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Originally Posted by neatdesign
Technically, moving a balance from lender to lender to avoid paying any interest is a form of credit card fraud called "kiting" and is considered a federal crime. However, I never really understood how this could be a crime when the lenders themselves actually promote it and essentially encourage consumers to participate in it.
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Actually that's not kiting. Kiting involves, basically, spending money that you don't have, or before you have it. For example, if you write a cheque today that would be NSF if cashed *on the spot*, you're kiting (even if you know that the cheque won't hit your bank until tomorrow, and your pay will have been deposited by then, etc.). It's also called "floating" or "paper hanging" and involves any situation that takes advantage of the delays introduced by processing times. With regard to credit cards, it means paying the minimum payments on one card by using another card - a good example is at
http://www.credit.com/slp/chapter8/Downward-Spiral.jsp.
But moving an entire credit line to a lower interest rate vehicle - whether a credit card offer or a consolidation loan or simply renegotiating a mortgage- isn't kiting. The important distinction is that kiting occurs when you are "floating" debt, appearing to make payments with no funds actually coming from you.
http://www.early-warning.com/check_fraud_schemes.asp
http://www.investopedia.com/terms/k/kited.asp
http://www.investorwords.com/2700/kiting.html
http://en.wikipedia.org/wiki/Check_kiting
http://findarticles.com/p/articles/m...62/ai_15139850
http://www.answers.com/topic/check-kiting
http://mentalhelp.net/poc/view_doc.p...d=10656&cn=217
Jackie