Using Square to pay off non-CC accepting debts, earning rewards, etc. | TigerDroppings.com

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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
20012 posts

Using Square to pay off non-CC accepting debts, earning rewards, etc.



So in the 0% APR thread, it came up again about using services like Square to earn reward points or to effectively lower the interest rate on a loan by charging that amount onto a credit card.

I'd like to talk about the process, pros/cons (let's skip the obvious con of paying the credit card rate if you don't pay the balance in full) etc. in one place because I see the idea bandied about but it never seems to be worked through.

I assume any use of Square to provide benefits would entail having cash on hand in the amount you wish to charge to avoid the credit card interest rate from kicking in and overriding the 2.75% "rate" you pay to Square.

So, if you are charging $5,000, you want $5,000 in cash on hand (+2.75%). Then swipe the card. Now you have 5,000 still owed on the loan, 5,000 owed on your credit card(+2.75), and 5,000 in your "Square account."

You take the 5,000 in cash + 2.75% and pay off the CC. You take the 5,000 in assets in the Square account that is now in dollars and pay off the loan account. If the loan was for 8%, you are saving the difference between it and 2.75%?

Is that how people are making this work? I also have looked into paying rent with Square, but it seems like you end up paying 10 to 20 dollars for the privilege of converting your rent into points, which would "gain" points faster, but in reality, you are losing money on the transaction.

Sorry for the long post, was hoping we could get a discussion about the merits of this at the current rate they are charging.

ETA: The simplest solution would be if my loans accepted Credit card payments, but they only allow checking/savings accounts, unless I'm missing something.



This post was edited on 1/20 at 11:21 am



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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
30530 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


Not quite, you're missing an important point. There is no "Square" account that holds money, the moment you swipe your card money gets sent directly to your bank account and Square takes a cut. So after you do the swipe, you owe $5000 on your CC and have $4862.50 ($5000 - 2.75%) in your bank account. There is nothing for you to get from Square, you have simply paid them $137.50 to get a cash advance.

This can be okay if you have a low CC rate, because now you write a check to your loan. If the loan rate is higher enough to cover the difference between the CC rate and the 2.75%, this is fine so long as you pay the CC back later before the rate expires. You're just paying a lower rate and paying Square a 2.75% fee to be able to.

Like I said in the other thread though, I think it's better to just charge normal living expenses on your card and pay the minimum. That way you aren't paying 2.75% to Square. And no matter what, always pay the minimum monthly balance on the due date, and be sure you have the whole thing paid off by the end of the teaser period.

Yes, this is some work which is why it probably isn't worth the effort unless you're talking about saving a grand or more.

ETA: I do have a Square and use it regularly.



This post was edited on 1/20 at 2:33 pm


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lynxcat
Rutgers Fan
Member since Jan 2008
14579 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


2.75% is too much. I hope another competitor comes into this arena to make them more reasonable for personal use.





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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
30530 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


It is a bit high although if you have a small business their fixed monthly rate is far more reasonable IMO. Or if you are a business that does lots of small dollar transactions, b/c the fee is a fixed percentage with no minimum.

I use it for getting payments from people on my soccer team, can't beat the ease of use and I'd rather pay the fee than wait another week for someone to give me a check.






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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
20012 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


Ya, i called it square account to keep the variables separate for discussion purposes, but it does seem at present, outside of having an introductory period that allows you to carry balance, any benefit must be realized within the month youre using it, and at that point there is little benefit for the trouble.

If that rate geta closer/under 2% i believe the math works out as a benefit if you get 2X rewards. Hopefully that day comes soon.






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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
20012 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


Ya, i called it square account to keep the variables separate for discussion purposes, but it does seem at present, outside of having an introductory period that allows you to carry balance, any benefit must be realized within the month youre using it, and at that point there is little benefit for the trouble.

If that rate geta closer/under 2% i believe the math works out as a benefit if you get 2X rewards. Hopefully that day comes soon.






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BACONisMEATcandy
LSU Fan
Delta, Amex, & Über Threads
Member since Dec 2007
41967 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


it would have to be closer to 1.5% for me to consider it





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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
20012 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


Well id take a push financially to be able to get the points because thereis value in converting your rewards faster at 0 dollar net gain/loss to you. But ya, i believe at 1.5 it becomes a no brainer





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LSU6262
LSU Fan
Member since Jun 2008
2317 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


the ink cash gives $200 rewards when $3000 is spent within the first 3 months. it also pays 1% of any purchases. and has 0% for 6 months

my student loan's interest rate is 3.75%


so, if I use square to put 3k or so on my ink card, then put that amount to my student loans... as long as i pay the ink off in 6 months, is there a downside?






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BACONisMEATcandy
LSU Fan
Delta, Amex, & Über Threads
Member since Dec 2007
41967 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


you'll pay 2.75% on that $3000





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LSU6262
LSU Fan
Member since Jun 2008
2317 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


yeah, but 2.75% is < 3.75%, plus I'll receiving $230 in rewards.





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foshizzle
LSU Fan
Washington DC metro
Member since Mar 2008
30530 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


quote:

outside of having an introductory period that allows you to carry balance, any benefit must be realized within the month youre using it, and at that point there is little benefit for the trouble.


Right. You need a card with an extended introductory period to make this work.






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Teddy Ruxpin
LSU Fan
New Orleans, LA
Member since Oct 2006
20012 posts

re: Using Square to pay off non-CC accepting debts, earning rewards, etc.


quote:

Right. You need a card with an extended introductory period to make this work.


Maybe some day the fee on Square/Competitor will get low enough to pull it off.

I'm mad I can't pay my student loans with my CC as it is. It sucks, but I'm sure there is a reason they do it.






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