My local bank has a point program via RewardsNOW. 1 point per $2 spend on debit purchases. I believe I could find some deposit-able, negotiable instrument to purchase and churn.

My concerns are two-fold. First, it's a credit union and a small bank. I often make my deposits with exactly the same person every time I go in. I'd have to make rounds of various branches I suppose. Or deposit via ATM? Not as easy to fly under the radar.

Second is T&C rule number 3: "In the event of Cardholder fraud, abuse of the Program privileges, or violation of the Rules, RCU, in its sole discretion, reserves the right to cancel your participation in the Program."

In your personal, professional, ethical opinion, whatever- do you think churning constitutes an "abuse of the program?" If not, what is that language meant to protect against? Would that give you pause? Does anyone have any personal experience with churning a program like this?

You really aren't supposed to be able to buy deposit-able things with your debit card as a purchase -- it should ring up as a cash withdrawal -- so it's very gray-area, since the onus of categorizing purchases is on the merchant/card issuer (Visa/MasterCard). With that being said, I don't think your credit union will care; if it's a credit-run purchase, they'll get their transaction fee and pass along the cut to RewardsNOW. Some of your reps may even applaud your ingenuity.

Abuse is very hard to define as being something separate from simply breaking the rules. While RewardsNOW might frown upon this, and they might pull the abuse card on you, they wouldn't necessarily know that you're churning, just that you're buying a lot of deposit-able stuff (and they're still getting their cut -- it's not like they're losing money on your proposition). My guess is that the abuse thing is more like if you were to buy $20,000 on your debit card, redeem the points, then return it all, putting your rewards account into a negative balance.

From what I can see in the most that you can get is something like $0.015 cents per point if you use it for travel, but you only get one point for every $2 of debit purchases.

https://www.rewardsnow.com/texans/tr...?categoryid=11

We are talking about $80,000 worth of purchases for a domestic ticket not costing more than $400.00 {Your financial institution might have different redemption tiers as the program is independently run and marketed to small financial providers where managing their own program would be financially unfeasible}

Not a lot of value for a lot of work, but now to your questions.

Is it ethical? There might be a few who disagree, but I think is ethical as you are not doing anything outside of their rules.

Will the credit union lose money? Probably not even if they only charge 1% to the merchant for a debit transaction, that is probably how much they are paying the rewardnow people. Remember it takes $2 to get a point.

Can this be considered abuse? Yes it can specially if you are moving large amounts a month. It will be completely up to whomever is running the program in your credit union. Once they have to start paying rewardnow thousands of dollars a month, they will take notice specially if they are small.

The loser in this transaction is not the credit union, it is whoever is accepting credit card payment for cash equivalents. The seller is giving you cash at 100% face value but getting back 97-99% from their credit card processor. Or are you saying the credit union is the one making the sales?

Also, spreading your deposits around is a bad idea. It could give the appearance that you are structuring (a federal crime) your deposits to get around the CTR reporting.

This program, like most debit card points programs requires a signature based transaction to earn points which pretty much eliminates cash-equivalents like money orders.