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Comment by orborde | Hacker News Reader

I don't quite understand the purpose here. Is the idea that you can keep rolling your credit card debt forward interest-free indefinitely?

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No... From what I read people would get rewards from the credit card. So they bought say $10,000 in coins and deposited the coins back before the end of the billing cycle, winning a $200 cashback reward. That $200 is what the person doing this would profit.

That "hack" has the nasty characteristic of probably making everybody lose, maybe more than the $200 the guy was getting.

I imagine shipping was not free for the government, which also probably paid the credit card operator a fee. The credit card operator is losing money by paying rewards on a bogus transaction.

The credit card company doesn't lose money. They charge a settlement fee to the government, which more than covers the cost of the rewards program. So only the government (ie, the taxpayers) lose out here.

The taxpayers also don't lose out because the mint makes the coins and mails them and pays the credit card settlement fee for less than the face value of the coins.

Nobody loses, except people who object to the subtle inflation by seigniorage. The Federal Reserve can control that anyway.

You can also use it to get frequent flier miles - a lot of cards offer 50,000+ miles on reaching a certain minimum purchase.

Here's someone who bought $15,000 in coins: http://advancedriskology.com/the-day-i-bought-15000/

$15k is pretty small. I think there are some members of Flyertalk.com who managed to churn far more than that during the programs run.

Why is the transaction bogus?

It is not difficult to find credit cards that will rebate back to you anywhere from 1 to 5 percent of your spend

The best actual cash back on unlimited general purchases is probably 2% (Schwab used to do this; Sallie Mae Visa, Capital One Venture or their 2% business card, NASA Credit Union).

5% is basically always either category-limited (Gas, sometimes restaurants) or limited to a trivial (<$5k/yr) spend.

I personally do the American Express Starwood card, since I value Starwood points (1 per $1 in general, and some other bonuses for hotels, gas, etc.) at about $0.025-$0.04. You can also convert SPG points into FF miles at a rate better than unity.

Back in the day, paying for space segment ($200k/mo) on a business credit card meant never having to pay for a hotel suite or airline ticket.

The Chase Amazon card is also 3% on Amazon purchases, which basically means 3% on every mailable product in the world. I think it also gets you 3% on Amazon Web Services purchases...I doubt Dropbox or Netflix pay their bills with that card, but it would be amazing :)

Add Fidelity American Express to the 2% general purpose list.

Got a ref on the 5 percent part? (Ignore this if it's only for gas; I'd be interested in 5% all purchases.)

Discover rotates the category of things that give 5% back every few months, which is generally easier to take advantage of than just gas. 5% for everything would be way over the interchange fees, so it'd require some sort of catch.

There is also a limit on the amount applicable to the cashback bonus, per program, and it's usually a trivial amount like $300 (so, $15 cash back per month).

I think the point was that you racked up frequent flier miles for using your credit card.

Sounds more like a way to rack up rewards points.

No. It was for the credit card points and cashback rewards. They essentially got these points/cash for free.

I'm guessing that people did that to get miles/points from the credit card.

It has been edited at least twice. At some point, it indicated it was a means to get frequent flyer miles gratis.

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