Credit Card Cash Trick!

ScottHeron

Hi guys,

Just had a little idea and needed some advice on it.

Basically I have a credit card with a £250 limit.

Now i also have an uncle who owns a store where he accepts credit and debit card payment.

I was wondering is it possible to charge my card with say £100 on the chip and pin machine. Take £100 from my uncle in cash.

In theory, this would be treated as a purchase and and i would have the interest free period to pay it off.

What do you think??

mynameistallulah

Your uncle would have to pay the merchant for the transaction. I expect he would want you to cover that cost.

ScottHeron

Thanks for the reply

From what I know, he will have to pay a transaction fee of 1% to the merchant.

The amount from my credit card gets paid into his account (which is linked to the chip and pin machine) in approx 2-3 working days

Gromitt

I think the transaction fee will be more than 1% as I get that via cashback! For them to make a profit, I'd say it's more like 2.5%.

Plus, if you do it too often, your uncle may be questioned (lots of money going into bank, no receipts, no vat, ...)

opinions4u

If I was your uncle I'd tell you to do one.

I wouldn't want the credit card charges or the VAT investigation it could trigger.

WelshRarebit

Not recommended at all. As an accountant this kind of activity, if detected, could be interpreted as money laundering.

ScottHeron

Cheers for the replies guys

I think i was wrong on the transaction fee 1% does sound too small!

Also thanks to the accountant (Welshrarebit) for outlining any potential problems that can arise!

zagfles

WelshRarebit wrote: »

Not recommended at all. As an accountant this kind of activity, if detected, could be interpreted as money laundering.

Surely this depends how it's accounted for. Supermarkets give cashback on debit cards, and in some countries (where the cost of processing cash is similar to CC charges) they are happy to give cashback on credit cards.

lisyloo

Supermarkets give cashback on debit cards

That's a recognised, allowed and legal process. I don't know but I would guess there are VAT arrangements for this.

Pretending a cash advance is a puchase is not a recognised process and could potentially lead to problems.
e.g. if the company sells exclusive VATable items then it would be expected that the £100 purchase was VATable.
That could cause the owner a nightmare.
Also could look like "money laundering".

I'd say onw is a recognised process with probably a recognised "category" or "code" which takes care of it being no-VATAble, the other is quite literally money laundering which is illegal.

If his was legal an above board it would already be advertised on MSE.

Rupert_Bear

zagfles wrote: »

Surely this depends how it's accounted for. Supermarkets give cashback on debit cards, and in some countries (where the cost of processing cash is similar to CC charges) they are happy to give cashback on credit cards.

Wilkinsons have offered me cash back on my Credit card but have always declined. However not sure how it works out with charges etc.

zagfles

lisyloo wrote: »

That's a recognised, allowed and legal process. I don't know but I would guess there are VAT arrangements for this.

Pretending a cash advance is a puchase is not a recognised process and could potentially lead to problems.
e.g. if the company sells exclusive VATable items then it would be expected that the £100 purchase was VATable.
That could cause the owner a nightmare.
Also could look like "money laundering".

I'd say onw is a recognised process with probably a recognised "category" or "code" which takes care of it being no-VATAble, the other is quite literally money laundering which is illegal.

If his was legal an above board it would already be advertised on MSE.

There can be a difference between the amount put through the till (ie the purchase price) and the amount charged to the card, although I guess some retailers' systems may not allow for this. Essentially cashback is no different from paying with a £20 note and getting change. The receipt would show say purchase price £2, paid £20, change £18. The £2 figure would be one used for VAT and accounts etc.

There's nothing dodgy or illegal about it, the only reason most UK retailers (other than Wilkinsons it seems) don't offer it is because it will cost them, they'll have to pay the 2% or whatever their CC charge is. As I said in other countries (Sweden for instance) most retailers are happy to give cashback on CCs because the cost of handling/paying in cash is similar.