Amex Cashback is this idea too good to be true?

bizwax

Hey folks,

I'm just after getting accepted to for an Amex Cashback Everyday Card with £3000 limit.

The cashback facility is great but wondering will it work as follows. Basically, spend 3k, clear it , spend 3k and clear again - rinse and repeat.

Can I do this multiple times in the same billing period to effectively spend more than my credit limit but always using the credit of the card? This way I could effectively be spending a lot but making some decent cash as a bonus.

OR - is it the case that there is some kind of limit on this related to my credit limit and that I can't earn as much as I think?

As a side question, can I earn cashback if the card is in credit or is it only when I utilise the credit available on the card?

Thanks.

Typhoon2000

Yes as long as you pay off your spendings as soon as possible without waiting for the statement, and hence don't go over your credit limit you can spend more than the £3000 a month.

You are not supposed to put the card into credit, so I magine you can only earn cash back on what they lend you, not on your own money by putting the card into credit.

20aday

As pointed out by the PP you aren't meant to put your credit card into 'credit' and the Terms and Conditions on earning cashback on your AmEx from the site state spending in excess of your credit limit will not earn any cashback so I'd imagine it's the same for "front loading" your plastic:

Cashback is earned on every full pound spent on each purchase. The value of each purchase will be rounded down to the nearest full pound before Cashback is calculated. Cashback will be payable at the following rates, 0.5% on spend up to £3,500; 1% on spend between £3,501 to £7,500; and 1.25% on spend over £7,501. Cashback will be paid by crediting your Account during each Card anniversary month on the expenditure that has taken place during the preceding 12 months. Cashback is not earned on Balance Transfers, Cash Advances, American Express Travellers' Cheques purchases, Foreign Exchange transactions, interest, any spending in excess of your credit limit, charges for returned payments, late payment or referral charges and American Express Credit Card finance charges.

JimmyTheWig

Yes, there's a flaw in your logic.
The problem is that you'd need to be spending many thousands of pounds each month!

[But other than that I don't see a problem.]

Credit cards aren't designed to carry a positive balance. They may not like you doing this. Among other potential problems, I believe you lose Section 21 protection by doing this.
Are you looking to make a single purchase greater than £3k? If not, why would you want a positive balance?

bizwax

Hi Folks thanks for the feedback. Looks like I was correct.

I plan on using this to buy products to resell. so will spend many thousands every month. I will spend a lot each day. I guess I need to spend the credit, and clear every couple of days to keep the account clear but not in a positive balance.

I know, I know what I am doing may not be strictly inline with the terms and conditions but I didn't see anything about that and i'll let them come and tell me that. I needed the credit card anyway for cash flow and don't need to get the cashback. It will just be an end of year bonus if I get it, if not then it will be great.

In theory, if I run a tight ship and keep spending the credit and clearing I could be spending in excess of £45k a month using the £3k credit. That would result in a LOT of cashback.

Personally I find it too good to be true and believe they will catch on quick enough. That said, there didn't seem to be much in the terms and conditions. the only thing I can think is that they might not mind this as they will be getting the processing fees from the merchant that volume of transactions.

What do you folks think. Please try and be constructive and not just throw non constructive comments my way because of my "Get rich quick" scheme, which I can assure you this is not.

Thanks.

JimmyTheWig

c-j-h wrote: »

In theory, if I run a tight ship and keep spending the credit and clearing I could be spending in excess of £45k a month using the £3k credit. That would result in a LOT of cashback.

Personally I find it too good to be true and believe they will catch on quick enough.

I don't know what you think they're going to catch on to. I think they'll love you. You'll make them lots of money (of which they'll happily give you a cut in terms of cashback) and you're not a big liability to them in that your credit limit is, relatively speaking, low.


My only concern is that sometimes transactions take more than two days to hit your account.
So if you spend £1.5k a day.
At the start of the first day your balance will be £0 and your available credit will be £3k.
At the end of the first day your balance will be £0 (transactions not yet hit) and your available credit will be £1.5k.
At the end of the second day your balance will be £1k (some transactions not yet hit) and your available credit will be £0.
You make a payment to your credit card, but how much? Anything over £1k will send your balance positive, which you don't want to do too often. So make a payment of £1k.
Even if that comes off by the start of the next day, your available credit on the third day will only be £1k. And you want to spend £1.5k.

Does your business model work on a stightly smaller scale? If not, you might need another credit card until they give you a higher limit.

Also you need to consider your cash flow. Unless customer payments are coming in the day after you've bought the goods from your supplier then you're going to need to use your own funds to free up the credit card balance if you are planning on spending it all every other day.

bizwax

Yes, in theory they will love me. But if they figure they are giving me a lot of money then they might try and withhold. If so I can battle it out with them and take my business elsewhere.

Yes, I understand exactly what you are saying about clearing times. I had thought of that and it may be a problem. I'm a software engineer by trade so I can make a program that tracks my lodgements to CC and measures the time taken to hit it. I can also make a program to calculate how much to pay and when. Hopefully it won't come to that.

And yes, the business works at whatever scale, which I can specify. The 45k is a figure that came from my ballpark baseline. I might reduce a bit until I get a better credit limit. I do have my own cash for cashflow that I can use through a debit card if required.

And also, here is something that may puzzle you but I won't be making any purchases until I have my customers money in hand. In fact, i'll make the purchase with their money.

redux

Surely the profit on your sales should be a lot more significant than a tiny amount of cashback

planteria

yes, you can do this without problems.
spending, clearing, spending, clearing--rather than putting into credit--works more cleanly, but the odd time putting your Amex into credit won't cause you any problems either ime

dzug1

Will Amex be bothered that a personal card is being used for what are blatantly business purposes?

bizwax

dzug1 wrote: »

Will Amex be bothered that a personal card is being used for what are blatantly business purposes?

That is what I was referring to when I mentioned them "catching on" earlier. It's one of the hitches in my plan. But like I said above, i'll let them come to me.

planteria wrote: »

yes, you can do this without problems.
spending, clearing, spending, clearing--rather than putting into credit--works more cleanly, but the odd time putting your Amex into credit won't cause you any problems either ime

Ok, I guess it will be a pain managing the clearing of the card, hopefully with that kind of volume I will be able to get a credit increase which should make things a little easier.

redux wrote: »

Surely the profit on your sales should be a lot more significant than a tiny amount of cashback

Yes they are but if i'm going to spending £40k per month on the card, I don't think the cashback earned after 12 months would be regarded as tiny. May be to you, certainly not to me. It can be used as a year end bonus