idea? will it work?

Discussion in 'General Discussion | Miles/Points' started by sderekw, Aug 16, 2011.  |  Print Topic

  1. we run a small company out of our home, and because of that we have a credit card machine. why couldn't i just simply chage $100k per day (or whatever the credit limit on the card is) on a card that doesn't have limits on the amount of miles that can be earned through purchases? other than the fee charged by my CC processor, there doesn't seem to be any other exposure to costs... charge the card, pay the card stright from the biz bank account. i could probably even change banks and get free CC processing for a few months.

    has anyone else done this? while it is a bit unethical, there doesn't seem to be anything illegal about it...
     
  2. mikeef
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    mikeef Silver Member

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    1) I don't know what the rules are regarding charging yourself for items. If you started making a ton of charges that looked suspicious, your CC company might investigate.

    2) Generally, the credit card fees more than offset whatever you get in rewards.

    Mike
     
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  3. cordray2643
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    cordray2643 Silver Member

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    This just feels wrong to even talk about doing. If you were to do this, somehow, some way the rest of us will be paying for your miles.
     
  4. Fees will kill it.
    Plus you'll need to pay income tax, unless you can convince IRS that your entire business model is to procure miles at 2.9 cpm. But then IRS will make you pay taxes on the miles.
     
  5. craz
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    craz Silver Member

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    a great way to accumlate tons of very Expensive Miles. It may pay (although Im sure there are cheaper ways) in order to get the min amount needed charged onto a new CC for the sign-up bonus

    other then that, as others have said between the % you must pay the CC and the company who issues the card reader and Uncle Sam, it just might be cheaper to buy the tkt and earn miles for flying. But do get your final price per mile down since sometimes it may pay when certain Carriers or programs throw out say a 100% bonus on transfers (but even then it will probably still be over 2 cents per mile and no miles earned for flying ha sto be added in as well)

    then I wouldnt use a CC that had the same last name or address as mine has
     
  6. Jaimito Cartero
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    Jaimito Cartero Silver Member

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    You're kidding right? If they're paying the fees, they should get the benefits.

    Other than the fact that their merchant agreement will not allow it. The fees are almost always going to be more than the miles are worth. Plus it would show your business as having millions of dollars in income that you would then have to explain.
     
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  7. lin821
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    lin821 Gold Member

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    That, is the bottom line.

    How far people will go and/or how much risk to take is totally up to the individuals.
     
  8. Mapsmith
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    Mapsmith Gold Member

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    Jaimito is absolutely correct. Your merchant agreement prohibits the use of your company card (and actually the personal cards of the person signing the contracts) in the machine in your business. As well, it will be charged at the "Cash Advance" fee even if allowed. The Cash Advance will accrue interest from the time the charge is posted.

    So, if you can get away with it, you will be charged 3-5% by the Processor, 15-18% interest on the money until you pay it off, and probably legal fees (again check the merchant agreement) as the Credit Card Company comes after you. AND, you will possibly be arrested for Money Laundering with the associated legal costs. (Also, in my Jurisdiction, Money Laundering is a Felony. If Convicted, I would lose my business license and the ability to do further business.

    Therefore, if you plan to go ahead with this, I would definitely be in touch with your accountant and your lawyer and let them know what you are doing.
     
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  9. OneSweetWorld
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    OneSweetWorld Silver Member

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    Not worth it.
     
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  10. Andyandy
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    Andyandy Gold Member

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    This idea crops up every so often like toadstools after a rain. As others have pointed out, the fees would make it a poor value even if it wasn't a breach of contract.
     
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  11. nd.mp

    nd.mp Active Member

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    This reminds me of when I was little and, not understanding the concept of balance transfer fees, I just assumed you could stagger credit cards and keep paying one off with the other and never have to pay your bill. My parents knew better.
     
  12. Pharaoh
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    Pharaoh Gold Member

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    I once did this unintentionally ... charged a product I sold to myself on my own credit card (with a nice discount, of course) and received a nasty phone call. They said if it happened again they would cancel my card and go on some blacklist. The explanation was that it was considered kiting which I guess I can see as a problem.
     
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  13. after further research, not worth it once you consider fees, exposure to legal issues, ethical issues, etc...
     
  14. DJP_707
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    DJP_707 Silver Member

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    One other issue is the IRS who will see these large transaction and want to see you pay business income taxes on the money too.!
     
  15. kellio
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    kellio Gold Member

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    I think this would also raise money laundering flags.
     
  16. sunspotzsz
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    sunspotzsz Silver Member

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    With fees, I am not sure it even make sense. Plus, you will have issues with IRS and credit card companies.

    It is not worth it.
     
  17. sma_15

    sma_15 Silver Member

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    Haha! I asked the same thing when I was little too.
     

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