Amex Threatened Me!!!!!!!!!!!!!!!!!

Re: Amex Threatened Me!!!!!!!!!!!!!

GEORGE,

All I can say is Keep a close eye on your pets!!!

We just got a new Shih Tzu puppy named Kimo, and I sure won't let those Amex or CA guys near him.

 

Re: Amex Threatened Me!!!!!!!!!!!!!

I just triple locked my front door - just in case. i think Experian is pissed off at me for continually disputing inquiries. Strange times we live in,
Thanks Quix for the alert!

))

 

Re: Amex Threatened Me!!!!!!!!!!!!!

jimc001, here's the reason they don't like people to overpay a credit card with a balance transfer from another card... Consider this:

1) Your Pookieface Bank MasterCard charges you some serious money to get a cash advance. In fact, they usually charge a percentage of the cash advance right at the start, PLUS interest begins accruing right away, and the interest on cash advances is usually HIGHER than what's charged for purchases. On the other hand, with purchases you get a grace period with no interest, plus a lower APR if you carry a balance, etc... but not with cash advances.

2) Let's say you want to get around those high fees they charge for converting your line of credit straight out for cash. Well, if Pookieface Bank offers a sweet low, say 2% (or even 0% for 6 months) APR on balance transfers, you could simply BT from your Pookieface Bank MasterCard over to your other card where you have a zero balance, and Pookieface WOULD NOT charge you the fees they usually charge for a cash advance. So Pookieface writes a big check to your other card, debits your line of credit at their low promotional BT rate, and then you have a big credit on your other card for which you can request a fast refund. Plus -- bonus -- since your extra cash on your other card is a CREDIT, you don't incur their usual cash advance fees when you get your refund there either. Voila -- instant, low-cost cash.

3) You'd then have your 2% or 0% cash loan with no usual cash advance fees. Banks hate this because you're subverting their rate sheet. Moreover, they like to watch out for each other in this regard. Clearly, AmEx thinks George is the type of person who would play a game like this. We know, of course, that George would never even think of such shennanigans in his wildest dreams, but AmEx just doesn't know George like we do. And so it goes -- he gets no respect. Poor George... always a victim... you gotta feel for the guy.



Doc

 

Re: Amex Threatened Me!!!!!!!!!!!!!

PsychDoc,
It's not clear to me how you do a balance transfer
<from> a card where your balance is $0. In your example, I have a $2000 balance with PookieFace (which is offering the 2% BT deal)
and $0 with Pterodactyl B&T. So PookieFace cuts a check TO Pterodactyl for, say, $1500 and I end up with a positive balance on my Pterodactyl Card, and I call Pterodactyl and they cut me a check for $1500?

Jim

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Yep, you could do it that way, Jim.

Here's the way it's supposed to work. You have a $1000 balance with BANK A who you've done business with for years. BANK A is charging you 18% interest. You get a new card with BANK B. They have a spiffy Balance Transfer promotion because they want your business, so they offer you 0% on balance transfers for 6 months. Let's see, who do you want that $1000 with now... you'll pay $90 in interest over six months with BANK A... but you'll save that $90 if you move the balance over to your new card at BANK B. So... BANK B, with whom you have a zero balance, cuts a check to BANK A for $1000 and sends it to them in your name. Voila -- the balance is transferred from one bank to another. Your balance at BANK A is now $0, and you balance with BANK B is $1000. Of course, BANK B hopes that you will maintain that balance long past the 6 months time frame so they can make the big bucks, lol.

Here's the way it's not supposed to work. You have a zero balance with BANK A. You get a new card with BANK B. You want to skirt the cash advance fees these banks charge, but you still want a $1000 cash loan. So you lie to BANK B and tell them you have a $1000 balance with BANK A. They then cut the check and send it to BANK A. You then call BANK A and request an expedited refund of the overpayment you made "in error." Voila -- cheap loan with none of the usual cash advance fees. Banks hate this, which is why AmEx threated to close George's account.

