ATO (tax office) payments by credit card

[burmans]

Yes I have not been tempted to pay off my credit card with minimum payments. A recent note on my credit card statement let me know that the account would get fully repaid just before my 114th birthday.

Its that fully repaid that is the killer, if you are $1 short on a payment the interest free days part of the calculation gets dropped. Can be a killer if you mistype or such, I usually round up to avoid that these days.

I think that this issues of swings and roundabouts that is relevant to this discussion, credit card companies clearly lose on some parts of what they offer (big signon bonuses, low or zero rate balance transfers) but hope to pick it up in other areas. While banks may regard it as against their best interests for consumers to understand all the rules, in fact they are counting on us not, I don't think any independant observer would suggest we should not be able to read, understand and apply the rules to minimise our costs/maximise our benefits. This is after all exactly what the banks themselves are trying to achive, a maximised outcome for themselves.

 

[cove]

Now asg29e that really is a long term goal!

 

[kevrosmith]

...making a small payment mistake (swapped two numbers around) the payment was short by less than a hundred dollars...

Hmmm... am I the only one (silly enough..?) to set up direct debits to pay off the full balance of my credit cards each month...? Set-and-forget, and they just pull the money from one account to pay off the full balance, so I never have to worry about reminders or making errors when paying.

 

[Pushka]

Hmmm... am I the only one (silly enough..?) to set up direct debits to pay off the full balance of my credit cards each month...? Set-and-forget, and they just pull the money from one account to pay off the full balance, so I never have to worry about reminders or making errors when paying.

I don't think it's a silly thing. My 85 year old mother does the same. .

But I'm a control freak and don't like Banks having auto access to my accounts.

 

[Jack_OC]

Hmmm... am I the only one (silly enough..?) to set up direct debits to pay off the full balance of my credit cards each month...? Set-and-forget, and they just pull the money from one account to pay off the full balance, so I never have to worry about reminders or making errors when paying.

I do that too, but when it comes to paying a huge ATO bill that kind of goes out the window, as I don't ordinarily have >$100k sitting in my day to day bank account either!

 

[amaroo]

I got stung with the QEDRCC by the tune of around $500, not a pleasant experience for making a small payment mistake (swapped two numbers around) the payment was short by less than a hundred dollars...

From that point forward I refused to use the card for a few months, told them this, of course they couldn't care...I also complain every year and peg back the $500 in $89 increments... which I intend on doing for another three years

I've done that with AMEX......got slugged with 1.3K.....rang & the bloke wrote it off straight away. I'm going to miss my Ult

 

[sumthinfornuthin]

Either way the issuers make money, they should stop whinging. All it takes is for someone to not make full payment on the balance and the high interest rates pays for all the points!

I got stung by CBA a few months ago, I underpaid by under $1000 on a $45000 bill ( so paid back about $44100) in one month and was charged just under $1000 interest because they average the balance on the whole month when calculating the interest.

It was just a stupid error on my part but what can you do just suck it up, learn a lesson and move on

ouch............................

 

[wafliron]

Really?, you can't see why paying into credit, in order to pay a bill, in order to receive points could be regarded as abuse?

Yes, really. Give me one logical reason why putting a card into credit before paying any sort of bill is abuse? Note that saying "because they you could just pay cash" isn't a correct answer - that may be a sensible reason not to do it, but there's a big gap between "illogical" and "abuse".

If you can afford to pay the card into credit, then why use a credit card to pay the bill?

For convenience, for points, to make a single transactions that is partly cash and partly credit - take your pick.

Why not just pay the bill from your money?

So, by your logic, if I have $100 sitting in my bank account and use a credit card to buy $100 of groceries I'm "abusing" the card, because I could have used cash? Completely ignoring ATO, I guess everyone who uses credit cards "sensibly" (i.e. don't genuinely borrow via them) is abusing the system.

At least when you pay up to your limit and wait for the money to be paid by your due date, you gain something for cash-flow or interest issues, but if you're paying the money up front, you don't even have that.

You gain points. Which are one of the main incentives to use a credit card.

Even ignoring all of the above, the whole thing boils down to one fact: card issuers could very easily ban paying a card into credit at all, either "technically" or via T&Cs, but they don't - so clearly they don't see this as "abuse" either.

