Dangerous revenge: Beating credit card companies at their own game

Published: Monday, June 24 2013 10:10 a.m. MDT

Michael Dolen remembers that day 10 years ago in Adrian, Mich., when a large delivery truck T-boned the Ford Taurus he was driving. The impact crushed his side of the car and also just about everything on the left side of his body.

Insurance paid for most of the 18-year-old's painful surgeries, but coverage for specialists was outside his health plan and cost him 50 cents on the dollar. There was no way his single mom could help pay those bills, and there was no way Dolen was going to sign up with the 26.9 percent interest rate "financing plan" the specialist's office offered him.

So he put the bill on a credit card.

Three years later, in 2006, Dolen made his last payment and hadn't spent a penny in interest. "I strategically used credit cards to beat the banks at their own game," Dolen says.

His experience paying off his crash led Dolen in 2008 to found CreditCardForum.com, a website where consumers rate and compare credit cards. It eventually became a full-time job.

For many Americans, their full-time job may have to do a lot with making minimum payments. The amount of credit card debt per U.S. household averages $7,073, according to a new analysis by NerdWallet.com. If you look at the average credit card debt for those households that have debt, the average rises to $15,162. A new analysis by CardHub.com shows that Americans are on the road to adding $47 billion in credit card debt this year.

With that much debt in plastic, it isn't surprising that some financial gurus, like radio personality Dave Ramsey, recommend cutting up the cards. Dolen and other experts, however, see a different possibility — a way to turn the tables on the banks and credit card companies. It is a dangerous game, a game that if played right could save thousands, but if played wrong could send people to make desperate calls to financial counselors.

Getting into credit card debt because of an unexpected health problems is not uncommon. Will VanderToolen, a financial counselor, sees it all the time. The bulk of calls he gets at AAA Fair Credit, a free financial counseling service based in Salt Lake City, deal with excessive credit card debt. Some of that debt comes from medical bills. Some comes from people who lost their jobs and covered interim expenses with credit cards. Other debt comes from people who are just classic over-spenders.

Zero the hero

Dolen, however, says he was not an over-spender. He considers himself very frugal. It was that frugality which drove him to put his medical bills on that first credit card back in 2003. That card was a new one he qualified for from Bank of America that offered zero percent interest for several months. After that offer expired, he transferred the balance to another card that had a zero interest rate introductory offer. He did the zero percent shuffle multiple times. "I had about a dozen cards," Dolen says. "Before the recession, banks were giving cards to anything with a pulse."

He says there are plenty of ways to use cards strategically and legally, by the banks' rules. But it takes a plan and discipline to pay on a schedule. There is little room for a slip-up.

Free money

Many credit cards try to lure new clients with a high initial bonus. There are always strings attached, however. To get the bonus, a person needs to run up a certain amount of purchases within a specified period. For example, one card gave a $500 bonus if people spent $3,000.

"It is one of the best ways to get a lot of free money," says Odysseas Papadimitriou, CEO of CardHub.com, another credit card comparison website. "You use it for a few months and then you get up to $500 of free money. It doesn't get much better than that."