this post was submitted on 01 Aug 2024
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parents scammed out of 10K line of credit - best way to pay it off (self.canada)
submitted 6 months ago* (last edited 6 months ago) by ChocoboRocket to c/[email protected]
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So my parents got scammed last night, fraud case is open but it's likely not gonna go anywhere and they'll be out 10K - they know better and now they really know better, and I'm hoping to get some advice on a repayment strategy.

They absolutely don't have that kind of money and repayment will take a while.

Plan one is just put it on the mortgage, but they're currently locked in at a lower rate for 2 more years, so adjusting that isn't ideal if it changes the rate. If not, adding 10K to mortgage is no brainer.

Line of credit does carry lower interests, but it will accrue daily, credit cards are high interest, but interest is racked up monthly.

Would it be possible/smart (assuming +10K credit card capacity) to move LoC debt to the credit card for 25 ish days a month to avoid daily LoC interest, and then send the debt back to LoC for 5ish days (transfer time) and have the credit card at $0 at the end of every month? No credit card interest and far less days for LoC debt to accrue interest?

Obviously there is risk in not having the credit card paid off in time, but would this strategy be viable if properly executed?

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[–] pubquiz 26 points 6 months ago (3 children)

I get what you're trying to do moving the money back and forth. I seems to me it's awfully close to kiting - a concept my branch manager explained to me when I was 17 and thought I'd found a loop hole. Be careful; getting busted is no fun even when it's a scolding. https://en.wikipedia.org/wiki/Check_kiting

[–] ChocoboRocket 3 points 6 months ago

Yeah, it's pretty much the idea of kiting but without intention for scamming/lying - just hoping to take advantage of the difference in how interest is applied to debt without breaking the law.

Considering there is still risk involved (bank/CC get paid either way, and miss timing the transaction results in interest payments to them) its more of a risk tolerance approach than scam/fraud, but I don't doubt the Bank's diligence in protecting their assets.

Hopefully they can do a debt consolidation, and get a better rate, but with interest rates where they are I am not sure it would be much better than line of credit

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