MilesBuzz! - Are Savings Bonds transactions cash adv?

If I am buying savings bonds using a credit card [in order to earn miles], is that considered a cash advance by the credit card company?

No. They are posted as purchases.

And for those of you who still have the same healthy skepticism that I did, you can read it straight from the horse's mouth, at Savings Bond Direct's web site:

http://www.savingsbonds.gov/sav/sbdfaq.htm

The fourth Q&A down is:

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Q:Is this considered a merchandise purchase or a cash advance?
A: Your savings bond purchase is treated as a merchandise purchase. It is not a cash advance.</font>

Still want to be sure, just call your CC issuing bank and have them reduce your 'cash advance' to 0(zero) then anytime anything tries to go thru as a cash advance it gets denied. However as I said ANYTIME ANYTHING tries to goes thru as a CA it gets denied which means NOT only the bonds, so if on occassion you do use your cash advance option then it will not work when even you want it to.

I read one post on flyertalk in which a person did reduce their cash-advance line to zero, but then a charge did come through that the CC company considered to be a cash-advance. Inside of deny the charge, the CC company "helpfully" let it go through, but then charged an over the limit fee.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AAaLot:
If I am buying savings bonds using a credit card [in order to earn miles], is that considered a cash advance by the credit card company?</font>

No offense, but do you really think that there would be 100s of FT posts on this subject if were considered a cash advance?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by cactuspete:
No offense, but do you really think that there would be 100s of FT posts on this subject if were considered a cash advance?</font>

I have in this board long enough to have seen normal people do abnormal things for miles http://www.flyertalk.com/forum/smile.gif

[also, I just bought $30K and had problems with the last $5K...on the phone the Citibank agent mentioned that the charge did not go throught since I was buying bonds and bonds where like cash advances]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AAaLot:
I have in this board long enough to have seen normal people do abnormal things for miles http://www.flyertalk.com/forum/smile.gif

[also, I just bought $30K and had problems with the last $5K...on the phone the Citibank agent mentioned that the charge did not go throught since I was buying bonds and bonds where like cash advances]

</font>

Again, the purchases can't be treated as cash advances. Whether you reached some other limit on your credit card account, or the transactions were so far out of line that Citibank flagged your account for suspicious activity, I would have no idea.
My Citibank AAdvantage Gold MasterCard has a $10,000 limit, and I've never had problems purchasing bonds. I've purchased $15,000 in one month, but made multiple payments to keep my balance from going over $10,000. Citibank also claims you don't have a "pre-set spending limit," and any charges over your credit limit must be paid in full. But, again, that doesn't mean unlimited spending. If you suddenly make a $50,000 charge out of nowhere, they may still deny it.

I have bought and turned in 100k in bonds, this works fine, and it is treated like a purchase, the banks no exactly what to do with them when you deposit them, this is all very very simple, when you buy a lot at one time, most of the credit card companies freak out

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ceber:
when you buy a lot at one time, most of the credit card companies freak out</font>What's "a lot"?

I bought $15,000 worth in October and again in November. Amex didn't blink, and approved the transactions instantly.

Though once they did have a slight problem the next day for just a few hours.

My limit is 18k, and in November the 15K was approved but posted so quick that it was still listed as pending WHILE it had also posted. Needless to say this apparent 30K shut down my account which I found out at Walgreens.

A call to customer service helped get it straightened out. It took a few hours to get it out of the approval queue, but I was impressed when I got a phone call BACK from the CSR saying it was all cleared up. And she apologized for calling me so late http://www.flyertalk.com/forum/smile.gif. It was 9pm. Of course, I told her no problem and thank you very much.

tried to buy 90k at one time, they shut me down around 70k, had to call and then was back in action, I have only purchased using amex

And now a minor topic drift...earlier Savings Bonds threads mentioned that some banks (Chase?) would not cash Series I bonds. Bond holders had to get their signatures guaranteed and then send the bonds to the Federal Reserve.

Today I took some Series I bonds to my credit union, where they were accepted without difficulty http://www.flyertalk.com/forum/smile.gif

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Middle_Seat

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ceber:
tried to buy 90k at one time, they shut me down around 70k, had to call and then was back in action, I have only purchased using amex</font>

Ceber,

Out of curiosity who where you buying the bonds for? I can see your wife and your sefl, however, when you get to your kids you begin to have gift tax issues?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AAaLot:
Ceber,

Out of curiosity who where you buying the bonds for? I can see your wife and your sefl, however, when you get to your kids you begin to have gift tax issues?

