Can You Earn Interest off The Credit Card Loan Limit?

Celebie on 08/04/2023 - 13:14
Last edited 09/04/2023 - 07:54 by 1 other user

Hello, I've recently applied for a Citibank credit card to earn the points bonus from the first quarter spending limit- I wanted to ask. Is it possible to earn interest off the borrow amount for the card?

For example, let's say I have a credit card limit of 20K. I transfer 20K to a savings account, earn interest off it, then pay back the $20K to the credit card before the interest grace period.

Are there workarounds to prevent someone from doing this? Does this affect your credit card status or score in some way?

Thank you

Financial Credit Card

Comments

  • elgrande on 08/04/2023 - 13:17
    +11

    Without looking at the terms of the specific card, its normally 45 days interest free on purchases, but no interest free period on cash transfers.

    • AustriaBargain on 08/04/2023 - 18:45

      What if you bought 20k worth of BTC then sold all the BTC after 45 days? If the value of BTC goes up then it's ez munny.

      • donga100 on 08/04/2023 - 19:33

        I don't know of anywhere you can buy BTC without paying a card processing fee or a bad exchange rate.

    • HeWhoKnows on 09/04/2023 - 15:45

      Correct. Any cash advances are charged interst from Day 1.
      OP loses 18% PA

  • MS Paint on 08/04/2023 - 13:18
    -1

    transfer 20K to a savings account,

    Pretty sure that's not how it works.

    • Celebie on 08/04/2023 - 13:21
      +2

      I believe it is possible with the PayAll feature

      • Bargainitis on 08/04/2023 - 13:43

        Technically yes. PayAll won't be free for much longer (I recall by October 2023 though.

        Simple math is 20K x 5% / 365*30-45 days depending on how good you are with cash flows… $80-100 odd bucks per month…

        Worth it? you decide. Free money I guess.

        • jackofspade on 08/04/2023 - 13:53

          and 20K points worth at least $100

          • Bargainitis on 08/04/2023 - 16:29

            @jackofspade: Sorry yes, I forgot to mention there is value in the points too. Admittedly, when I had the prestige card, I flogged this benefit but ended up switching to platinum a while back so not sure if they have added more restrictions since. YMMV

      • Bargainitis on 10/04/2023 - 19:54
        -1

        anyway, lets not discuss this too much. Its clear no one else in the rest of this thread understands this anyway haha its for the best.

  • Ughhh on 08/04/2023 - 13:22
    +15

    Pretty sure it'll be considered as cash advancement, will negate any interest earned.

  • Pelicannn on 08/04/2023 - 13:34

    Not likely… My guess is they will catch on and apply something along the lines of this:

    "This product should not be extended to repaying other debt held, for business purposes, for the purpose of gambling, or in connection with unlawful activities, to invest in shares or other financial products or for cryptocurrency related transactions."

    I am sure you could try, but the PayAll is only fee free for another few months, after that it is 2% of the total amount, which would require a significant amount of interest to offset and make it profitable after the fee is introduced.

  • DashCam AKA Rolts on 08/04/2023 - 13:35
    +5

    Even if feasible, interest on deposit is very low. Any miscalculation and high interest on the CC would make you regret even thinking about it.

  • Neoika on 08/04/2023 - 14:41

    Revolut, card fee may apply now.

    • DoctorCalculon on 08/04/2023 - 20:27
      +1

      Last time I topped up using my ANZ CC, I didn't receive a cash advance fee.
      When I tried a smaller amount with my CBA card, I copped a cash advance fee a few days later.

      Not sure if ANZ CC has caught on to Revolut top ups by now?

      • Neoika on 08/04/2023 - 20:45

        Revolut charges up to 1% (0.76% for my platimum card) fee on credit card top-up now, no fee on debit card top-up.

        1% fee may be applicable for a black or higher grade card.

        • DoctorCalculon on 08/04/2023 - 21:11

          Revolut charges up to 1% (0.76% for my platimum card) fee

          Yes, I am well aware.
          I haven't done any top ups via CC since they introduced those fees.

          However, curious to know if ANZ still treat Revolut top ups as a purchase or a cash advance.

          • Neoika on 08/04/2023 - 21:34

            @DoctorCalculon: I think no change on the banks' side. Westpac related treats it as cash advance as someone said in a previous topic.

  • p1 ama on 08/04/2023 - 14:59
    +6

    Are there workarounds to prevent someone from doing this?

    Yes, the fact that cash advances are subject to interest immediately.

  • Settero on 08/04/2023 - 15:01
    +1

    https://www.citi.com/credit-cards/understanding-credit-cards…

    What is a cash advance on a credit card?

