Using Convenience Checks to offset credit balance

[Todd Carlson]

Hello Everyone! I just got out of a Legacy education class and the instructor brought up the intetesting topic of convenience checks. He said you would write the convenience checks to yourself for the maximum amount you could, deposit the into your bank account, pay it off at the end of the month and raise your line of credit at the end of every third month. You would do this until you have a limit if $200,000. After you have two credit cards lIke this you buy a house that needs to be fixed wIth one of the credIt cards and float the balance between the two credit cards using convenience checks untIl the house is fInished. Once the house is finished you then sell the house for over what was originally paid and pay off the credit balance. If this is actually a viable option you would of paid no money for the house and made a profit. Also the instructor claimed that you could write the convenience checks (which he called purchase checks) to yourself deposit them in your bank account and get credit card perks for each check you wrote. The example that was used was to travel for free using the travel miles from a credit card. Could someone tell me if there is any validity to what he said? I would greatly appreciate it!

[Michael Farney]

There's usually a 3% fee per check you write.  So for every $10,000 check you write, they will charge you $10,300 on the card itself.  So it's great for temporary lending at 3% rate....

***BUT***

Buyer beware, your credit will plummet as your balance/utilization goes up.  And if you butcher your credit score, your bank won't do the refinance, and now you can't pay off the balance.  So it's a very careful, fine line you must walk.  I did this with only $25k, and my credit score plummeted to 615. I paid the card in full right before thanksgiving, and now my scores are 775-805.  Be careful.