Dear Scott,

I love your website and have passed the good word to others where I work. I play the zero percent game every year and never ran into this one. Yesterday, I did a balance transfer at zero percent to pay down my house.

They gave me $20,000, which I will pay back in a year. I was horrified that they asked me what I was going to do with the money. I felt that they did not trust me, and I always pay them back every year before the zero-percent rate goes up. They never asked me this before with the same amounts every year.

I had to say something but did not lead on that I was using it to go debt free and pay down the house, so I had to come up with something fast or else I would be denied the balance transfer. I told them I needed the cash to buy my neighbor's boat.

Scott, I have a great credit score, and I never pay a dime of interest to them in the past. The credit card company even let me open six cards with them and even let me transfer available credit to a new zero percent card. Why all of a sudden do they want to know what I am doing with the money?

Greg

Greg,

Thank you for your kind words about my website and work!

I know what you mean about the "zero-percent game," but I do prefer to call that being DebtSmart. Calling it a game implies that we are taking advantage of the system in a negative way, and that is certainly not the case. How about we call it the "zero-percent strategy"...ooooh, I like that!

The "zero-percent strategy," for those that may not know, is continuously transferring your balance to zero-percent, usually short-term, deals from existing credit cards (or new accounts). This technique can save you a bundle!

It is very interesting that they asked what you want to do with the money. I have never heard of that happening before! In all my years of transferring balances, and I do this all the time between my 80+ accounts, I have never been asked what I plan to do with the money. What difference would it make? They want you to borrow the money, so why should they be asking?

I don't really have a specific answer to your questions but can only speculate:

1)	Maybe it's not the policy, but a rep was just curious (although that is most improbable).
2)	The bank may be collecting data about customers so they can send letters to market their transfers based on what people use the money for.
3)	They actually want to make sure that the money is used for a "good" purpose. However, I doubt this is the case because they just want to make money, and since your credit score is good, they know a profit from you is in their future.
4)	They want to stop people from constantly transferring their balances, but I doubt this too. Banks want to encourage transfers in the hope that they collect interest charges from the lazy who don't stay on top of their debt management.

Most likely, it's case #2--data collection for marketing, but that's just my guess.

Talk to you later.

Regards, 
Scott