Use PayPal to boost up points quickly

[VAG newbie]

Hi all:

It's my first post and I'm a newly converted FF points addict. I am not sure if this question has been posted before as I can't find it through searching.

Has anyone considered transferring money through Paypal using AMEX to your friends/relatives and ask them to give you money back in cash, then you essentially:

1. Have cash in advance with 0 interest.
2. Earn points (1-1.5 FF points depending on the type of Amex card)

Yes, there is a small surcharge, which I worked out to be about 2.5c/mile. Of course this is not the best earning rate, but it's similar to some of those US airline's miles when they are on promotion (which I couldn't purchase, for some bizzare reason all my cards were declined), and it's definitely cheaper than miles sold by airlines which charges about 3.5-4c (USD)/mile. So it is certainly an alternative for those who needs to top up their miles.

The cash in advance would also have some uses. In my case I can put in my offset account for my mortgage, and that can further reduce the cost involved with Paypal.

Has anyone done this before? Have I missed anything? Did I break any T&C's risking having my CC cancelled?

 

[Andyc]

I've looked at it before and saw no issue other than the rates.
I thought the Paypal rates were a little high so didn't pursue it.

 

[kalboy]

Ive also wondered about using my personal NAB Qantas AMEX to make "purchases" from my business eftpos which is with Westpac, although it will show as "Kalboy trading as XZY" so not sure if i would get away with it for long, or if its even worthwhile I think my surcharge is 1.2%. Also not sure about GST considerations.

 

[Isochronous]

I'm listening...!

 

[casanovawa]

I think most banks have pretty sophisticated analysis software don't they, so trying to use a personal card to purchase from your own business account will be worked out pretty soon with some quite strong repercussions...

I think the banks are also pretty good at analysing how people might play them off against each other and then shut these down, not sure how many are left, just make sure you get them at the right price (and that's what you have to work out how much to get and what value when redeemed)...

 

[trippin_the_rift]

Ive also wondered about using my personal NAB Qantas AMEX to make "purchases" from my business eftpos which is with Westpac, although it will show as "Kalboy trading as XZY" so not sure if i would get away with it for long, or if its even worthwhile I think my surcharge is 1.2%. Also not sure about GST considerations.

Both your merchant acct and credit card will be instantly suspended. Amex is less lenient.

You'll then need yo prove it was a real purchase to get things rolling again. You will also then get a nice letter informing you of a 'possible breach of contract'.

If your merchant acct is killed you'll have a lot of trouble obtaining a new one from any bank.

Just make more money. Pay some tax and get points that way

 

[Mal]

Once offs you will often get away with, bit don't screw with PayPal - they are very aggressive and nasty when they suspect funny business.

 

[opusman]

PayPal don't even accept Amex do they?

Easiest way to build up a lot of points quickly is to pre-pay your tax. You can even pay too much if you don't mind waiting for the refund until next July.

 

[VAG newbie]

Yes, PayPal takes Amex now.

Of course ATO is still the best route. But I'm on a salary and my tax are paid by my employer so I don't get much benefit out of it. So Paypal is the back up plan when ATO is not good. Other than people like me on salary, ATO maybe no good if:

1. You got a Citibank card that has good earn rate but earns no point with ATO.
2. We don't know when the other banks will pull the plug like Citibank.
3. Too much "abuse" with ATO may lead to card cancellation (EDR!)

Paying ATO too much in advance is a good idea while your card accrues points. But you lose a large amount of cash with ATO until tax return time, which generates no interest. (In my case with a mortgage, I lose the cash to off set the mortgage interest) depend on how much you pay in advance, financially maybe worse off. Eg. If you pay $100k in advance now, you effectively lose that for 6 months. Current home loan rate for me is 4.9%, that's $2450 lost in interest. Which maybe a tad expensive for the 150k miles that generated.

Conversely, if you use PayPal to pay your friends/relative, you got that cash in advance. Depending on your interest free period with the card (say you just signed up a new card with 6 months interest free), you can save extra $2450 in interest if you put the same amount of cash in offset account.

I don't recommend anyone to use PayPal to pay themselves as it is too risky, something doesn't smell right. But paying friends and relatives are perfectly legit. PayPal even let you choose that option. Of course you need to have a trustworthy friend/relative. In my case it would be my parents, wife. Even my two kids, I created email address for them and each one has a bonus saver account for kids with CBA, so I can give them money through PayPal.

I think banks are less likely to pull the plug on PayPal as the surcharge is quite significant, so the "fat" is there that I think the profit margin is huge, unlike ATO.

Did I miss something? Sounds too good to be true.....

 

[Mal]

Doesn't ato pay a small amount of interest on overpayments?

 

[Deleted User]

Doesn't ato pay a small amount of interest on overpayments?

This has been the case for previous years....

The rate used in calculating your interest is set by law and is reviewed every quarter.
Interest rates for 2012–13 are shown in the table below.
Details of other quarterly interest rates are available from the ATO.
TABLE: Interest rates used for calculation of early payments, overpayments and delayed refunds (2012–13)
PeriodInterest rate
(% pa)
1 July 2012 to 30 September 2012
3.66
1 October 2012 to 31 December 2012
3.62
1 January 2013 to 31 March 2013
3.24
1 April 2013 to 30 June 2013
2.95

 

[ferni]

I've looked at it but never bothered as I think the cost is too high... Could be worth looking at Paymate as well.. if you take up one of thier plans you can get it down to about 1.6%.... (I haven't actually done it, just looked)

 

[opusman]

Doesn't ato pay a small amount of interest on overpayments?

Yes they do (in some cases): http://www.ato.gov.au/Individuals/Payments-and-refunds/In-detail/Penalties-and-interest/Interest-on-early-payments-and-overpayments-of-tax-2012-13

 

[get me outta here]

I do remember an extensive thread somewhere a couple of years ago on this and it came down on the negative when all was said and done. If you are adventurous you could try it once, selling to a mate and refunding.

Yes, I buy most things on paypal w' Amex.

 

[craven morehead]

Ive also wondered about using my personal NAB Qantas AMEX to make "purchases" from my business eftpos which is with Westpac, although it will show as "Kalboy trading as XZY" so not sure if i would get away with it for long, or if its even worthwhile I think my surcharge is 1.2%. Also not sure about GST considerations.

Can be done and then refunded via EFT (Cancelled sale etc ) . Of course there is the surcharge to consider 1.2% sounds cheap for AMEX

 

[craven morehead]

Doesn't ato pay a small amount of interest on overpayments?

Yes they do

 

[VAG newbie]

This has been the case for previous years....

The rate used in calculating your interest is set by law and is reviewed every quarter.
Interest rates for 2012–13 are shown in the table below.
Details of other quarterly interest rates are available from the ATO.
TABLE: Interest rates used for calculation of early payments, overpayments and delayed refunds (2012–13)
PeriodInterest rate
(% pa)
1 July 2012 to 30 September 2012
3.66
1 October 2012 to 31 December 2012
3.62
1 January 2013 to 31 March 2013
3.24
1 April 2013 to 30 June 2013
2.95

I didn't know that. Thanks for the info.

This might suit those with spare cash and needing points. Although in my case it is still better for me to keep the cash in the offset account at 4.9% vs 2.95%.

At the end of the day, I guess we all have to make the choice that makes financial sense.

 

[Beta4Me]

If you had two businesses that could buy services from each other this could work...pay for both using your credit card and get reimbursed and the net effect on the books of both businesses is nil. If they're part of a corporate group the intra-company transactions wouldn't even show on the consolidated accounts