Premium Bond & credit cards

stuartgh

My uncle said this works, is he right?

"So one way to make money is to get as many interest free credit cards as possible and use them to buy premium bonds. The more u buy the more chance u win. At the end of the interest free term u simply cash in the bonds and pay off the cards with no cost."

Sounds too good to be true?

Jegersmart

You cannot buy premium bonds with a cc as far as I know, much like you cannot pay off a cc with another cc. Your uncle is a fool imho.:O

stuartgh

Are u sure he's a fool - this post on hotukdeals suggests u can use credit cards:

I work in a Post Office and the other day I had a customer purchase some NS&I Premium Bonds and wanted to pay for it via his Credit Card. Now at the time I was certain the system wouldn't let you pay for anything like that by credit card - only cash, cheque or debit card. But he told me he used his credit card in the past. So we tried and it went through fine.

Now I'm 99.9% certain that that transaction will show up on your credit card statement as a PURCHASE (Post Office Limited). So I bet your wondering where I'm going with this don't you, well....

Buy £500 of premium bonds on your credit card, take advantage of interest free periods. Cash in your premium bonds as soon as you get them and you've got a cash advance without paying the fees or the interest.

A Lot of credit cards offer vouchers, points, air miles for example. Buy Premium Bonds, pay your credit card bill off in full, so no interest and cash in your bonds.... Great way to collect your awards from your CC company if you've cash flow can let you.

:-)

Ark_Welder

A reason for not doing this is that getting lots of credit cards will probably have a negative affect on your credit score. So when you do come to get credit (such as a mortgage) then you might have problems.

It also assumes that you will win something...

laurel7172

You do know that, on average, you'd be better off keeping the money in a high interest account than in Premium Bonds, don't you?

And don't 0% cards usually charge a percentage for cash withdrawals?

If you were charged 4% on the maximum investment in Premium Bonds (£30k?) that would be £1200. And there's no guarantee you'd win anything at all.

stuartgh

But do purchasing premium bonds count as cash withdrawals?

And surely you could keep the number of cards to a minimum by raising the limit?

laurel7172

But you can't buy Premium Bonds with a credit card. You'd have to withdraw cash.

We accept Maestro, Switch, Visa Debit or MasterCard Debit. The debit card must be in your name issued by a UK bank. We’ll start processing your payment as soon as we receive your card details, so please make sure you have enough money in your account when you apply.

http://www.nsandi.com/savings-premium-bonds

dtsazza

It's not really too good to be true - it's just a particular form of stoozing.

If you have a 0% credit card, then the traditional use of it is to use it for all of your usual shopping/petrol/bills/etc., and put the same amount of cash into a well-paying account (e.g. 3.x% ISA).

That said, since premium bonds are cash-equivalent, premium bonds might be a good way to "release" your credit limit into cash. Buy the bonds right up to your credit limit, then cash them in as soon as you receive them. Then put that money into a well-paying account (since premium bonds pay roughly 0.8% interest which is easily surpassed by just about anything else).

Good information it really counts as a purchase, though that remains to be confirmed (and seems unlikely because of the loophole I just mentioned).

Jegersmart

stuartgh wrote: »

Are u sure he's a fool - this post on hotukdeals suggests u can use credit cards:



:-)

You can look at http://www.nsandi.com/savings-premium-bonds for accepted payments - and I can confirm there are no credit cards allowed.

If the Post Office accepts credit cards though I guess you could exploit that while it lasts. The post you quote though is of course anecdotal information best.

Good luck.