Gold Dollar Coins Not Treated as Cash Advance on My Credit Card

A couple months ago I gave an update on my gold dollar coin purchases. At the time, we discussed the fact that the US Mint had warned people that the purchase of these coins might be reflected as a (costly) cash advance on their credit card. (BTW, they also warned people not to buy the coins and simply take them to the bank -- pocketing the credit card rewards -- because that was not the intent of the program.) Risking the possible cash advance charges, I went ahead and bought $1,000 of Native American coins (note: orders are limited to two boxes ($500) per Presidential $1 coin issue -- and I already have $500 of each president available -- but you can get 20 boxes ($5,000) for Native American $1 coins and still get free shipping. Details here.)

The coins arrived within a week, the same as usual. A couple weeks after that, I received my credit card statement. I got the 2% cash back for the coin purchase and it was counted as a regular transaction (not a cash advance). I think maybe I'll buy more! ;-)

BTW, I HAVE been circulating my coins. A few recent ways we've done this:

• My son gave two gifts to his basketball coaches -- one was a bunch of coins in a small "treasure box" we got at Hobby Lobby and another was in a ceramic piggy bank. We like giving the coins in something that the recipient can use because then there are two gifts -- the coins and what the coins are in.
• My daughter gave a piggy bank full of coins to a friend for her birthday. My daughter painted the bank to make it look really cool and special.
• We've given out coins here and there to kids -- especially several at church trying to raise money for camp (they sell candy bars.)
• We used the coins to pay our way into a basketball tournament for two days. I keep some coins in my car, and it was easy to grab them and pay for us to watch the games.

We would use them at places like car washes, but most coin-operated systems do not take them (or at least it's not clear they do, and I'm not willing to lose a buck trying.)

Everyone, and I mean everyone, LOVES the coins. When given as gifts in a creative package, they are always a hit. And even cashiers seem to get a kick out of receiving them.

Here's my next thought -- what about buying a ton of coins and using them to buy a new car? If dealerships won't accept credit card transactions (and thus keep you from earning cash back), why not just buy coins and pay the dealer with them? Of course, $25,000 in gold dollar coins could be quite a load to carry. :-)

Comments

[Money Reasons]

I like the idea of buying a car with the coins!

When I bought my malibu, I didn't realize that auto dealers wouldn't take credit cards. So I was pretty peeved when they told me no.

That would be a lot of weight though! hehe... But think of the joy you would bring to the car dealers as you hand them boxes and boxes of coins! :)

[MC]

I don't understand the allure. They're gold coins, so what?

[FMF]

MC --

You're not following along, are you? ;-)

Check this out:

http://www.freemoneyfinance.com/2009/02/make-money-by-buying-money.html

[Budgeting in the Fun Stuff]

I loved these things as a kid, but I think they'd get too heavy for huge purchases like a car, wouldn't they?

I'm not willing to lose a cash-advance charge if my credit card is different...maybe I'll call in advance...

[Lynda S]

I use the coins to pay for parking at school. It is fast and efficient to just drop in one coin instead of try to fight a crinkled dollar bill or find exact change.

[Kathy F]

I use them to buy a can of Diet Coke every work day from the vending machine. Also use them to pay for membersihp in the water club at work (costs $3-4 per month).

[CPA Abroad]

I like the car idea. I am planning on buying a car in the fall and plan on paying cash. Not sure how the dealership would like that though. You could also play a little game where you order them on the first day of a CC cycle, use them to buy the car, and not pay the CC until the due date, thereby earning a little extra interest. If you get 30 extra days on $20k in your account (using Ally's current rate) you would get approx. $20 in interest, increasing your benefit by 5% (assuming 2% cash back on 20k). Of course, I am assuming you can get to 20k in gold coins.

I also seem to recall that there is some sort of "payment in acceptable form" clause with some things. I think it is designed to keep people from paying with all pennies when they are angry about paying for something, like a fine or court judgement against them. Anybody know if that is true?

[CPA Abroad]

One last thought...wouldn't paying for a car with gold coins be against the intent of the program as the dealership will just take them to the bank and deposit them?

[FMF]

CPA --

Technically, no, but practically, yes.

I'm the coin purchaser and I'm supposed to buy the coins with the intention of putting them into circulation. That's what I did (by giving them to the dealership.) Hence, technically, the letter of the law is fulfilled.

But the dealership is going to take them to the bank, resulting in no futher circulation of the coins, which violates the spirit of what the US Mint is doing. So for all practical purposes, it is against the intent of the program.

Guess that idea is out for me...

[MelMoitzen]

They are GREAT for the pool and beach in the summer--kids can put them in their bathing suit pockets (guess that's mostly boys, I guess), have snack/ice cream money and not worry about them getting wet like currency.

[Tyler]

I use $2 bills all the time for similar reasons. People tend to remember me more frequently because I am the guy with $2 bills. Oh and I get away with tipping the valet less because they think the $2 bills are cool. No credit card rebates however.

[Funny about Money]

So, my plan is this: you rent a backhoe to haul the $25,000 worth of gold coins into the dealership.

If that doesn't get their attention, nothing will. All we want to know is whether any of them asked you what it would take to get you to drive that backhoe off the lot... :-D

[TJ]

which credit card do you use?

[FMF]

TJ --

I use the Schwab 2% Visa.

[TJ]

Dang, I should have used my 2% Fidelity as they are both through FIA. I couldn't find any info on the net that these cards worked as purchases so I went w/ Chase which had been documented. Oh well. Now I know for next time. :D Its the perfect way to "get your cashback" on purchases at places that otherwise charge fees for using credit cards.

[TJ]

well I basically negated any cashback. They sent it by UPS rather than USPS which I was expecting, so I wasn't home when the package came. Had to pay UPS $6 to have it rerouted to work...now I know next time to have it sent to work.

[RichGuy]

The United States Mint has eliminated the credit and debit card purchase of $1 Coins through its Direct Ship Program effective July 22, 2011. Customers who wish to purchase $1 coins through the Direct Ship Program can still do so by wire transfer, check, or money order.

The Mint has determined that this policy change is prudent due to ongoing activity by individuals purchasing $1 coins with credit cards, accumulating frequent flyer miles, and then returning coins to local banks. Local banks, in turn, returned coins to the Federal Reserve. While not illegal, this activity was a clear abuse and misuse of the program.