detroit, macomb · Member since 2018 · 84 posts · 42 votes
Hello is it possible to sell something online and use a credit card to buy that item for myself and then use that cash to transfer into my bank to buy a house? Because i have 20k credit limit and would like to turn it all into cash Because i cannot qualify for any bank loans and hard money loan is my last option..thanks
Don't do that it sounds like a horrible financial move. Work on your personal finance. Setup a monthly budget for yourself and save as much as you can. Keep on saving and continue educating yourself further.
Maxing out your credit cards won't help you secure a mortgage. It will help put you in worse financial shape. Also let's say you found a house for 20k and maxed out your cards. Credit cards are one of the most expensive ways to borrow money interest wise. What happens when you need 20k-40k additional to rehab the place??
Why can't you qualify for a loan at a bank? Have you tried for a FHA type mortgage?
@Frankie Betancourt I know I have an online business where people pay for a conference and pay by credit card that I have used my own credit card to enroll for the conference. But it charges like a 3% fee to run the card. I wouldn't want to set up a website and online store front and payment processing service just to pay myself with a credit card. Then you have the interest of the credit card. Can you save cash or HELOC a home or hard money lending? Can you take the deal to an investor and split the deal with them?
Also can you fix why the bank won’t give you a loan? If you max a credit card out they are less inclined to let you borrow and you don’t want to cut yourself short.
Why don’t you talk about what you need the money for. Talk about the deal you wish to make. Maybe we can strategize on how to get that deal locked under contract with minimal funds. Maybe you wholesale 2 or 3 deals to get quick cash. I have friends who have put down payments with their cards. Usually these guys have a good network of cash buyers, so they are in and out of a deal in less than a month.
You need a niche and a strategy. The money part, is actually the easy part.
Don't do it. If you have a new card with a 0% promotion for new purchases, you might have that same promotion with a cash advance for a 3-5% fee. Call the credit card company and ask. You'll pay eBay their fee, PayPal their fee, and the credit card company their fee for accepting a credit card payment.
You are going to tank your credit score like this by maxing out your card....and likely your DTI. They will both go back to normal once you pay off the card....but if your on the cusp of being able to get a loan in the future it'll likely cause a lot of headache.
@Frankie Betancourt Yes. Most credit cards have an amount you can pull out for cash. Its usually 50% of your credit limit. You have to go into bank and get a cash reserve against your credit card.
@Frankie Betancourt I have heard of ppl using CC to buy properties though. Actually I heard a story about a lady that's from Detroit who did that. I heard it on the BiggerPockets podcast. If you can get into a property without having to put money down perhaps you could just use your credit cards to pay the monthly until you find a tenant or an end buyer.
To echo what others have said, it sounds extremely dicey. Questionable legality, possible high interest rates, and if you use the eBay/PayPal method there will be a ton of fees.
If you have found an amazing deal that you must close on, why not try presenting it here? If it really is a good deal, you should have no problem finding people here to help with the money part. You may not be making as much splitting proceeds, but being in part of deal is better than being in no deal (or a super dicey deal).
Back in my cc days, I'd take advantage of the 0% balance transfer offers. No fees and a low or 0% intro rate. I'd do the 'balance transfer' online.
When it asked for which account I was paying on/transferring to, I'd put in my business name (very generic sounding) and bank acct #. The amount I transferred would appear in that acct. No cash advance fees or limits and I got the promo rate of 0 for 12 monhs or whatever. But the last time I did this was probably 2011.
The last thing you want is to buy that house through this twisty approach and default on the mortgage and then lose the house.
Now, you will be in an even worse situation than were (Worse Credit + No House).
Take a financial look at your situation and start thinking of ways you can start small in Real Estate Investing that can help you generate some cash. You are already here on BP, keep digging as there are a 100 ways to make money in Real Estate (No Get Rich Schemes)
The reality is nothing worth having is forced. Take your time...
@Frankie Betancourt if you have $20k on a credit card, you can do a balance transfer. Be sure to contact your credit card merchant for interest rates, etc. And you are correct, you can use that money to invest to bring you more money.
You need to be careful with schemes like this. Here is some potential problems:
1. Ebay terms of service prohibits you from bidding on your own auctions.
2. The credit card transaction will be reported to the IRS under 1099-K. Paypal may report too on the receiving side. Selling things on Ebay is taxable, so you could end up with trouble from the IRS.
3. The credit card company limits cash advances. Buying from yourself is a way "around" this by using deception. That is considered fraud. I am not sure if they would find out or what they would do about it, but they have large loss prevention teams specifically to deal with fraud so there is risk.
@Frankie Betancourt if you’re getting a mortgage and not buying outright, you’re only creating debt for yourself. So the banks would see that you’ve just taken out a ton of debt on your credit card, and you can’t use loan money for a down payment. Even though you technically sold the item, you also technically bought the item, so it’s a wash
Could you not just purchase something from a family/friend that YOU HIGHLY TRUST and once the 18K has cleared and they withdraw the cash you sell them something back? It removes the "buying from myself" sketchiness?
@Frankie Betancourt wouldn’t it be easier to just take a cash advance on the credit card? All of the cards I have offer cash advances as an option. The interest rate might be higher on a cash advance so I would recommend you factor those numbers into your house buying pros and cons.
Also, you might want to review the fine print on eBay. Selling something to yourself might violate their rules.
Cash advances typically have an exorbitant interest rate. Avoid that where you can.
That would be extremely expensive money borrowed. You are going to get hit with fees on whatever marketplace you do this transaction on, then you will get hit with credit card interest which can be 20%+. I do not recommend this at all, especially if this 20K is not something you can pay back in the near future.
Here is something I did before. I have a card that does occasional 0% + $0 fee bank transfers and the base APR is 9% which is somewhat manageable. Thats absolutely free money for a year, but with this card I cant just do a bank transfer check into my bank account. So I got around that once by using another credit card that does $0 fee cash advance, did a 25K cash advance into my bank account, and then immediately did a 0% 0 fee bank transfer fee to my other card. I used this to help buy a property but even with these much more favorable circumstances I would not even recommend this to anyone unless they are able to pay that bank transfer off within a year.
This does explain some of the ridiculously priced items I've seen on Ebay. Just so you know, any transactions over $10k have to be reported by banks (anti-fraud/anti-terrorism laws).
If you PAY OFF ALL YOUR CREDIT CARDS you will start getting 0% offers and credit card applications like crazy-remember that it's easier to get into debt than out of it though.