Charging your own credit card for rewards?

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anchorman
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Charging your own credit card for rewards?

Postby anchorman » Wed Jun 15, 2011 12:02 pm

I have a very specific question and I am looking for some helpful advice.

I have a credit card that provides me with 2% cash back, unlimited on my purchase. I have seen online mobile processors that can work with my smart phone that have a monthly fee of $12 and provide a merchant rate of 1.7%.

I'm wondering if I can sign up and charge my own credit card for the full limit (it has a very high credit card limit, over $50,000) through my own processor and take the rewards. I know it is legal but I imagine it violates the TOS for the card. I imagine the credit card companies would frown upon this, but is it something that would result in me losing my credit card if they started asking questions? Is this something they would red flag and likely get nasty with me about?

The benefits would be a small profit each month, maybe $150 and the ability to float any balance I had on the card without paying any interest.

Any helpful information from insiders would be great. Thanks!


jeffysdad
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Postby jeffysdad » Wed Jun 15, 2011 4:18 pm

Interesting idea. It sounds to me like you are thinking you can capture the spread between the 1.7 and 2%, i.e., 0.3%, which would be $150 on $50,000. I don't know the answer to your question, but think there has to be another fee in there besides the $12/month. The merchant (you in this case) would be paying the bank 1.7%, and the bank would be paying the consumer (you again) 2%. Sounds like a losing proposition for the bank, and I'm sure some lawyer has already spotted it.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

anchorman
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Postby anchorman » Wed Jun 15, 2011 5:48 pm

Mobile Credit Card Processing made easy with Intuit GoPayment

Under pricing, it is 12.95 per month and 1.7% per swiped amount.

jeffysdad
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Postby jeffysdad » Wed Jun 15, 2011 8:50 pm

Yes, but I think the Intuit fees only cover their service and there would be additional interchange fees originating from V/MC/Amex and/or the card-issuing bank.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (Amazon.com, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

DoingHomework
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Postby DoingHomework » Thu Jun 16, 2011 5:56 pm

I think jeffysdad is correct. There would be additional interchange fees on top of that. It is possible that what you want to do would work but I am skeptical for a couple of reasons. First off, rewards cards and other premium cars typically have higher fees to the merchant. Intuit might be absorbing this to promote their service though.

Secondly, American Express merchant accounts work a little differently. You need a separate merchant account with them in most cases. So the information on the FAQ which says all credit cards can be used seems to be incomplete if not wrong.

Why not just call them and ask? Setting up a real merchant account will require a credit check and an actual interaction with the provider. It sounds like you have good credit and could easily get one but you would/should still be talking to someone on the phone about this who knows the real answer.

DoingHomework
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Postby DoingHomework » Thu Jun 16, 2011 6:03 pm

Your answer is in the fine print:

"All Visa/MS/Discover Network transactions that do not meet the requirements stated above, business cards, foreign cards and transactions that do not meet Visa/MC/Discover Network requirements for the best interchange program will be charged a "Non-Qualified Rate" of 3.70%."

You'll pay 3.7% for non-qualified transactions. That will include most rewards cards! You only get the 1.7% rate for cards eligible for the lowest interchange rates.

Incidentally, I have a merchant account with another company and my rates are much better than Intuits. I get about 0.5% better than what they offer and only pay a $10 monthly fee which is waived in months with high volume. The deal you found is not that great.

Also, there are various other important details disclosed in the fine print - AMEX is handled differently as I mentioned.

thecreditczar
 
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Postby thecreditczar » Sun Jul 10, 2011 9:30 am

Hello Doing Homework,
Which merchant account company are you with if you don't mine me asking and how do I put a picture on my profile? Thanking you in advance.

DoingHomework
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Postby DoingHomework » Mon Jul 18, 2011 5:15 pm

thecreditczar wrote:Hello Doing Homework,
Which merchant account company are you with if you don't mine me asking and how do I put a picture on my profile? Thanking you in advance.


Authorize.net.

Not sure how to put a profile picture on.

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Mogul of Pineapples
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Postby Mogul of Pineapples » Tue Aug 02, 2011 9:56 pm

thecreditczar wrote:how do I put a picture on my profile?


Due to all spam this site has gotten, pictures are not enabled for new members but you will be able to add one soon enough if you stick around.

Going back to the topic, I was speaking with an executive at a credit card processing company not too long ago and somehow we started talking about charting your own credit card for rewards. He said it was against the agreements since it's considered to be a cash advance. I'm unsure if he was talking about the processing agreements or the cardmember agreements. I will try and find out.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

Current Cards:
American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
Primary Everyday Card: American Express Blue Cash
Primary Travel Card: Chase Sapphire Preferred



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