In this post, I’ll be sharing a risky method on how I used my credit card to raise over £2,000.
I briefly touched on this in my post about how I got into debt, but here I want to go into more detail.
This was an act of desperation. I was grieving the loss of my mum and made a couple of very impulsive financial decisions (both for different reasons and on different occasions).
What I’m sharing here is not financial advice. It’s simply the truth of what I did in that moment, and why I wouldn’t recommend it to anyone else.
What I Did
I’ve had an American Express cashback credit card for many years, and on the most part I’ve used it responsibly.
I’d known people who were stuck in credit card debt, and I didn’t want that to happen to me. I mainly used the card for the cashback rewards and to build my credit score.
The card has a £2,000 credit limit. While it does allow cash withdrawals (with fees), it’s also the main payment method on my PayPal account. So, whenever I bought something on eBay or Amazon, the purchase was made on my credit card and paid off straight away.
But here’s what I did:
- I sent £1,000 to my girlfriend via PayPal using my Amex card.
- Because I used the ‘Family and Friends’ option, there were no fees.
- She sent the £1,000 back to my bank account.
- I then used a 0% balance transfer card to move the Amex balance across (paying only a small transfer fee).
- That left me with £1,000 in my bank, and no interest to pay, as long as I made the minimum monthly payments.
I later repeated the process with another £1,000 when my balance transfer card offered a new promotion.
Why I Did It
As I mentioned, I did this twice.
The first time was to help fund a holiday to Amsterdam with my girlfriend. I’d already paid the deposit while I was employed, but I left the job before I could pay the remaining balance. I didn’t want to cancel the holiday, I’d had a rough year after losing my mum and I needed something to look forward to.
You might wonder why I didn’t just pay with the credit card in the first place. Well, the holiday company didn’t accept American Express as a payment method.
The second time was when I needed to move out of my dad and step-mum’s house. I had moved in with them after my mum passed away, but after more than a year, my mental health was suffering and I became desperate for my own space.
I had no job or savings, so I used the same method to raise the money for a deposit on a room in a shared house. I also used my Very catalogue to buy a mini-fridge and mini-freezer, and used my credit card for a new mattress and air fryer (the old mattress in the room was old and lumpy).
Altogether, my debt hit around £2,500. Fortunately, a short-term job helped me bring the balance down to just over £2,000.
Why It Seemed to Work
In the short-term, the method worked as I intended.
I raised the cash I needed, for both the holiday and to move out. I also got the basics I needed for my room.
Thanks to the balance transfer card, I haven’t had to pay any interest (yet). I only paid around a 3% fee each time I did transfer my balance, but I’ve avoided interest so far by making the minimum payments.
From the outside, it might have seemed like a smart idea or a cool loophole. However, there were downsides and risks involved.
The Downsides
The most obvious downside was that I ended up over £2,000 in debt.
And while I’m managing it for now, I didn’t solve the core issue, which was a lack of income and no savings. I was essentially borrowing from my future self.
I don’t regret the things I did with the money, I regret the method I used to get the money.
Also, it’s more than likely that I violated both Amex and PayPal’s terms and conditions. Repeating this method could have easily gotten my accounts suspended or even banned.
Ultimately, this wasn’t a financial plan. It was a desperate act that happened to work out, but I wouldn’t do it again.
Why I Don’t Recommend It
At the time, I felt like I was being creative, and it’s tempting to find creative ways of raising money, especially when you’re broke.
But the truth is, using this method to raise money is extremely risky:
- You could get hit with cash advance fees or interest charges (I didn’t, but you might).
- If you don’t pay off the balance before the 0% interest period ends, interest can quickly snowball.
- Managing large debt can be mentally draining, especially if you’re already in a bad financial situation.
So even though I did this method twice, I certainly don’t recommend it.
This post is about sharing my story transparently and honestly, not giving advice, so please don’t hold me responsible if you try this and it goes wrong.
What I Learned
I’ve learned that just because something works short-term, doesn’t make it a good long-term solution.
I also learned how easy it is to fall into debt, especially when you’re in crisis and not in the best mental state to make clear financial decisions.
If I could go back and do things differently, I would. But at the time, I did what I felt I needed to do at the time.
Life’s about learning, if you’re not failing and making mistakes, you’re not learning or growing as a person. And as the famous quote goes – “If you’re not growing, you’re dying.”
I’ve certainly learned that using a credit card to raise cash isn’t a good decision at all.