    A cash advance happens whenever you use your credit card to get cash from an ATM or bank.

    Cash advances typically have a different credit limit that is based on your regular credit limit. This cash advance limit is usually 20-30% of your regular credit limit. It’s also important to note that credit card companies charge interest on your cash advance as soon as you make the withdrawal. The rate of this interest is typically a separate cash advance APR, higher than your purchase APR.
    Rates and fees associated with credit card cash advances

    There are generally three types of fees associated with credit card cash advances:

    Transaction fee: A transaction fee is typically around 5% of the cash advance amount, with a minimum fee of $10.
ATM fees: If you use an ATM to get your credit card cash advance, your bank or the ATM operator may also charge a separate fee.
Interest rates: One of the biggest drawbacks to credit card cash advances is that they often come with high interest.

    Tldr

    you get charged a fee for cash advance , and no interest free period

  • avoidfullprice on 08/04/2023 - 15:34

    Almost like op is saying

    Hello, i watched many youtube video about getting a LOC to pay mortgage off faster. Is it possible? If not, i think PayAll does. Can anyone confirm?

  • Gunnar on 08/04/2023 - 16:02
    +1

    Financial ‘ideas’ on here seem to get dumber by the day

  • freefall101 on 08/04/2023 - 16:09
    +2

    A better way of doing this is:
    * Load up your credit card with a tonne of debt (prepay all your bills for the next 12 months, buy a bunch of gift cards for supermarkets and petrol, use the payall feature to withdraw cash or do whatever you can to max it out)
    * Get a new card with a zero balance transfer for as long as possible (make sure it's 0% BT)
    * Spend the next few months not paying for anything until you have the same amount of cash in your savings/offset/whatever account
    * When time to end the interest free period, do another BT or pay it off.

    Pretty easy way to make $1k a year on a $20k credit card (particularly in an offset account at the moment). Some cards will offer up another credit transfer once the original period is over too, so just get a second card and wash and repeat. Avoids getting blacklisted or having a big history of credit cards under you name like doing it every 6-12 months for points. NAB low rate card is just a $3 fee and 32 months interest free, so you can set and forget rather than worrying about the 45 days.

    • MS Paint on 08/04/2023 - 17:04
      +1

      Load up your credit card with a tonne of debt

      At first I thought you were going to suggest this

    • p1 ama on 08/04/2023 - 18:02

      This relies on being able to get a new card with a balance transfer. As the amount that you are owing increases, this will become increasingly difficult.

      The obvious risk is that if you are not able to get a balance transfer and you have no other means of paying off the $20K or however much of debt you have, then you are faced with 20%+ interest repayments.

      • Brick50 on 08/04/2023 - 21:11

        I was going to ask as a card churner if everyone does a balance transfer for each new card they get or not. I haven't as I don't know if its worth the hassle but seems like it could be a good perk possibly

  • Donaldhump on 08/04/2023 - 19:32

    cash advance, fees, and instant interest charge of ~20% per day

    you think the whole world wouldn't have gone raging mad with this idea you have already

    this is what i did in the early 2000s

    open a suncorp cc
    open a citibank cc 2% for life balance transfer
    transfer not existent debt of 25k from suncorp cc to citibank
    cash advance suncorp atm 5 days in a row 5k
    deposit into suncorp savings account
    close suncorp c/c
    put money into offset acc

    the interest on the cc was charged at 33% or something mad like that so over time the 2% became 3% .. 4% etc, eventually closed off

    also got bonus citibank rewards points * 2 which was enough to get fridge, couch, and dnner table.

    • Neoika on 08/04/2023 - 19:47

      It was possible to do it with Revolut pre Dec last year. Citi and some others treat Revolut top-up as purchase, with not only cash out to a bank account but also rewards points benefits. Revolut introduced card fee (0.76%) on credit card top-up since Dec. I did it moderately for quite a few months.

    • fantombloo on 08/04/2023 - 21:32

      20% per day

      The most interest, more than anyone else, like you wouldn't believe. Username almost checks out.

  • Davo1111 on 08/04/2023 - 20:10

    I agree with above, this would be a cash advancement.

    btw, do you really want to do this? this sounds very high risk

  • wako on 09/04/2023 - 07:58

    They will offer you to take the money for 6 months at . 99% or 1.99% for 1 year

    You will have to pay back every month a set amount

    I just did it because they offered me free gift card of $200 to cash advance with set fee no interest. My fee was like $40 so was $160 up still plus made back on interest anyhow
    Think could do 90% of limit

    Didn't spend the money just kept in high interest account

  • Jono05 on 09/04/2023 - 19:17

    Is this your first credit card?

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