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http://online.wsj.com/article/SB10001424127887323511804578296342176365174.html

"Small investors in the currency market may soon find their credit cards denied.

Industry overseers, concerned that retail investors are racking up credit-card debt to bet on currencies, are considering a ban on using the plastic to pay for trades."
"One executive with a retail foreign-exchange brokerage estimated a ban, which would also cover online-payment services like PayPal, could affect 60% of transactions it processed in the U.S"

Is anyone using FOREX accounts to churn credit cards? Haven't tried it myself but I imagine that would involve placing bets with hedges that would allow one to cash in on the 2-5% credit card CashBack, rather than simply depositing money via credit card and then withdrawing which would be unlikely to succeed long term . Looks like that possibility will now be coming to an end in the near future.

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Haven't heard of anyone using brokerage accounts to do any big time credit card churning. There must be a good reason for it. Must not be so easy to work it out after commissions/fees even with a 5% card.

They process withdrawals as refunds back to your card, which usually negates the CashBack. Only if you trade a lot will they let you withdraw cash after a number of months. If you can trade a lot in FX and not lose 5% over several months, you've got a trading career ahead of you.

xerty said:   They process withdrawals as refunds back to your card, which usually negates the CashBack. Only if you trade a lot will they let you withdraw cash after a number of months. If you can trade a lot in FX and not lose 5% over several months, you've got a trading career ahead of you.

While it's true that withdrawals (matching your credit card deposit) have to go back to your credit card, you can simply refund it to a different credit card and you get to keep your CashBack. However, I don't think you can use this method that much without raising some sort of red flag from the broker and the credit card company receiving the withdrawals. I tend not to mess around with churning using Forex and brokerage accounts because I don't want to be under investigation for money laundering.

avalon6 said:   you can simply refund it to a different credit cardwhich broker does that simply ?

there must be some way to take trading positions that cancel each other out at under 5% transaction costs. that would allow the funds to be cashed out to a bank account.

xoneinax said:   avalon6 said:   you can simply refund it to a different credit cardwhich broker does that simply ?

Costco.

eyj said:   there must be some way to take tarding positions that cancel each other out at under 5% transaction costs. that would allow the funds to be cashed out to a bank account.
There are ways to establish such hedges, at very low cost even; but there is no way to determine which side/leg of the hedge will prevail.

sesat said:   
There are ways to establish such hedges, at very low cost even; but there is no way to determine which side/leg of the hedge will prevail.


Can you provide any details on how to establish such hedges cheaply? It wouldn't matter to me which side won/lost.

sesat said:   eyj said:   there must be some way to take tarding positions that cancel each other out at under 5% transaction costs. that would allow the funds to be cashed out to a bank account.
There are ways to establish such hedges, at very low cost even; but there is no way to determine which side/leg of the hedge will prevail.


not sure I understand what you are trying to say. As long as you can take two opposing trading positions that will end up canceling each other out, all for a total cost of under 5% (assuming 5% CashBack card) you would potentialy have a source of unlimited churn.

Has anybody had much experience with finding forex account via credit card, and then taking it out in another way. I am especially interested in FXCM since I have funded accounts there and wondering how much trading is needed before i can get it out another way?

There may be something here. With a $10,000 deposit and a 2% card, there is $200 in bonuses possible. This could cover the commissions on several trades. If one could withdraw other than via credit cards, one wuuld be ahead.

In general, forex trading is zero sum, which means no profits pre-commission (unlike stocks where most companies make money, and as a part owner you can expect a profit.

It is highly unlike an amateur will be able to make profits. However, credit card reward could shift the odds towards a profit.

FXCM caps credit card deposits at $10,000/month, but does not charge fee for this service.
You can withdraw via debit card for no fee, or pay $25 for a wire. I don't know how my credit card issuer would process the transaction (purchase vs cash advance), and I'm not interested in finding out by trial and error.

sesat said:   FXCM caps credit card deposits at $10,000/month, but does not charge fee for this service.
You can withdraw via debit card for no fee, or pay $25 for a wire. I don't know how my credit card issuer would process the transaction (purchase vs cash advance), and I'm not interested in finding out by trial and error.


Most cards don't have a cash advance limit of $10,000 or more. It will be rejected if they try to process it as a cash advance. Regardless, I don't think this is a good idea because the broker will shut you down after more than one attempt.

I spoke to FXCM, they will want me to withdraw my contribution using the same credit card I had used to fund it with. This scheme will only work once meta-cc#s become available (say Google Wallet) so that we can provide one cc# for funding, and then change the meta# for withdrawals.

When this (meta-cc#s) happen, and how exactly will it work?

^^^

I am just guessing here, but let's say you have two physical cards:

Card A, with number 1234,
Card B, with number 5678.

A meta credit card would be a virtual credit card number from the meta company, with number, say 9999.
You can associate 1234 with 9999, and make a large charge to 9999. Actual charge will go to 1234.
Then later, you can associate 5678 with 9999, and make a large credit to 9999. Actual credit refund will go to 5678.

Again, I am just thinking outloud here, not saying something I know for sure.

My problem with "meta credit card" or whatever you want to call it is that the MMC data may not pass through the meta credit card to the real one. Earning you 1X instead of 3-5X.



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