Visa and Mastercard publish the interchange fee, not the merchant fees.

Hmmm, thats not quite true. What you are referring to are interchange rates (not merchant fees).

Thanks for correcting my mixed-up terminology - unfortunately it's too late for me to edit the post. I think everything I wrote is correct though, just a terminology issue.

I am not sure, if the acquirer would pay the lower gov rate or the fact that someone uses a premium card overrides the low rate, and the acquirer has to pay the premium card rate to the issuer. I suspect that it would be the later, as by way of example in my business' merchant facilities we pay as a merchant fee to our acquirer a rate of a percentage + card type based on the interchange rates. Eg. If someone uses a premium card we get charged more than a standard or debit transaction etc. not the normal .33 that my business code falls into.

I'd always assumed (but do not know with any certainty) that it was the former. Was your example of "your business" real, or hypothetical? If real, it'd be interested to check.

I got stung by CBA a few months ago, I underpaid by under $1000 on a $45000 bill ( so paid back about $44100) in one month and was charged just under $1000 interest because they average the balance on the whole month when calculating the interest.

It was just a stupid error on my part but what can you do just suck it up, learn a lesson and move on

I got stung with the QEDRCC by the tune of around $500, not a pleasant experience for making a small payment mistake (swapped two numbers around) the payment was short by less than a hundred dollars...

If you guys (or anyone else) are normally on-time payers, and ever find yourself in this situation again, as soon as you realise something is amiss I'd highly recommend you pay the entire card balance in full and then call the card issuer to ask if there's anything they'll do to help you out - you might be surprised.

In my case, over the past two years I've simply forgotten to pay a credit card bill on a couple of occasions (I feel like it was three times, but can only remember the details of two) - once on my WOWEDR, the other on my CitiBusiness Gold, and in both cases a very substantial balance.

Upon calling and simply asking Citibank refunded all the interest charges in full (about $900 IIRC) and WOW refunded about 2/3 (about $500 IIRC) - and WOW would have refunded the whole lot if I'd agreed to setup a direct debit (the deal was that they'd waive the previous bill's charges regardless, and the current bill's in return for a direct debit being setup). In both cases the stated reason for the "favour" was the fact that I was normally an on-time payer - in the case of WOW I'd only had the card for about 6 months, too!

 

[Mattyana2003]

I also was refunded $250 by WOW after missing a bill payment and being charged interest. I explained that i had paid the all my previous bills in full on time. It took a couple weeks and two phone calls.

 

[shifty]

I'd always assumed (but do not know with any certainty) that it was the former. Was your example of "your business" real, or hypothetical? If real, it'd be interested to check.

Yeah, real example. We have different setups in different stores based on demographics and what we anticipate the card type patterns will be. We also have historical reports to help us determine the future card type usage pattern - though so do our bankers

In some stores I choose a blended rate which is basically a wash-up of all the rates (generally stores where we get a lot of premium cards), and in others I choose the interchange rates + the acquirer markup rate (generally in stores where basic or debit cards are the majority).

 

[wafliron]

Yeah, real example. We have different setups in different stores based on demographics and what we anticipate the card type patterns will be.

Sorry, I meant specifically is it a real example that your business falls into one of the 0.33% interchange fee categories? You might have been answering that, but I'm not sure as I wasn't clear enough in my question.

 

[attimo69]

Yes, really. Give me one logical reason why putting a card into credit before paying any sort of bill is abuse? Note that saying "because they you could just pay cash" isn't a correct answer - that may be a sensible reason not to do it, but there's a big gap between "illogical" and "abuse".

It's the difference between what's technically within the bounds of the rules and what wouldn't pass the 'front page test'. Yeah, I get it, many people think that if it's not specifically forbidden, then Go For It, open slather. I personally believe that when the 250 kg customer goes to the all-you-can-eat buffet every second day and gorges themselves til they're full - that's abuse. As they say, it's an offer, not a challenge. It's not what the restaurant owner intended, and may, eventually impact on all the other customers as the restaurant owner re-considers their offer.

Clearly many people here see nothing wrong with that. That's fine. I'm just voicing what appears to be the minority dissenting view.

My point is, the behaviour of some customers already has made the restaurateurs reconsider their offers. Sure, paying tax with a cc is a nifty way of making points, but I'm pretty sure that it wasn't meant to be a points factory for high income earners/business owners. Now, we see the fruits of our labours: CC companies cutting back, being stricter, tightening up their Ts&Cs.

