Comment by reuven | Hacker News Reader

Comment by reuven | Hacker News Reader

My favorite story of this sort happened a few years ago: The US has never been successful at getting the public to accept dollar coins. As a result, the dollar coins -- some with presidents on them, and some with Sacajawea depicted -- were sitting in the US Mint's warehouses. The Mint, in order to get rid of these coins, offered people the chance to (a) order them by mail, (b) have them delivered for free, and (c) pay for them on a credit card.

Some people (very cleverly) did the math, and ordered ridiculous numbers of dollar coins on their airline-affiliated credit cards. When the dollar coins would arrive, the buyers would take them back to their bank, depositing the money in their account.

In other words, these people were getting thousands of dollars' worth of frequent flyer miles each week, for absolutely free. The Mint found out about this when banks started sending them enormous numbers of dollar coins, unopened, for storage, and that a very small number of customers were ordering a very large number of dollar coins.

The full (and very entertaining) story was done by NPR's Planet Money podcast:

http://www.npr.org/blogs/money/2011/07/13/137795995/how-freq...

> Some people (very cleverly) did the math, and ordered ridiculous numbers of dollar coins on their airline-affiliated credit cards. When the dollar coins would arrive, the buyers would take them back to their bank, depositing the money in their account.

Effectively, this works around the usual restrictions on using credit cards for cash advances. Even if you just had a standard cash-back credit card (1-2% on purchases), you could make a huge reward without actually spending any money, and on top of that you'd be able to get a month's worth of cash advance up to your credit limit; you could make a significant amount on the float that way.

However, most credit cards have fine print that explicitly excludes the direct purchase of negotiable financial instruments, so they'd have every right to cancel the rewards and charge a cash-advance fee if they found out.

It was a PITA to get banks to accept large amounts of coins. I had a coworker that was doing this, but he had to keep switching banks -- most would let him do it once for free.

I actually find stories like these rather sad. People are wasting valuable time, money, fuel, etc. just to take money they haven't earned. To me, it's no different than Wall Street: a legal way of taking value from someone else in a negative-sum game. Just because something is legal, doesn't mean it's ethical.

You can still do this, but the mint imposed limits on the number of coins they'll sell you per week, effectively making this scheme not worth it anymore.

However, to me it is still the best way of getting all those bonus miles when you sign up for a new credit card, without actually spending any money.

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