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Comment by sitharus | Hacker News Reader

The cash advance penalty is to protect the system cut. When you pay $50 for a meal the credit card system takes a 2-6% (some countries/regions limit this to sane amounts like 0.5-1%, eg EU countries and Australia) cut depending on the card, split between the network (visa, MasterCard etc) and the source and settling banks.

If you take a cash advance for $50 you only see $50 on your statement and the network doesn’t get its cut. If there’s no penalty for using a cash advance you’d find many businesses would have an in-house ATM so you could pay in cash and they could avoid the cost of accepting cards.

You actually see this in places like New Zealand where we have unregulated credit/debit card interchange rates but also have an established fee-free(ish) card system. Almost all smaller retailers accept EFTPOS card transactions but not credit/debit cards.

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What is a way to get money from a card into a bank account?

Or conversely, is there a way to have a virtual "bank account" that is accepted by credit cards as a source of payment (e.g. via Plaid or whatever) but is actually backed by a credit card?

I am asking because being able to use credit cards to pay off credit cards, without taking cash advances, can provide a lot more options for a person or company.

Obviously you can have two companies controlled by the same entity that each purchase a product from one another, paying only the merchant fee. But does that violate the credit card issuer's policy, or do they really care?

Not that I know of. You can certainly take advantage of balance transfer offers that some card providers have to bounce the credit around, but most only do that for new accounts.

What’s wrong w my suggestion of having a friend’s company charge you and then do a wire?

Sounds pretty close to wire fraud to me.

https://en.wikipedia.org/wiki/Mail_and_wire_fraud#Elements

In many/most places this would trigger a loss of a significant amount of money to sales tax, income/revenue tax etc.

Disclaimer: if you're in a situation where you're paying credit cards with other credit cards, you're actively courting financial ruin.

That said: in the US, credit cardholders are inundated with balance transfer offers. Frequently, this involves the credit card company mailing checks to their customers. These checks work just like they are attached to a checking account, but they are backed by the underlying credit card. I am aware of a few companies that juggled credit card offers in this way to get off the ground.

I would disagree. Ive made it through college by just transferring balances to 0% interest cards and get a new one every 15 months or so. I pay 2% balance transfer fees or so everytime. Which is a better rate than the big Banks get from the fed.

In the UK this is known as Stoozing. Some credit cards will give you a 0% interest rate (APR) if you do a balance transfer. That's usually to pay off another credit card.

Some allow for "Super Balance Transfers". They let you do a balance transfer into a current account. Ostensibly to pay off your overdraft - but they've no way of knowing.

Et voilà! Cash from your credit card.

The downsides? There's usually a balance transfer fee of a couple of percent and if you don't keep up with repayments, the APR can revert from 0% to 20%+.

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