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Please would you confirm if what I heard is true. Someone told me that they had made a significant amount of money by taking out a credit card with say an 18% repayment, but instead of buying tings with the card they just made repayments increasing the balance on the card from £0.00 to + £XX.xx this caused them to earn 18% interest instead of being charged 18% interest. Is this true? Is this possible? If so, why doesn't everyone do this? If not, why not, why can you not do this? Thanks — Preceding
unsigned comment added by
81.131.40.58 (
talk)
17:28, 26 March 2019 (UTC)reply
If a credit card offers an initial interest-free
"grace" period, one can exploit this by repaying fully on the first due date. The only "achievement" is to deny the bank a short period of interest but likely at a cost to oneself of any fixed fee for the use of the card, and the inconvenience of buying things one might not normally buy. A
credit card does not offer any way for the holder to earn interest but maximizes the temptation to borrow money at a
high interest rate.
DroneB (
talk)
00:31, 27 March 2019 (UTC)reply
A credit card doesn't directly offer a way to earn interest, but the typical grace period you mentioned means interest can be earned by keeping the money which would have otherwise been spent directly in an interest bearing account or similar. The time period is fairly short although likely to vary depending on several factors including the norms and laws of where you're talking about. In NZ it's about up to ~55 days (1 month plus ~25 days) which means ~28 days average assuming that the expenses are spread out evenly. Although as you said, this comes with other costs (but also benefits). The interest you will earn is going to be even more dependent although is almost definitely going to be way less than 18%. (It's only likely to be be anything close to 18% if you're in a country with very high inflation.) E.g. here in NZ it will probably be something between 0.5-2.2% annually at the moment.
Nil Einne (
talk)
04:46, 27 March 2019 (UTC)reply
In the UK many credit cards have a "reward" scheme, typically refunding 0.2-0.4% of your spend at the end of the year which is why I use my credit cards to buy absolutely everything. They don't like it if you accrue credit in your account. One of my banks called me when I overpaid by £100 and said I wasn't allowed to do that.--
Shantavira|
feed me10:06, 27 March 2019 (UTC)reply
They are a lot more generous in the US. The
Discover Card credit card, for example, provides 1% cash back for most things, and 5% for a different category, such as restaurants, each quarter. That can provide a way to make some money, say if you regularly go out to lunch with coworkers, put the entire bill on your credit card, and have them pay you cash.
SinisterLefty (
talk)
10:55, 27 March 2019 (UTC)reply
That's a way to get some immediate cash. As regards the "rewards" thing that some cards do, those are essentially rebates on purchases. Paying them off and getting a credit balance isn't likely to get you more rewards. If anything, it's the opposite: They'll have more of your money. ←
Baseball BugsWhat's up, Doc?carrots→
16:58, 27 March 2019 (UTC)reply
Yes, and my point is that in this way you are getting the rebate from the purchases of others. For example, if the lunch costs $200, and the rewards are at 5% for restaurants, you get $10 back in rewards. If your lunch costs less than that, you've made a profit. You could also combine this with the restaurant customer rewards program, and maybe get your lunches for free, again, getting the rewards from everyone else's purchases, pocketing the entire $10. It's quite a minimal profit, and your coworkers might get wise to this and object, of course. You could also invest the $200 (hopefully not in lottery tickets) until the bill comes due.
SinisterLefty (
talk)
11:50, 28 March 2019 (UTC)reply
The cash back is reversed when the return is processed. Shops in the UK insist on repaying onto the credit card if the purchase was made that way, otherwise they incur costs. They will not refund in cash unless the purchase was made in cash.
Dbfirs19:45, 27 March 2019 (UTC)reply
Welcome to the Wikipedia Miscellaneous Reference Desk Archives
The page you are currently viewing is an archive page. While you can leave answers for any questions shown below, please ask new questions on one of the
current reference desk pages.
Please would you confirm if what I heard is true. Someone told me that they had made a significant amount of money by taking out a credit card with say an 18% repayment, but instead of buying tings with the card they just made repayments increasing the balance on the card from £0.00 to + £XX.xx this caused them to earn 18% interest instead of being charged 18% interest. Is this true? Is this possible? If so, why doesn't everyone do this? If not, why not, why can you not do this? Thanks — Preceding
unsigned comment added by
81.131.40.58 (
talk)
17:28, 26 March 2019 (UTC)reply
If a credit card offers an initial interest-free
"grace" period, one can exploit this by repaying fully on the first due date. The only "achievement" is to deny the bank a short period of interest but likely at a cost to oneself of any fixed fee for the use of the card, and the inconvenience of buying things one might not normally buy. A
credit card does not offer any way for the holder to earn interest but maximizes the temptation to borrow money at a
high interest rate.
DroneB (
talk)
00:31, 27 March 2019 (UTC)reply
A credit card doesn't directly offer a way to earn interest, but the typical grace period you mentioned means interest can be earned by keeping the money which would have otherwise been spent directly in an interest bearing account or similar. The time period is fairly short although likely to vary depending on several factors including the norms and laws of where you're talking about. In NZ it's about up to ~55 days (1 month plus ~25 days) which means ~28 days average assuming that the expenses are spread out evenly. Although as you said, this comes with other costs (but also benefits). The interest you will earn is going to be even more dependent although is almost definitely going to be way less than 18%. (It's only likely to be be anything close to 18% if you're in a country with very high inflation.) E.g. here in NZ it will probably be something between 0.5-2.2% annually at the moment.
Nil Einne (
talk)
04:46, 27 March 2019 (UTC)reply
In the UK many credit cards have a "reward" scheme, typically refunding 0.2-0.4% of your spend at the end of the year which is why I use my credit cards to buy absolutely everything. They don't like it if you accrue credit in your account. One of my banks called me when I overpaid by £100 and said I wasn't allowed to do that.--
Shantavira|
feed me10:06, 27 March 2019 (UTC)reply
They are a lot more generous in the US. The
Discover Card credit card, for example, provides 1% cash back for most things, and 5% for a different category, such as restaurants, each quarter. That can provide a way to make some money, say if you regularly go out to lunch with coworkers, put the entire bill on your credit card, and have them pay you cash.
SinisterLefty (
talk)
10:55, 27 March 2019 (UTC)reply
That's a way to get some immediate cash. As regards the "rewards" thing that some cards do, those are essentially rebates on purchases. Paying them off and getting a credit balance isn't likely to get you more rewards. If anything, it's the opposite: They'll have more of your money. ←
Baseball BugsWhat's up, Doc?carrots→
16:58, 27 March 2019 (UTC)reply
Yes, and my point is that in this way you are getting the rebate from the purchases of others. For example, if the lunch costs $200, and the rewards are at 5% for restaurants, you get $10 back in rewards. If your lunch costs less than that, you've made a profit. You could also combine this with the restaurant customer rewards program, and maybe get your lunches for free, again, getting the rewards from everyone else's purchases, pocketing the entire $10. It's quite a minimal profit, and your coworkers might get wise to this and object, of course. You could also invest the $200 (hopefully not in lottery tickets) until the bill comes due.
SinisterLefty (
talk)
11:50, 28 March 2019 (UTC)reply
The cash back is reversed when the return is processed. Shops in the UK insist on repaying onto the credit card if the purchase was made that way, otherwise they incur costs. They will not refund in cash unless the purchase was made in cash.
Dbfirs19:45, 27 March 2019 (UTC)reply