Doc

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Doc,
Thanks for clearing that up, but wouldn't Plan B involve unpleasant words like "fraud" and "prison",
or is it just unethical and not illegal?
Jim

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Hmm, well, if it was an honest mistake, then it seems to me that it wouldn't be fraudulent. On the other hand, if there was a premeditated intention to subvert the terms of a already agreed-upon cardholder agreement, then, why yes, that would be fraudulent imho. In any event, I hope I was able to answer your great question about why banks get paranoid about substantial overpayments to credit cards; they don't want to be a party to somone's money laundering.

Doc

 

Re: Amex Threatened Me!!!!!!!!!!!!!

PsychDoc,
Wouldn't it make more sense to get a (to use my example) big cash advance from Pterodactyl B&T
and <then> do the BL ? You would have then effectivly turned a bloated cash advance interest rate into a 2% rate.
Thanks,
Jim

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Jim, you've lost me. Even worse, I'm losing interest in the topic. Best,

Doc

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Doc, you're so fickle

 

Re: Amex Threatened Me!!!!!!!!!!!!!

It would make more sense to go over to AAA and buy $3000 (or whatever) worth of Travelers Checks (because they show up as a purchase), then slowly deposit them into your account or use them to go buy whatever you needed the $3000 for in the first place.

IF you wanted to do that sort of thing.

But watch your puppies.

 

Re: Amex Threatened Me!!!!!!!!!!!!!

most cards either treat travelers checks purchases as a cash advance or charge some other fee.

If you use the AAA card issued by MBNA to purchase travelers checks at AAA, there is no fee, but every other card charges a fee including other MBNA cards.

 

Re: Amex Threatened Me!!!!!!!!!!!!!

So purchasing travelers checks is the same as taking a cash advance?

 

Re: Amex Threatened Me!!!!!!!!!!!!!

George probably had some juicy BT rates from a few other cards besides his Amex. So he set up several balance transfers to "pay off" his Amex card. This resulted in a lot of payment checks being sent to his Amex.

But his Amex debt balance was less than the combined BT amounts credited to the Amex account. The result: instead of George owing Amex money, George owes several other cards money at low rates and Amex owes George a refund check.

The juicy BT rate cards *should* be pi$$ed, because by sending excess payments to the Amex card, which Amex will have to refund to George, they basically gave George a CASH ADVANCE instead of a balance transfer.

Amex is pi$$ed because it means that they will have to disburse cash to George. They know they've been used as a middleman to convert available credit on George's other cards into cash, but they get no fees out of the transaction of refunding the cash to George.

Did I get it right?

-ingenue

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Assuming that each bank charges a 4% up-front charge for cash advances and a 4% up-front charge for balance transfers....

Card A - $0 balance, 16% APR Purchase / 19% APR Cash Advance
New Card B - $0 balance, 16% APR Purchase / 19% APR Cash Advance / 2% APR BT

Your Scenario:
$1000 cash advance from Card A = 4% fee + immediate 19% APR interest accrues, then
$1000 balance transfer from Card B to card A = 4% fee + 2% APR immediate interest accrues.
Total Fees: 8% up front fees + some interest at 19% plus some interest at 2%
(Up front fees = $80)

The "George" Scenario
$1000 balance transfer from Card B to card A = 4% fee + 2% APR immediate interest accrues, then
Card A shows a $1000 credit balance. Card A must send refund check to "George" for cash. No fees, no interest.
Total Fees; 4% up fron + some interst at 2%
(Up front fees = $40)

And if Card B happens to be waiving or capping balance transfer fees, you can push the cost of borrowing even lower.

-ingenue

 

Re: Amex Threatened Me!!!!!!!!!!!!!

I think you have it right.Not that I am in favor occ companies, but that seems a little sneaky.

 

Re: Amex Threatened Me!!!!!!!!!!!!!

Having read further, I understand George was doing this to have a credit balance available for free BT's through Amex. But I thought it was also important to explain the concept.

Go get'em, George.

-ingenue