Leveraging A Credit Card

We recently came across an article from MyBankTracker, concerning four steps to avoid credit card debt and decided to post a small "blurb" on the subject.

At many different financial consulting/counseling companies they don't approve of debt leveraging, or using debt positively due to its enticing features.  The most notable enticing features are the ability to borrow more than you actually can pay back on a loan, and being able to spend up to your credit card limit when you have low funds in other accounts.  This is the wrong way to go about debt leveraging.

The right way to take advantage of leveraging debt, is to consider all cons along with the pros. Yes, you have pretty much free money. And if used effectively you can make that money go to work for you.  For example...say you take out a $1000 cash advance on your Bank of America credit card. Bank of America typically charges a 4% transaction fee on the principal withdrawn, and interest rates accrues daily from the time of withdrawal. If you can find investments that have a higher return than the interest rate(and the initial 4%), you will effectively be earning free money. If you pay back your advance within the allotted time period, you could possibly raise your credit score in the meantime.

In reality, investments like these don't occur very often. But when they do, we recommend sound due diligence before any investing decision is made. Above, we explained just one way to leverage the established line of credit on your cards. As long as you pay the lender back, the more creative the uses, the higher the reward.  With that statement comes a caveat: the higher the reward, the higher the risk.

Cloud 9 consultants would only recommend creating unproven leveraging techniques if you are experienced in the field of financing.