EDIT: This question was based on a misunderstanding of how credit is built. However, the concept of moving money on a credit card without spending anything still has other potential benefits (such as gaming a rewards program), which are still appropriately addressed by many of the answers given.
I'm just starting to build credit. As I understand it, the more I charge my card (within a limit) and successfully pay off those charges, the faster my credit will be built. That's a broad generalization, but I've been told my best means of building credit are to put my rent and car payments on my credit card, as it generates safe but large activity.
Is it legal to generate an "artificial" repeated charge like this? For example, consider the application Venmo. It lets you connect a credit card to the app and make payments to other Venmo users through that card. If I send my friend $10 for lunch, the app charges my card $10 and adds it to my friend's Venmo account, where they can "cash out" and put it into their bank account.
That seems to let me do the following:
- Set up a Venmo account with my credit card
- Set up a second Venmo account with a checking account at the same bank
- Send $1000 from my first Venmo account to the second
- "Cash out" of the second account (moves the money into my checking account)
- Use the money in the checking account to pay off my card
It seems this way I could move a tremendous amount of money through my credit card, and from the card's perspective I'm simply making a large repeat payment; it doesn't know I'm paying myself, and it doesn't know it's getting the "same" money it just spent. If my understanding of credit it correct, this would be helpful.
Is something like this allowed? (It doesn't have to be Venmo, that's just the tool I thought this up with). I can't see any reasons why it wouldn't be, but I've typically found that when something works better than the system intended, it's probably illegal.
(Note: Venmo actually charges 3% on credit card transactions, so this particular example isn't perfect, but it illustrates my point)