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Senior Contributor
Open123
Posts: 3,969
Registered: ‎02-23-2011

Re: Businesses That DO NOT Accept Cards


Dustink wrote:

On a regular basis, it will end at some point. The mortgage company doesn't want to take on the risk. Also, they don't want to pay a fee. Same with life insurance. Although, I don't get why auto insurance accepts CC but not life insurance.


For mortgage companies, I think it's primarily more a matter of the credit card service fees.  As Walt observed, there are certain bills (such as rent payments) are necessities that must be paid regardless of the convenience factor.

 

For cash value life insuance and annuities, the reason is more money laundering.  These financial instruments never take any sort of cash and must be funded with a check, or some form of traceable payment.  Credit cards (or cash) can easily be used to launder money through these instruments.  Say, you buy an annuity or cash value life insurance and charge the initial premium of $25K.  In CA, the look free look period is up to 45 days (they say 30, but it's 45 in practice) where you can receive a full refund.

 

This refund in the form of a check or deposit means "money" laundered.  Or, even with the surrender charge of 5% - 10%, those who need to launder money will gladly pay the expense.

 

Term insurance you can pay with your CC.  I'd imagine auto insurance usually is small enough amount where they're not as concerned about money laundering.  Even if your auto/home premium is $5K, it's not a very effective way of laundering money, unlike Annuities and Cash Value life insurance where one can potentially launder huge amounts of monies, especially annuities.

 

Valued Contributor
Dustink
Posts: 2,980
Registered: ‎10-02-2012

Re: Businesses That DO NOT Accept Cards


Open123 wrote:

Dustink wrote:

On a regular basis, it will end at some point. The mortgage company doesn't want to take on the risk. Also, they don't want to pay a fee. Same with life insurance. Although, I don't get why auto insurance accepts CC but not life insurance.


For mortgage companies, I think it's primarily more a matter of the credit card service fees.  As Walt observed, there are certain bills (such as rent payments) are necessities that must be paid regardless of the convenience factor.

 

For cash value life insuance and annuities, the reason is more money laundering.  These financial instruments never take any sort of cash and must be funded with a check, or some form of traceable payment.  Credit cards (or cash) can easily be used to launder money through these instruments.  Say, you buy an annuity or cash value life insurance and charge the initial premium of $25K.  In CA, the look free look period is up to 45 days (they say 30, but it's 45 in practice) where you can receive a full refund.

 

This refund in the form of a check or deposit means "money" laundered.  Or, even with the surrender charge of 5% - 10%, those who need to launder money will gladly pay the expense.

 

Term insurance you can pay with your CC.  I'd imagine auto insurance usually is small enough amount where they're not as concerned about money laundering.  Even if your auto/home premium is $5K, it's not a very effective way of laundering money, unlike Annuities and Cash Value life insurance where one can potentially launder huge amounts of monies, especially annuities.

 


There are IRS guidelines and MECing thresholds to account for laundering. I think they all have something to do with the fee's and cases where they don't want you using unsecured borrowed money.

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