Credit Card Bonus ?

Q: credit card bonus ? What would be potential pitfalls with using the credit transfer checks from the GM, GE and Discover cards to make a deposit into your checking account (or Schwab One account in my case) and at the same time making out a payment check to GE, GM or Discover. If I'm correct, I will pay no more than a couple of days of interest, but get back 5%, 2% and 1% for the GM, GE and Discover cards, respectively ... even if I had no money in my checking account. Is that right? Is there a catch?

A: - it may be considered check kiting, which is illegal. (I believe if it is done between interstate institutions, it would be a federal crime -- federal crimes are usually punishable by much longer prison terms than comparable state crimes, so you may end up with a 2-5 year term for small scale check kiting) -Can you say "cash advance fee?" I'm not sure in any particular case if they charge or waive this for the credit card checks, but if it's there, the effective interest on your very-short-term loan will skyrocket unless you have an extremely handsome credit line and use all of it. Last card I looked at maxed out the cash advance fee at $20. Also, make sure that the card will actually pay the rebate on cash advances and not just on purchases. Another possible drawback is how long will it take the credit card to receive and process your payment; also will you run afoul of any check hold periods on your Schwab One "deposits." Finally, how long will it take Schwab and/or your credit cards to get annoyed w/you and decide to terminate the business relationship? Hey, if you can make it work, more power to ya. If nobody exploits the loopholes, they'll never get filled. Recall that Discover used to have no cash advance fee and folks could make money by taking an advance early in the cycle and then paying it back more than a month later; in the meantime collecting interest on the money. Discover must have noticed, 'cause

they closed the loophole. -In most states (and maybe there's a federal law about this), writing a check when the funds are not ON DEPOSIT at the time you write the check is a crime. However, the chances of getting caught seem slim, and how many of us have written and mailed checks on our way to the bank to deposit the money? However, as with all "crimes," the more you do it, the more likely you are to get caught. Personally I don't see anything ethically wrong with this one, but I should point out that most credit cards do not give "bonuses" for cash advances, and convenience checks are considered a form of cash advance. Read your credit card agreement CAREFULLY.