US Mint closes a long-standing credit card loophole
Written by Geoff Williams
Posted On: August 1, 2011
I'm peeved at the sneaky consumers who have made life a little more difficult for the intrepid coin collector, a title I once held as a kid when I had more of a disposable income. (Now, I just foolishly throw away my money on stupid things like mortgage and food.)
But I also am upset, frankly, for not thinking of this on my own. If you're a fan of collecting reward points on credit cards, you have to admit, this coin collecting for airline miles scheme was pretty clever.
What am I talking about? Well, a lot of people were using their travel credit cards to buy the dollar coins, thousands of them, simply to get frequent flier miles. Then they'd take the dollar coins down to the bank and trade them in for crisp tens and twenties that were easier to carry around.
Now, at first glance, that doesn't sound so bad. The U.S. Mint is offering a service. People are using it. What's the harm?
Well, the problem begins with the U.S. Mint shipping dollar coins to the public for free, something that they've been doing since 2008. Some crafty individuals were buying the thousands of dollar coins in order to get frequent flier miles, which means that after their shipment of coins came in, they were then depositing all of their weighty cash in their local bank and then, their bank account full and fat, paying off their credit card within the month. And voila, they have instant airline miles without paying a dime in shipping costs or credit card interest.
Meanwhile, the bank is stuck with thousands of dollar coins. And what do they do? They don't really have much use for all of them, since so few Americans seem to feel their pockets are better served by not having the clunky coins in them, and so they pack them up and ship them to the Federal Reserve. All of that counting and shipping coins around from Point A to Point B and then back to Point A is costing banks and the government money. Credit card companies, shoveling out the rewards but getting no interest and only one interchange fee, can't be too happy about this either.
It isn't an illegal practice--just an awfully clever one, which is why, admittedly, I can't help admiring the mad genius ingenuity of it all--but it definitely kills the spirit of how a rewards credit card is supposed to work. Not to mention, the travelers engaging in this have been kind of mocking the whole idea of coin collecting, which isn't just a relaxing hobby but a way of preserving our past.
So now there's bad news for coin collectors, and even worse news for well-traveled individuals pretending to be coin collectors. The U.S. Mint has announced that it will no longer allow credit card payments for dollar coins bought from its web site.
And so from now on, the U.S. Mint will now only let people purchase dollar coins by wire transfer or check, which, of course, is less convenient for the real heroes, the coin collectors who did nothing wrong.
- I have a credit score of 650 and need to re-establish my good credit. I won't carry a balance. Please advise regarding the credit card I can qualify for.
- "Your credit card has been declined…"
- Can you enter household income where it says annual income on a credit card application?
- Some credit cards put foreign transaction fees on vacation
- Flying high: Best airline rewards credit cards