I maintain (clearly against the tide here) that paying your CC into credit, by many multiples of one's credit limit, purely to manufacture points, to a total which is many times that which the card could be predicted to generate based on its credit limit could quite conceivably and fairly be considered abuse by the companies providing the credit.

However, I know, you disagree.

 

[shifty]

Sorry, I meant specifically is it a real example that your business falls into one of the 0.33% interchange fee categories? You might have been answering that, but I'm not sure as I wasn't clear enough in my question.

Yes - 0.33% with Visa, and 0.35% with Master.

 

[burmans]

It's the difference between what's technically within the bounds of the rules and what wouldn't pass the 'front page test'. Yeah, I get it, many people think that if it's not specifically forbidden, then Go For It, open slather. I personally believe that when the 250 kg customer goes to the all-you-can-eat buffet every second day and gorges themselves til they're full - that's abuse. As they say, it's an offer, not a challenge. It's not what the restaurant owner intended, and may, eventually impact on all the other customers as the restaurant owner re-considers their offer.

Clearly many people here see nothing wrong with that. That's fine. I'm just voicing what appears to be the minority dissenting view.

My point is, the behaviour of some customers already has made the restaurateurs reconsider their offers. Sure, paying tax with a cc is a nifty way of making points, but I'm pretty sure that it wasn't meant to be a points factory for high income earners/business owners. Now, we see the fruits of our labours: CC companies cutting back, being stricter, tightening up their Ts&Cs.

I maintain (clearly against the tide here) that paying your CC into credit, by many multiples of one's credit limit, purely to manufacture points, to a total which is many times that which the card could be predicted to generate based on its credit limit could quite conceivably and fairly be considered abuse by the companies providing the credit.

However, I know, you disagree.

Right, so youre argument is that when the banks want to they can rigidly enforce the Terms and Conditions and insist these are the only rules they should play by yet when they want they can insist that they get to interpret these rules so activities clearly within the rules are regarded as abuse. Which bank did you say you worked for?

Thankfully that is not the approach taken by any regulators or courts. Their approach is that if it's not in the Terms and Conditions, it's not in the Terms & Conditions. Incidentally that interpretation is not a view as you recognise your opinion is, thats a fact that something not in the T&C's really isn't in the T&C's.

 

[Flashback]

Right, so youre argument is that when the banks want to they can rigidly enforce the Terms and Conditions and insist these are the only rules they should play by yet when they want they can insist that they get to interpret these rules so activities clearly within the rules are regarded as abuse. Which bank did you say you worked for?

Thankfully that is not the approach taken by any regulators or courts. Their approach is that if it's not in the Terms and Conditions, it's not in the Terms & Conditions. Incidentally that interpretation is not a view as you recognise your opinion is, thats a fact that something not in the T&C's really isn't in the T&C's.

Further to that T&Cs don't count for much in court anyway so doesn't matter even if there was something in there

 

[DaveB]

I agree excessive use of the credit card was not the intent, though the card companies can't have it both ways. They make a killing from my creditor payments (3 to 4 times ATO payments) which more than offsets the probably small loss they make on the ATO deal at 1.45% for 1.5 FF points.
I definitely wont lose any sleep with a small win from the corporates making a nice change.

 

[Jack_OC]

It's the difference between what's technically within the bounds of the rules and what wouldn't pass the 'front page test'. Yeah, I get it, many people think that if it's not specifically forbidden, then Go For It, open slather. I personally believe that when the 250 kg customer goes to the all-you-can-eat buffet every second day and gorges themselves til they're full - that's abuse. As they say, it's an offer, not a challenge. It's not what the restaurant owner intended, and may, eventually impact on all the other customers as the restaurant owner re-considers their offer.

Clearly many people here see nothing wrong with that. That's fine. I'm just voicing what appears to be the minority dissenting view.

My point is, the behaviour of some customers already has made the restaurateurs reconsider their offers. Sure, paying tax with a cc is a nifty way of making points, but I'm pretty sure that it wasn't meant to be a points factory for high income earners/business owners. Now, we see the fruits of our labours: CC companies cutting back, being stricter, tightening up their Ts&Cs.

