I want to preface this question by saying that this is theoretical, and I fully understand that it is a slippery slope that could get out of hand if not handled properly, and that the gains do not outweigh the risks.
Base assumptions to this case:
- My credit cards (CC A and CC B) are free (no monthly/annual/transaction fees).
- I always pay in full and accumulate no interest.
- There is a 1% cashback annually on the amount I spent (e.g., using the CCs for $10000 in expenditures will net me back $100 at the end of the year). Or there is another reward program (the amount does not matter for the purposes of the question).
With proper planning and extremely strict financial rigor, would it be possible to use only CC A for regular purchases, and use CC B to pay for CC A? By my understanding, by paying in full, and never accumulating interest, the reward program would apply twice without ever having spent a single cent more.
End of January 2017: CC A was used to purchase $1000 in items during the month. I use CC B to pay for CC A's January expenses ($1000).
End of February 2017: CC A was used to purchase $800 in items during the month. I use CC B to pay for CC A's February expenses ($800) and I pay off the CC B bill from January ($1000) with a bank payment.
Apart from the compounding risk, what prevents someone from using this strategy?