Obtaining this loan is a bit demanding, but the beauty is you will never really be paying it back unless you want to. The downside is the continuous vigilance needed to keep the system going in the ideal case. Speaking of vigilance, can you spot the error in the logic?

The idea is, simply put, that you take two credit cards which allow you to withdraw money directly to your bank account. Withdrawing to your bank account is not essential but much more practical than trying to hustle with an ATM, especially when dealing with larger sums of money.

For practical purposes, I assume that these two credit cards have to be from different banks. Call these cards CC1 (e.g. Visa from Osuuspankki) and CC2 (e.g. Mastercard from Nordea). Then the sequence looks like the following (explained below):

The “You”-column is you, or rather, your two accounts, between which you send money. I assume sending money from bank of CC1 to bank of CC2 (and vice versa) does not cost much extra or is completely free of charge. For the purpose of abstraction it suffices to say that the You-column is just “you with the money”.

In the picture time flows downwards. The durations of one month are shown to illustrate when the loan is taken and when is it paid back.

First, you withdraw to your account 10k with CC1. The balance of CC1 becomes -10k. Now you have +10k. This money you will never pay back, so you might as well spend it. However, the illustration shows that it is unspent.

Second, you withdraw to your account 10k with CC2. The balance of CC2 is now -10k. Now you have +20k. The balance of CC1 was -10k. To pay back the loan, you use the 10k you just lifted off CC2. Now CC1 balance is again 0, allowing you to use it to get a new loan. Now you have +10k.

The CC2 balance was -10k. To pay back this loan, you withdraw 10k from CC1 and use it to repay CC2. The balance of CC2 is now 0, allowing the credit card to be re-used. The balance of CC1 is -10k. You have +10k.

You repeat this sequence of paying back the loan from CC1 with money withdrawn from CC2, and vice versa.

Notice, how the balance in You-column is always >= 10k. This means there is 10 thousand which you can spend as you wish. If you’re smart, instead of wasting it on fast cars and South American botanicals, you invest it and try to get a profit. For example, let’s say you end up with 15k. Now you can pay back the original loan of 10k and keep the returns, in this case 5k. Using this system gets you a loan with near-zero interest rate and an indefinite expiration time.

The idea in a nutshell is to keep on juggling the two credit cards forever. Indeed, if you ever cancel one or both of your credit cards, you would have to pay the original loan back.

Sounds too good to be true? Indeed. If so, where is the problem?

The system breaks down when there is a cost associated with moving money from the credit card to your bank account. For example, if you have to pay 2% of the sum moved from the card to your account, the system becomes too costly over time – you can most likely obtain cheaper loans elsewhere.

For instance in the case described above, you would have to pay at least 2*2%*10k = 400 per month to keep the system running. The TANSTAAFL-principle applies, “there ain’t no such thing as free lunch”.

If you are lucky enough to find banks without costs involved in transferring money from your credit card to the bank account, then this system could work, theoretically.

Errata: the last “+10k” of the middle-most (“You”) swimlane should be, of course, “+20k” .