This post is intentionally vague because if I give any specifics, then the unicorn would be slaughtered dead. Anyway, about a month ago, I called up a CU that I had a credit card with, asking about a higher CL for the card. At the end of the call, I asked, ‘Oh by the way, is there a way for me to pay my credit card using an external debit card?’ The rep said YES! I then tried 2 fintech’s debit cards – 1 earned 0% and the other earned close to 2%. So this card earns me close to 3% on unbonused spend and they don’t care about cycling at all.
Let’s back up and understand a few concepts. We all know about cashback cards that give 1% or 2%, etc on the spend side of things. Well, you should also be thinking about how to get cashback on the PAYMENT side of things. Instead of using your bank’s checking account to pay off the card and earn 0%, well if the credit card takes debit cards for payment, then you could earn an extra 1-2%. That’s why when Paypal Bill Pay was working with Bank of America’s 2.625% cards, you were getting about 4.5% cashback on unbonused spend. Now that PPBP is dead, we have to look at banks that take debit card payments DIRECTLY. I think everyone knows about the other major bank that takes debit and the two 2nd rate banks, but not many people know about the CU’s.
Also, just because 1 fintech’s VISA debit card doesn’t earn any cashback, then check their MASTERCARD. And if both cards earn nothing, try a different fintech’s VISA or MASTERCARD.
I bring this up because I got a lettter in the mail this past week from a CU that told me my account was dormant (I thought I had closed the account years ago, but I hadn’t.) I then looked on their web page and they actually had a 2% unbonused Visa card. I then called them up, asking them to NOT close my account, but on the IVR, one of the buttons was like, ‘Push 5 if you want to pay your credit card.’ So when I got the rep on the line to not close my account, I asked her if they took external debit cards to pay off their Visa card and she said YES. My guess is it’s the same backend system as the CU I wrote about above. So instead of closing my account, now I’m going to get their Visa card and go to town.
So go poking around your local and in-state credit unions and see who has a high cashback credit card that also happens to take debit card payments and you’ll be back on your way to ~4% cashback on unbonused spend. And if they shut you down, who cares? It’s just a small random CU anyway.
In theory the CU shouldn’t shut you down if they’re just paying 1.5-2% unless they worry about fraud/money laundering (though I guess they get burned on the pay off). More likely your debit gets killed but I guess you can always go to the next fintech.
The CU would shut me down due to cycling on the card, not for the payments. The CU is eating the interchange fees so up to 2%, which if enough ppl are doing it, they stop taking it for EVERYONE.