Credit Card & PayPal - Cash or Purchase?

dezza

A few weeks ago Nationwide charged me a cash advance fee for a transaction made using Paypal Friends/Family, although oddly the amount was only £3 rather than 2.5% of the transaction (which would have been more). To be clear it was the Paypal transaction that triggered the charge, not a cash withdrawal or gambling transaction etc.

born_again

Asghar said:

Well I was bored, so a few days go I sent the other half £20 via PayPal using a Virgin credit card.

The payment went through fine with no fees from Virgin (or PayPal) and the transaction is no longer pending on the credit card. Went through as "Professional Services", not a cash transaction.

Not sure what MattMattMattUK was on about, totally incorrect post and not helpful.

Not all credit cards process the transactions in the same way. So some will/might process it as a cash purchase. Thus causing extra interest to be incurred.

PRAISETHESUN

It will come down to the card issuer and what they class as a "cash" transaction. I've had some providers of cards I use treat a certain transactions as a purchase and others the exact same transaction as a cash advance. I'd take what is said here with a pinch of salt either way and test it yourself with a small amount and see if a fee/interest is charged before committing to a large transfer.

ratechaser

VXman said:

Asghar said:

Well I was bored, so a few days go I sent the other half £20 via PayPal using a Virgin credit card.

The payment went through fine with no fees from Virgin (or PayPal) and the transaction is no longer pending on the credit card. Went through as "Professional Services", not a cash transaction.

Not sure what MattMattMattUK was on about, totally incorrect post and not helpful.

This is interesting. So I could send cash to my own paypal account from a 0% creditcard. Transfer that cash to my bank account. Then put it in my 0.5% Marcus account and make loads of money!
I do miss those days of 7/8% interest rates when you could genuinely make money out of doing stuff like that.

Well better than that, wouldn't it work on a cashback credit card (Amex ideally) where you could send loads of money to yourself, have it treated as a purchase, and then pay off the card?

This is the sort of thing that gets the Manufactured Spend fanatics frothing at the mouth and has all but been closed off (I think buying high value prepaid debit cards was the previous technique...). Not for one minute saying that people on this thread haven't managed it, but I can certainly understand Matt x3's scepticism...

ThriftyMister

PayPal came back to me in the end and told me that friends and family transactions are presented as cash-like transactions.

It does seem these transactions are somewhat open to interpretation by the card issuer so I bottled it and sent the transfer as a purchase instead. Yes I got a 2.9% fee from PayPal, but I can be 100% confident this way that it will be recorded on my statement as a purchase and I'll benefit from the 26 months interest free on what was my loan.

LiveLend were cheeky sods, they tried charging me a whole years interest in their settlement figure so I had to raise a manual request for a settlement figure, which is all paid now, but I fear they may be catching less suspecting customers out and massively over charging them for early settlements. 

Hey ho, all done now. There's little left to pay off now anyway. 

RobsterUK

Glad you're happy with the result.
Like someone else said this is down to the card issuer, so for your bank to say it's nothing to do with them is pretty silly.
I've done this quite a few times as a sort of manual balance transfer doing it as a gift on PayPal and don't get any fees on the card, but I think the card issuers might be getting wise to this though because on my latest MBNA statement it says that from Oct 2021 they will be treating "cash-like" transactions as a cash withdrawal. It mentions "digital currency" and "topping up electronic money" so I'm assuming that includes Paypal.

Sandtree

VXman said:

Asghar said:

Well I was bored, so a few days go I sent the other half £20 via PayPal using a Virgin credit card.

The payment went through fine with no fees from Virgin (or PayPal) and the transaction is no longer pending on the credit card. Went through as "Professional Services", not a cash transaction.

Not sure what MattMattMattUK was on about, totally incorrect post and not helpful.

This is interesting. So I could send cash to my own paypal account from a 0% creditcard. Transfer that cash to my bank account. Then put it in my 0.5% Marcus account and make loads of money!
I do miss those days of 7/8% interest rates when you could genuinely make money out of doing stuff like that.

Other than you cannot pay yourself money (though some do have two accounts) but many use partners/friends/family for similar purposes who then return the money (hopefully)

phillw

RobsterUK said:

I think the card issuers might be getting wise to this though because on my latest MBNA statement it says that from Oct 2021 they will be treating "cash-like" transactions as a cash withdrawal. It mentions "digital currency" and "topping up electronic money" so I'm assuming that includes Paypal.

And of course the biggest problem is that if you send money to friends and family via a credit card and they decide to charge you, then arguing your case to the ombudsman that it's not a cash advance will not really wash.

But yeah, it might work until they notice.

Like all my credit cards started noticing when doing the 30 x £1 debit card payments to meet the TSB spend and save target to get £5

Asghar

Seeing as this thread has kicked off again, I just want to add that since August, Virgin Money have also changed their terms on what they consider a cash advance.

I have used their credit card in the past, as noted earlier in thread, to send money with no charges.

Since their changes I am not going to try in case they now treat it as a cash transaction.