</font>
Example, for I bonds you can buy up to $30,000 worth of bonds annually. For you and your wife that's $60,000. If you have two children, you and your wife can gift up to $20,000 to each. Buy $20,000 worth of I bonds in each child's name (no gift tax) and list yourself as the co-owner. Because the bonds are listed in their name and social security number the amount does not apply against your annual purchase limit. However, because you are listed as co-owner on the bond, you can cash them. This scenario for a family of four gets you $100,000 worth of bonds.

For those who may not have seen it, there is a posting by NuSilvMedal over on the Delta thread that says AMEX will NOT give bonus points for savings bond purchases during promotion periods. You still get the base amount but not getting the double or triple bonuses that have been available certainly takes away a lot of mileage-building power. It's not clear from the postings if this is a case of limited targetting of some AMEX folks (seen as overusing the bonus opportunities?) or is a general policy change for all. In either case, not good news.

when you cash the bonds for the children, you have to open a bank account in their name first, the interest is reported to their social security numbers, once the money is bank in the bank, you can transfere it, etc, to any other account, taxes will need to be paid on the interest, but that can be accomplished on the parent's tax return

are these savings bonds? how long do you have to keep them? how do you find out the interest?

thanks very much

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by betty s:
are these savings bonds? how long do you have to keep them? how do you find out the interest?

thanks very much</font>

You can find full info on buying bonds and getting miles for it on my web site below. Click on Free Frequent Flyer Miles in the left menu, then on Financial Offers in the top menu.

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The Personal Travel Experience of Gary Steiger (http://home.earthlink.net/~pgary/TravelFrame.html) - including how to get free frequent flyer miles on the web.

Hi, this is a little off topic but I have a question regarding buying savings bonds (i-bonds). Can they be bought by a business, instead of an individual? I own a small business and want to purchase the bonds on behalf of the business. Is this allowed, and if so, how should it be done? Thanks.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ceber:
when you cash the bonds for the children, you have to open a bank account in their name first...</font>

If your name is listed as coowner of a bond then you may redeem it yourself, and can do so using your own individual bank account. In such a case I believe that the interest is reported under your SSN, not the SSN of the child. In fact if it's not truly the child's money and you "cleverly" arrange the reporting to make use of the child's lower tax bracket, you're looking for trouble. The law is very much concerned with the substance of such transactions. Rule of thumb: if it's your money to spend, then it's your tax to pay.

Regarding gift taxes...

When a person buys a savings bond naming himself and another as coowners, there is no gift completed so long as that person has the ability to regain control of the money. No gift means no gift tax. For details see regulation 26CFR25.2511-1 in the Code of Federal Regulations, which says in part:

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">If A creates a joint bank account for himself and B (or a similar type of ownership by which A can regain the entire fund without B's consent), there is a gift to B when B draws upon the account for his own benefit, to the extent of the amount drawn without any obligation to account for a part of the proceeds to A. Similarly, if A purchases a United States savings bond registered as payable to "A or B," there is a gift to B when B surrenders the bond for cash without any obligation to account for a part of the proceeds to A.</font>

Do keep in mind that listing a coowner on a savings bond has real legal consequences. Although you may plan to regain sole control of the money at some future date, circumstances could very well prevent that from happening.


--ss

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by custombagel:
Hi, this is a little off topic but I have a question regarding buying savings bonds (i-bonds). Can they be bought by a business, instead of an individual? I own a small business and want to purchase the bonds on behalf of the business. Is this allowed, and if so, how should it be done? Thanks.</font>

Not sure how it would be done but I noted on form PD 5396 that a SS # or a EIN # could be put down. That would seen to indicate that a business could?
BTW, this form can be used to Direct Deposit a savings bond redemption from the Federal Reserve into your bank account. Also, anyone worrying about the difficulty of cashing bonds at a local bank might want to send them in ahead of the time to cash to the Federal Reserve; I just got this response from the Bureau of Public Debt Dept:

Yes, you may send the bonds in to our office and request that the bonds not be redeemed until December. You may have the redemption check direct deposited if you want. The Form PD 5396 is the form to be completed to request the direct deposit. You may down load the form off our web site at:


Forms Ordering (http://wwws.publicdebt.treas.gov/NC/FoRMSHome?FormType=SBF)

Our mailing address is:

Bureau of the Public Debt
P O Box 1328
Parkersburg WV 26106-1328

If you want to send the bonds to your processing Federal Reserve Bank you may use our web site to find out the address and telephone for your processing site at:

Federal Reserve Bank Addresses (http://www.savingsbonds.gov/sav/savfrb.htm)

Gosh, I hope I get these links right!

[This message has been edited by rox59 (edited 11-18-2002).]