Sending money using paypal and your credit card treated as cash advance ?

[Superduper2014]

Hello Guys, 

I am doing some renovations and some contractors would take paypal for example, but they don't want to pay the fee and suggest to send as friend payment and I can absorb the fee by paying with the credit card. 

My questions to you is if you have seen large payments (5k) via paypal for example or other ways using credit cards, ACTAULLY, being charged as cash advance. I read that they can be treated as such, but wanted to get feedback on actual experiences as a result. 

I understand that I can also send the payment with the added fee and then use paypal and send as a paid service for goods or services rendered. Would that also, maybe trigger a cash advance fee? 

Finally, is sendig money as friends a reason for creditors to actually close accounts or get spooked?

thanks, trying to do my due diligence. 

[Brian_Earl_Spilner]

Yes, it can be treated as a cash advance, because you're sending cash.

Doesn't matter how you configure it because you're still sending cash.

Lenders have been known to take AA for sending friends and family, but it's typically because it went to family and there may have been a SUB involved.

Just a warning, PayPal can shut down your account if it believes you aren't really sending money to friends and family. There's no way to restore the account. Know quite a few people that this has happened to. Normally, there would have to be a history of abuse, but I've seen people shut down for a single transaction.

[Wrigley2172]

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@Brian_Earl_Spilner wrote:

Yes, it can be treated as a cash advance, because you're sending cash.

Doesn't matter how you configure it because you're still sending cash.

Lenders have been know to take AA for sending friends and family, but it's typically because it went to family and there may have been a SUB involved.

Just a warning, PayPal can shut down your account if it believes you aren't really sending money to friends and family. There's no way to restore the account. Know quite a few people that this has happened to. Normally, there would have to be a history of abuse, but I've seen people shut down for a single transaction.

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Ill echo what Brian said but I would also caution against friends and family in this case as i know from buying car parts through paypal friends and family removes your ability to file any fraud claim with paypal to get your money back. Not sayinf these contractors are dishonest, i just would not give up that ability having seen how many people are jipped out trying to purchase car parts

[Kforce]

Don't do it.

Just use a check !

[Credit12Fico]

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@Kforce wrote:

Don't do it.

Just use a check !

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He's probably wanting to put the $5k of renovations on credit.

[ChessChik47]

May be safer to use a balance transfer check: either write it out to yourself and deposit it to your account then pay your contractors, or if your credit card company allows you to ach the balance transfer amount directly to your account, then you can pay your contractors, or write it out directly to the contractors.  Good luck!

[longtimelurker]

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@ChessChik47 wrote:

May be safer to use a balance transfer check: either write it out to yourself and deposit it to your account then pay your contractors, or if your credit card company allows you to ach the balance transfer amount directly to your account, then you can pay your contractors, or write it out directly to the contractors.  Good luck!

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Possibly the contractors are in tax avoidance mode (after all, oh not allowed to say that), and wouldn't declare paypal "friend" receipts but would have to do so with a check.

[K-in-Boston]

Unfortunately all of the risk of doing so would be on you.  If they sent you an invoice through PayPal (even marked up to cover the fee) that would likely be okay for most lenders.  I have done that in the past for purchasing high dollar eBay items where the seller was not accepting PayPal due to the fees, for example, but it was still less money and more convenient for me than doing an international bank wire.

Alternately, writing a convenience check as suggested would be a much better alternative.  If that is not an option, see if they are okay with a check from a payment service company like Plastiq which could arrive in just a few days.  The fees for that are usually in-line with PayPal, sometimes better if you have a Fee-Free Dollars offer.

[Superduper2014]

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@K-in-Boston wrote:

Alternately, writing a convenience check as suggested would be a much better alternative.  If that is not an option, see if they are okay with a check from a payment service company like Plastiq which could arrive in just a few days.  The fees for that are usually in-line with PayPal, sometimes better if you have a Fee-Free Dollars offer.

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@K-in-Boston I have never heard of Plastiq before, thank you very much for the suggestion. 

So, Plastiq would be the one to charge my credit card and then send me a check and I will pay them a fee. 

Would American Express or any of the other banks consider this a cash advance as well or could they potentially? In the end it is similar to just using paypal for the final objective. I am curious.

I will definitely look into into it now.

Also, no way that amex or any other creditors would get spooked by this and just close my accounts? Just being cautious.

Thanks K and all who have replied. 

[K-in-Boston]

Amex may not allow contract work.  In general, Plastiq is transparent about fees and is very good about giving warnings when CA might be incurred and even blocks some payments because of it.

I used to use Plastiq to pay for summer camp because my Amex rewards earnings were much better than the fees and I never had a difficulty.

I'd suggest reading an article or two about what works and what doesn't for Plastiq,  but it certainly worth a shot.  Frequent Miler has one such article here:

https://frequentmiler.boardingarea.com/complete-guide-to-plastiq-credit-card-payments/#What_Works_Wh...