Advanced Credit Card Trick


Lately, I have been offering all sorts of tricks and tips for the average credit card user.  I am keenly aware that most credit card users carry a balance and struggle to pay it off.   If you are one of those, stop now and go on to something else.

Opening A New Bank Account?

I was discussing banking with a very successful businesswoman and (frequent flier mile collector) the other day.   She mentioned that she had changed banks recently, and that it is not that uncommon for her to open a new account for business or personal financial reasons.   I shared with her a trick that I had picked up some time ago.   When you open an account, the last question you are likely to hear is “How would you like to fund your initial deposit?”

What few people realize is that most banks will actually accept your credit card for an initial deposit.  If you have good credit, and a large limit, you may choose to fund something very close to that limit.   Of course, you can withdraw funds from that account to pay for your credit card.    An extra bonus would be the small amount of interest you might make if you time your initial deposit shortly after your billing statement closes.

Visa and Mastercard are commonly accepted, with American Express acceptance being exceedingly rare.   Furthermore, reports indicate that some banks, such as Citi are now coding such charges as cash advances.     This is triple bad as you get hit with interest and fees, while not earning any rewards.   The easiest way to ensure that your bank cannot charge an initial deposit as a cash advance is to call your credit card issuer ahead of time and ask for your cash advance limit to be set to zero.   This is not a bad idea for other reasons, as it reduces your risk of fraud.   With your cash advance limit set to zero, go ahead and rake in the miles or cash back bonuses.

Will This Affect Your Credit?

No, opening a bank account does not affect your credit score in any way.    There is another system out there that tracks bank accounts, and you will run into issues if you try to execute this trick every day.    If you are opening your accounts for legitimate purposes, not just to gain miles, you should never have a problem.   Think of all those frequent flier miles as the new version of the toaster that banks used to offer for opening an account.    There certainly is nothing illegal or unethical about funding your account with a credit card, it just happens to be a relatively unknown option.

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One Response to “Advanced Credit Card Trick”

  1. Eric Says:

    The big risk is as you point out the cash advance coding. That is detrimental and will wipe out any “interest” you earn in that short period.

    Also, as a precaution, some issuers like Citi will give you a message like this:

    “We received your request to lower your Cash Advance credit line to zero. We must inform you that if we complete this process, your account may not be eligible for a higher credit line for six months.”

    So there is an unfortunate temporary side effect.

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