billing cycle of the good card, so the balance didn’t change.

I hope you took notes. There will be a test (essay), starting with “Which card was first?”

For you youngsters, here is the inspiration for this article