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Old Jan 24, 09, 5:06 am   #1
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Anyone ever overpaid their credit card before a large purchase?

This year is the first year that you can pay your UK tax using a credit card, for a small fee.

My tax bill is literally 15 times the limit on my BMI credit card. I am planning to put my BMI credit card (issued by MBNA) into credit by making a massive payment to MBNA, and then immediately paying my tax bill. MBNA has confirmed that I can do this.

My only concern is that I may not get the miles for the tax payment (it IS treated as a purchase, not a cash advance) because I am paying it from a credit balance and not actually using MBNA's money. The terms & conditions of my card don't mention miles once, yet alone how they would treat this situation!

Does anyone have experience of successfully getting miles from using a credit card when you have put it into credit beforehand?
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Old Jan 24, 09, 5:10 am   #2
 
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Amex took 2 payments by accident putting my card into credit when I spent the money over the next month the miles were credited as normal, this month I paid on the 5th and they took the same amount yesterday so I am in credit again, I expect the same thing will happen again
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Old Jan 24, 09, 5:16 am   #3
 
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I tried this with my HSBC card and I got a call from the bank saying they had reversed the payment (it was an intra-bank transfer) because it violated a money laundering law/policy in the UK.
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Old Jan 24, 09, 5:32 am   #4
 
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I've done this with my Amex cards both in France and the Netherlands without any problem. Miles posted for the purchases as it should be. The same for my German Visacard and later my German Mastercard.

But I don't know the UK-rules/laws, so it is the MBNA who could help you out.
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Old Jan 24, 09, 5:58 am   #5
 
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Wow. I am surprised that the card issuer allowed that. Several years ago I attempted the same thing with my visa card prior to a trip to antwerp on an engagement ring excursion and got shot down.
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Old Jan 24, 09, 8:43 am   #6
 
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check the fine print

most miles/points earning cards are based on the type of purchase, not the payment
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Old Jan 24, 09, 9:05 am   #7
 
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We have done this before with our UK MBNA Business Card that earns BMI miles & not had any problems.

It usually gets "overpaid" in circumstances where an employee has been stuck for foreign currency & either used the card @ an ATM or Travelex & by "overpaying" when the statement comes round they are not constantly adding interest.

Only thing we had to do was get them to change the D/D to be something like "dynamic" so that they calculate the D/D a few days before taking it & not by the statement date.

From reading that you are paying your Tax bill I wonder if you can also pay Corporation Tax, that would be an easy way for some "cheap" miles.
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Old Jan 24, 09, 9:11 am   #8
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Slightly OT, but how "small" is the fee that is charged? In the USA it is usually around 2.8-3% and that makes it a very expensive way to try to earn points.
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Old Jan 24, 09, 9:26 am   #9
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Last year I used Amex to pay a substantial amount (well over my normal monthly "limit") of taxes in the US. Called Amex in advance and wired the funds to my account. With the credit in the account, the tax payment was promptly processed and my miles credited on the next cycle. I paid 2.49% which I considered a good deal since I use my miles mostly for premium international award travel... so $2,490 buys SFO-FRA/MUC-CDG in LH F, normally an $18,000 ticket.
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Old Jan 24, 09, 9:58 am   #10
 
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Generally a pre-payment does not increase your credit limit, so as mentioned above you probably need to call your bank after you make the pre-payment and let them know what you plan to do and see if they can give you a temporary credit limit increase.
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Old Jan 24, 09, 10:20 am   #11
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Quote:
Originally Posted by sbm12 View Post
Slightly OT, but how "small" is the fee that is charged? In the USA it is usually around 2.8-3% and that makes it a very expensive way to try to earn points.
0.91%, on a credit card giving 2 BMI miles per £1. This is 0.455p per BMI mile.

As an example, a First Class flight UK-North America would be effectively £410 ($600) plus tax on this basis.

So you can see why the opportunity to earn 1/2m or so miles on this basis is interesting!
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Old Jan 24, 09, 2:26 pm   #12
 
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In the United States have done this with Bank of America Visa. I called BofA fraud department after I overpaid and told them where the payment money came from ( there own bank account) and where it was going and the use for three +$100,000. purchase in dollars.

There was a very common fraud commited with overpayment on a credit cards and that is why many people will have problems doing this.
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Old Jan 25, 09, 9:29 am   #13
 
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If/When the bank becomes un-cooperative, one might consider "installments", rather than "lump sum" payment strategy; surely, the tax-man will gladly accept whatever you send -- and the final %-fee is unchanged.

Caveat: some banks are known to cap the number of ACH payments per month
/.
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Old Jan 25, 09, 10:26 am   #14
 
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Some banks allow this, some do not. When allowed, it will not increase your actual limit, but it will effectively have the same impact, as you will have more "room to spend" before triggering a cut-off. Prepayment doesn't alter the awards earned - the type of purchase/charge determines this. Keep in mind that prepaid or not, very large charges often require preauthorization. I spend millions on credit cards through my business each year, but even we run into preauthorization issues at times.
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Old Jan 25, 09, 2:41 pm   #15
 
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I can confirm this works for both the Chase UA Visa and multiple American Express cards. I used to do this all the time with tax payments. Sometimes I would notify them, sometimes I would not. I think when they see the charge request from a source like pay1040 or officialpayments they know what you are doing.
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