A possible money-making scheme?

DO NOT DO THIS. I WILL NOT BE HELD RESPONSIBLE.

I've just realised that this is possible, after the ladbrokes thing...

I paid onto my ladbrokes account from my credit card. Being a mastercard, it can not withdraw to the card, so withdrawals are straight to my bank account.

So, the scheme is this. Get a mastercard dedicated to this purpose, as well as a high-interest current account as some financial institutions are offering (4.5% AER).

At the beginning of each credit card billing month, transfer the entire balance possible to ladbrokes. Immediately withdraw this into the high-interest current account. When credit card bill appears, pay it with the same amount that is in the high interest account. Once paid, immediately repeat process.

This allows you to accumulate interest in the current account without incurring any on the credit card. The interest you accumulate is not on money that's actually yours, but as most accounts have the interest calculated daily, there's a significant amount to be gained with this. Say the cc limit was £2000, you could earn £90 in the first year for spending 5 minutes per month doing the deals. Do this with several credit cards and you could start to bring in enough to pay for the christmas presents each year, or a flight somewhere nice.

And imagine the airmiles....

 

How is the Credit card compnay going to view this transfer to Ladbrokes?
As a 'cash withdrawal' that will attract interest straight away or a 'purchase' ?

 

Purchase.

 

This has already been done.

I read in the financial section of one of the broadsheet newspapers of a guy who set up multiple credit cards accounts and was taking the maximum out on each account and putting the whole lot (£30k plus) into high interest accounts, repaying each account just before the due date. He made quite a lot of money, but you have to be on the ball!

 

There you go...

What can they actually do to stop it?

 

Nothing, its perfectly legal.

 

one potential catch is that a lot of high interest accounts have a 90 day (or other) withdrawl period or you loose some of the interest. you'd still make money but it wouldn't be as much (unless you had the money to pay off the cards already - you could probably cycle the money round 3 or so accounts paying one off every month if you had the cash already if you see what i mean.
cheers


julian

 

Julian, thats what i thought. It would only seem to work if you have the funds to repay the CC bill every month.

 

Actually, I should do it myself. I have a Virgin one mortgage which is a current account mortgage, where I currently pay 5.4% interest, charged daily on the amount outstanding. If I opened up say 6 credit card accounts, maxed out each one at £5K and transferred the money to the mortgage account repaying each one just before due date, I would save the equivalent of interest on around 30K per year. That would equate to £1600

Hmm maybe this is worth looking into!

 

Miss it just once, though, and the whole thing would unravel terrifyingly fast.
As Robbo said, you have to be *really* on the ball all the time. Not as easy as it sounds to do successfully over a long period I suspect.

 

or invest in premium bonds. no loss, possible gain. bit of fun. cash them in and pay off the card simply, only takes "8 days" from when you submit the request for the money to be back in your current account.