Another CC cash advance strategy question

E

eggnog

This whole CC cash advance thing got me thinking again. Came up with the following strategy/scenario and thought I might see what board members think.

Is it possible, to get around cash advance, purchase a comodity with your CC, eg: 50k limit so purchase 50k worth of gold. Then turn around and ask for a cash refund. Since you purchased something like gold you should be able to get most of it back less slight fees. This way, the end result is cash at 'normal' CC rates as well as no cash advance restrictions. Could then do a balance transfer to a lower interest repayment rate.

Also, do CC have an interest only feature like with bank loans?
 
CashflowPlus said:
This whole CC cash advance thing got me thinking again. Came up with the following strategy/scenario and thought I might see what board members think.

Is it possible, to get around cash advance, purchase a comodity with your CC, eg: 50k limit so purchase 50k worth of gold. Then turn around and ask for a cash refund. Since you purchased something like gold you should be able to get most of it back less slight fees. This way, the end result is cash at 'normal' CC rates as well as no cash advance restrictions. Could then do a balance transfer to a lower interest repayment rate.

Also, do CC have an interest only feature like with bank loans?
Click to expand...

I don't like your chances.

First of all the merchant pays a fee of the transaction. If it's reversed back to the CC then no fee. I guess you could pay them the fee.
Secondly, with the transaction being on the credit card the merchant has some protection against fraud. If the refund you in cash then their protection is out the window.
You then have the issue of significant cash transaction reporting. For the merchant to be able to pay you the cash they would most likely need to withdraw it from their bank. This would require reporting and would most likely be a cause of concern to the merchant.


You'll find that stores have policies in place that require refunds to be processed back to the card it came from. I'm not sure if this is by direction from the card providers or not.



Regards
Steve
 
CashflowPlus said:
Is it possible, to get around cash advance, purchase a comodity with your CC, ....Then turn around and ask for a cash refund.
Click to expand...

No, as Bradsdad said, they will do a credit for you back on the same card. You might get cash back for an item of under $100 - 200 perhaps. But merchants do pay a commission and this commission is refunded back to them if they do a credit back on your card. Not so with a cash refund.
 
Propertunity said:
I think its called minimum payments - but it has a small amount of principal in it.:(
Click to expand...



Yes that's true but the principle portion is only small as the banks don't want you paying it off too fast as CC rates ;)

Most cards have a minimum repayment of $10 or 3% whichever is greater.
 
better yet .... do a balance transfer first and then cash advance at the promotional balance transfer rate. Confused? This is how:

Card 1: This is your current / existing credit card with bank ABC. Keep it at $0 balance
Card 2: This is a new credit card being advertised by bank XYZ as 2.9% balance transfer for the life of initial balance transfer

(i) Apply for the new Card 2, including the 10k balance transfer from Card 1.
(ii) Once bank XYZ approve Card 2 + 10k balance transfer, they simply mail a cheque for 10k to bank ABC to be deposited against Card 1 (the $0 balance doesn't really matter here ... they won't care)
(iii) Now that Card 1 is in 10k surplus, go ahead and withdraw the 10k .... and cash advance fees shouldn't apply since it's your own surplus cash above the $0 balance
(iv) rip up Card 2 with bank XYZ ... chuck it in the bin ... and pay off 10k @ 2.9% at your leisure

remember to weigh it up against the Card 2 annual fee and other charges associated with same from bank XYZ

e.g. Emirates Citibank Platinum Card Credit Card currently has 4.9% on initial balance transfer for life .... but comes with a $199 annual fee.

PS --> I'm not associated with Emirates and/or Citibank in any form or manner. The above is simply an example of an offer on the market

PPS --> I used this strategy to secure 17k @ 2.9% early last year ... which made for a very cheap car loan :)
 
Last edited:
tdh78au said:
better yet .... do a balance transfer first and then cash advance at the promotional balance transfer rate. Confused? This is how:

Card 1: This is your current / existing credit card with bank ABC. Keep it at $0 balance
Card 2: This is a new credit card being advertised by bank XYZ as 2.9% balance transfer for the life of initial balance transfer

(i) Apply for the new Card 2, including the 10k balance transfer from Card 1.
(ii) Once bank XYZ approve Card 2 + 10k balance transfer, they simply mail a cheque for 10k to bank ABC to be deposited against Card 1 (the $0 balance doesn't really matter here ... they won't care)
(iii) Now that Card 1 is in 10k surplus, go ahead and withdraw the 10k .... and cash advance fees shouldn't apply since it's your own surplus cash above the $0 balance
(iv) rip up Card 2 with bank XYZ ... chuck it in the bin ... and pay off 10k @ 2.9% at your leisure

remember to weigh it up against the Card 2 annual fee and other charges associated with same from bank XYZ

e.g. Emirates Citibank Platinum Card Credit Card currently has 4.9% on initial balance transfer for life .... but comes with a $199 annual fee.

PS --> I'm not associated with Emirates and/or Citibank in any form or manner. The above is simply an example of an offer on the market

PPS --> I used this strategy to secure 17k @ 2.9% early last year ... which made for a very cheap car loan :)
Click to expand...

This is a great idea if it really works. Would this really work with any bank?
 
Electro said:
This is a great idea if it really works. Would this really work with any bank?
Click to expand...

sorry Electro ... can't answer that one. Not sure if all banks, etc would skip the $0 balance check.

It did for me ... but that too was almost 18months back. May not work again.

If you do decide to go down this path, be sure to ask bank XYZ on whether they care about the $0 balance on Card1 with bank ABC. and please do so at your own risk.
 
Last week I utilised a 0% 9 month interest free balance transfer on offer and when I filled in the documentation, I didn't know the exact amount outstanding, so I added another $500 on top of what I thought the balance was. Thinking of course, they would only transfer the outstanding amount. I was wrong, they transferred the amount that I had put down, and now have $500 in credit sitting on the original card. Apparently, you can then put in application to get the funds paid to any account. :)

So taking that an extra step, if you were to say 'accidently' put down $5000 extra, as per my example (as long as your credit limit in the new card allowed it). Oops, I put an extra zero, my bad, you would technically have an extra $5000 cash (at top interest mind you).

Not sure if the banks have some sort of system which checks and blocks this.
 
buzzlightyear said:
So taking that an extra step, if you were to say 'accidently' put down $5000 extra, as per my example (as long as your credit limit in the new card allowed it). Oops, I put an extra zero, my bad, you would technically have an extra $5000 cash (at top interest mind you).
Click to expand...

Why restrict yourself to only 1 extra zero. Why not put 2 and say you forgot to the decimal place between cents and dollars. This way you get $50,000 :D
 
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