I maintain (clearly against the tide here) that paying your CC into credit, by many multiples of one's credit limit, purely to manufacture points, to a total which is many times that which the card could be predicted to generate based on its credit limit could quite conceivably and fairly be considered abuse by the companies providing the credit.

However, I know, you disagree.

The problem I have with your posts is, while you clearly believe there's something not right here, you don't seem to be able to put your finger on what it is that you think is wrong.

The objection to paying a card into credit is a complete red herring. As already pointed out by several people, that has no adverse effect on the card provider - in fact it saves them money compared to someone who goes into debit and clears the balance when they get their bill. Furthermore, it's not necessary to put your card into credit in order to spend more than your credit limit within a billing cycle. You can also do that by paying your bill more frequently than once per month - which is something that all card providers happily facilitate. For example, if you have a $10k credit limit, you can quite easily and legitimately spend $10k per week as long as you pay the balance off each week. Again, there is no reason why any card provider would have a problem with that.

Perhaps the fundamental problem here is that you misunderstand the purpose of a credit limit. It's not designed to put a cap on how much someone spends per month, it's simply designed to put a cap on how much they can borrow at any one time (and hence to limit the card provider's risk). If providers wanted to set a monthly limit on how much you spend, they could easily do so, but there is no reason why they would as they make more profit when you spend more!!

It's probably also worth pointing out that many people (myself included) ask for credit limits to be set at levels much lower than what the providers are prepared to provide, as having multiple cards with high limits makes getting other credit - notably home loans - very difficult. So as an example, my Westpac Altitude credit limit now is about 60% lower than it was 6 years ago, even though my income now is much higher than it was back then. This highlights that my credit limit is not a measure of what I can afford, nor is it a measure of the amount that Westpac would be comfortable with me spending. As such, credit limits have no relevance whatsoever to this discussion.

 

[docjames]

When you say

as having multiple cards with high limits makes getting other credit - notably home loans - very difficult.

, could you elaborate?

When I last took a new home loan (had an existing loan) and wanted a quote on max borrowing capacity, I got an answer from my existing banking provider (CBA) of say x,xx_,xx_. When I pointed out that they may not have been aware of another CC I had (amex), and how would this affect the borrowing capacity, the answer was x,xx_,xx_ minus yy,yyy (the amex credit limit). A tiny % and 1:1 reduction in the original amount.

So i don't understand your statement about difficulty (at least, that's not how it panned out in my situation). All my credit cards are paid off, perhaps that is an aspect (although there would have been nothing from stopping me maxing them out on top of the new loan).

 

[oz_mark]

The objection to paying a card into credit is a complete red herring. As already pointed out by several people, that has no adverse effect on the card provider - in fact it saves them money compared to someone who goes into debit and clears the balance when they get their bill.

Where it may matter, is that the authorised banking operations that GE have in Australia is confined to being a credit card acquirer and credit card issuer. They have to be a bit careful about how they will allow credit balances to occur due to their license.

 

[Jack_OC]

When you say , could you elaborate?

When I last took a new home loan (had an existing loan) and wanted a quote on max borrowing capacity, I got an answer from my existing banking provider (CBA) of say x,xx_,xx_. When I pointed out that they may not have been aware of another CC I had (amex), and how would this affect the borrowing capacity, the answer was x,xx_,xx_ minus yy,yyy (the amex credit limit). A tiny % and 1:1 reduction in the original amount.

So i don't understand your statement about difficulty (at least, that's not how it panned out in my situation). All my credit cards are paid off, perhaps that is an aspect (although there would have been nothing from stopping me maxing them out on top of the new loan).[/COLOR]

What don't you understand? Your example is actually a perfect illustration of what I meant. As you point out, every dollar of credit card limit you have is a dollar less that you can borrow on your home loan. Therefore, with a very high credit card limit (or combined limits across all cards), you will have difficulty getting a home loan at the upper end of the range where lenders would otherwise approve.

Your point seems to be that in your particular case, you didn't care that your borrowing capacity was reduced. That's great, but presumably you can understand that some people might care about that? For example, in my case, if I did not actively reduce my credit card limits a while ago, I would not have been able to refinance my home loan with a new lender (I know that because they told me - I had to reduce the limits and provide evidence that I had done so).