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Comment by jaredklewis | Hacker News Reader

Casino chips, online gambling of just about any kind, stocks, money orders, lottery tickets, and mortgage payments all basically can't be made with credit cards.

There are some banks that have blocked pornography and medical marijuana purchases.

But basically, the pattern is clear: banks don't want to lend you money to make investments. Banning money orders is a natural extension of that because you can then go use that cash for the aforementioned things.

That makes a lot of sense, because if banks did want to make those investments, they don't need you. If a bank wants to invest in stocks, property, or a game of roulette, they can just go put their money there, no credit card customer required.

What banks can’t do without lending you money is get a little slice of your paycheck every month through interest payments. This is a separate asset class than things like stocks.

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But don't banks want you to be in debt to them, paying 24.9% annual interest? Isn't this how banks make much of their money? Why would they care how you enslave yourself to them? Anyways, even if cash advances have been outlawed since I last did it freely and recklessly (been over 15 years, so maybe they have?), it doesn't take a genius to figure out how to get cash somehow or the other.

As a proof of concept, the very first coin dealer I just found randomly using Google takes all major credit cards and sells silver by the ounce. Well, gee whiz, I can run up my cards buying silver ounces, walk down the street, sell them at a different coin shop for cash, then go buy whatever I want. Hmmm... What is the real reason banks don't want people making certain investments??

Because if you default, or go bankrupt, they lose out the interest payments and the debt owed back. Its all about risk management.

Also, interest rates are much higher for cash advances, belying their higher risk profile.

Honestly, the responses in this thread from bitcoin people...it’s like they’re just now realizing that banks have intelligent employees working for them.

Ding ding ding!

Here's a random credit card from American Express. Cash advances have a drastically higher interest rate, PLUS a 3% (minimum $5) transaction fee.

https://www.americanexpress.com/us/credit-cards/card-applica...

Same pattern for Chase Sapphire Preferred. Higher APR and this time a 5% (minimum $10) transaction fee.

https://applynow.chase.com/FlexAppWeb/pricing.do?card=FS6K&p...

Of course banks want that interest, but if the customer defaults they incur a big loss, so they also need to manage their risk.

With regards to cash advances, they come with much higher APR rates, to account for the increased risk and are often not available to card holders with low credit.

Perhaps Wells Fargo would be more amenable to their customers buying crypto if they were able to charge a higher APR for such transactions, but I imagine this isn’t such a simple change given the many parties and agreements involved.

As others have pointed out, the other aspect is fraud. Perhaps the anonymous nature of crypto currencies attracts more fraud payments than bullion?

However, I am highly skepticle that you can buy silver with a credit card and then sell it for cash “down the street” without incurring huge transaction costs in the process. I’d be surprised if the process was even 80% efficient.

If you are in a dense coin/jewelry district of a medium-sized city, you can get darn close to the posted spot prices for mainstream coins. They will charge a bit extra but probably closer to a 5-10% rake than 20%.

Source: I once negotiated a cash price for a jewelry piece in downtown Portland, Oregon and the jeweler accepted bullion I wanted to liquidate at quoted spot bid in lieu of cash for part of the price.

If you are talking about getting "SAR levels" of USD folding green, though, you're going to need to make an appointment in advance. Plus, heavy. So the "walk 1600 oz of silver down the street" strategy has a number of practical impediments beyond the spread.

If you are buying 1600 oz. of silver, why not just buy 21 ounces of gold instead? lighter! But honestly I doubt too many people even have limits that high on their cards.

Anyways, as an American who's grandfather landed on Normandy in WWII and who actually has roots back to the Mayflower (I do!) the very idea of an "SAR level" makes me fricking sick. Disgusted. People should be free to do what they want with their money and not have to tell anyone anything, period. Not only with their money, either..with their free time, the communications, their travels, their bodies and souls...LIBERTY should not just be an empty slogan on cheap metal coins and in songs and engraved on old stone statues.

It is really too bad what the USA has become, and I hope that the future will see a brighter day for "we the people"..

Silver and gold "rounds" (as they are called) minted by South Africa (Krugerrands), USA (Eagles), Canada (Maple Leafs), Australia, New Zealand, and so on are nearly as liquid as $100 bills, and you'd probably only lose at most 5% . 90% silver US coins minted before 1964, as well as very common date and poor condition US gold coins also are easily bought and sold fairly close to spot.

(Edit, adding: I just did a quick peek around the web and found spreads as low as 0.6%, if you buy and sell with that same particular company. In fact they also will hold it for you so you don't even have to physical take possession and deal with mailing or transporting it at all. While I would expect they may have some rules about that, it does show how competitive the market is and gives some idea of the situation.)

If you buy gold and resell it whereever then you have cash. The casinos in Vegas don't ask a lot of questions, nor does anyone else, really...(yes, this includes the good ol' Moonlite Bunny Ranch too..lol)

All I'm saying is that you can easily get cash from credit cards which you can then buy whatever with, so I just don't see the point (well, I may...) of them limiting your usage of their cards.

They want people to get in debt and then make payments, not get in debt and then default.

> Hmmm... What is the real reason banks don't want people making certain investments??

If you're suggesting some kind of conspiracy against cryptocurrencies by banks, you should provide some evidence to counter the entirely reasonable justification about the high default rate the article has given.

I never used the word "conspiracy" but don't you think the Federal Reserve and other central bankers are at least talking about it, making some contigency plans, ..next step is what is sometimes called in shadier parts of society as "calling in markers" ...you cannot deny that Wells was one of the banks bailed out in '08 so...umm...

It's interesting, the other day at a local gas station (AZ) I just saw a sign posted that they now accept debit and credit cards for purchasing lottery tickets. I wonder what recently changed?

I think this is probably a case of the individual retailer accepting credit cards, but that doesn't mean your credit card's issuing bank is going to approve the purchase.

Obviously if they accept them, there must be some banks that don't mind, but I know that many issuers won't accept the transaction. Kind of like the situation we have here: Wells Fargo blocks cryptocurrency purchases, but not every bank does.

Presumably they list the purchase as "misc retail" or something equally nonspecific, and the bank can't tell whether that's gas, groceries, lottery tickets, or all of the above. (Hint: it's probably all of the above.)

Also, when you use your credit card to get a cash advance, it is charged at a higher interest rate. Letting you buy cash-like things would let you circumvent that higher interest rate, but since they usually ban those things, the loophole is closed.

As far as I know, the only bank that fully bans mortgage payments is American Express, I've use my Citi card to pay my mortgage when Plastiq has discounted fees from time to time.

Interesting. I thought Visa also didn't allow it accept with debit cards, but now I am not sure. A little googl-ing suggests the main reason people can't may have more do with the mortgage lenders than the credit cards.

You're right, apparently Plastiq reached out to a blogger and made the following statement: “mortgage payments are not an allowable category on Visa cards.”

My Citi is a MasterCard and I've never had problems paying my mortgage with it. I did just last month. So Visa and AMEX won't let you pay mortgages but MasterCard is ok with it.

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