My Mastercard gives me 1% cash back. I can set up a paypal account against my master card. Now what is the catch in this scheme?
1.Transfer 1000 dollars from mastercard to paypal( this does not cause any transaction fees) 2.Collect the 1% cash back = 10.
3.Change settings to set up paypal against a bank account (no charge)
3. Transfer the money back into the chequing account (no charge)

Essentially a 10$ riskless profit that can be repeated.

  • 1
    I'm abstaining from any votes. But I'll say, this doesn't strike me as personal finance, but rather "gaming the system." Commented Oct 8, 2014 at 18:48

3 Answers 3


Although there are no transaction fees from PayPal, your bank should treat this as a cash advance rather than a payment and so will charge you fees. The cash advance fee will be larger than 1%, so you'll definitely lose money. Plus you'll start paying interest immediately (unlike for purchases). PayPal warns that you'll get cash advance fees here.

  • 7
    Not only do cash advance transactions incur fees to the cardholder, they are often not eligible for cashback rewards, so you lose two or three times. Commented Oct 8, 2014 at 19:09
  • Also, loading and unloading in quick succession will probably get PayPal to shut down your account. Commented Oct 9, 2014 at 14:32

One way you can accomplish this is on a cruise ship. Most cruise ships have casinos, and most will allow you to sign out chips at the casino cage. You can then exchange the chips for cash.

The chips that were signed for are resolved as room charges. Those room charges can be charged to a CC. Those signed for chips are rolled into the total room charges and are thus not treated as a cash advance.

The cost of the cruise not with standing, you could earn money in that form. Step off the boat, deposit cash in the bank, and send a check to the CC company.

All that being said, it is an cheap and safe way to get cash while you are traveling in that method.

  • That's a cool idea.
    – Victor123
    Commented Oct 10, 2014 at 14:49
  • Have you personally tried this? Given that the cruise ship company loses money when you do this (they pay a merchant fee on the charge to your credit card), I'd expect them to stop this. For example, they might impose a surcharge when you sign for chips instead of paying with cash. Commented Mar 31, 2015 at 0:57
  • I have done exactly what I said many times. In the long run, they lose very little money as they want to give travelers every chance to gamble.
    – Pete B.
    Commented Jul 27, 2016 at 15:14

I successfully did this in a slightly different scenario:

  1. I live in Germany.
  2. I'm getting Amazon points instead of "real" cash.
  3. A second person is required (I assume a second account may violate PayPal policies).
  4. I did this with a rather small amount of money and I strongly advise against "drawing attention" by using large sums!

So here's what I/we did:

I can't deposit money on my own PayPal account using a credit card, but I can send money to a friend that's drawn from my credit card without any fees. This is considered a "real payment" so it's elegible for Amazon points (1 point per 2€, 0.5%). That friend can withdraw the money from PayPal to an ordinary bank account and transfer it back to me.

Now, I don't think that PayPal itself can charge a credit card for free, so I assume it's PayPal who's losing money when this is being done. As long as we're talking about very small amounts (a little less than 0,50€ in my case) I don't think they care, but if this is being done with significantly larger sums I'm sure they will eventually do something about it. Besides that I'm unsure if that might be considered fraud or be illegal for other reasons.

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