The gold price bull market is approaching, and the challenge of "preventing cash advances" on bank credit cards is reigniting

Under the soaring gold prices, the "trick" of cashing out credit cards by purchasing gold is quietly showing signs of recovery.

Wall Street Insight noticed that recently, several internet users shared credit card cash-out models on social platforms, claiming that cash could be obtained by "swiping credit cards to buy gold and then selling it through precious metal recycling platforms."

According to related shares, banks frequently distribute credit card "interest-free coupons" combined with continuously rising gold prices, making the intermediate cost required for this cash-out method only the handling fee, with some channels even having no handling fee at all. The cost is not only far lower than traditional cash-out "intermediaries," but it may even generate profits through gold price differences.

Looking back at the current peak gold prices, this "trick" does have its rationale.

The operation of using credit card credit limits to indirectly cash out has always been prohibited by laws, banks, and platforms, and the gray business of cashing out limits has also spawned a large number of intermediaries, collection industries, and consulting industries.

Wall Street Insight learned that the handling fee for current bank credit card cash withdrawal services is about 1-3%, but the limits are limited; large cash-outs can be achieved through gray industries such as POS machines.

Beyond credit cards, the "trick" of cashing out through physical goods is also common in consumer loan platforms.

For example, a previous mobile phone consumer loan cash-out APP provided a complete cash-out service for large products like gold and mobile phones, but the handling fee was as high as 15%.

In contrast, the recent "buy gold to cash out" with nearly 0% handling fee is indeed attractive.

In fact, this "trick" also appeared during previous periods of rising gold prices.

During the gold bull market in 2012, there was an online article claiming to be "the most powerful credit card cash-out method in history," stating that "buying gold with a credit card and then selling it can legally cash out limits, which is much safer than cashing out through black intermediaries."

It was stated that if the cash-out amount is high, one could even use the interest-free period to invest in high-yield financial products, earning a larger price difference.

The methods from over a decade ago are still being replayed today.

Wall Street Insight noted that under the current surge in gold prices, some credit card gold buyers on social platforms claimed to have successfully cashed out with 0% handling fees; there were also users who attempted to buy gold with credit cards to profit from price differences but lost over a thousand due to poor timing.

Furthermore, in the black market, there are even criminals concentrating on acquiring credit cards to complete "money laundering" through buying and selling gold.

A credit professional in Fujian revealed, "Many who are cashing out large amounts through gold are involved in money laundering, with many channels available, such as Taobao, Pinduoduo, and Xianyu."

For example, there were previously criminals posting ads online claiming to help "black households" package cash flow for loans, but in reality, they were using consumers' bank cards to buy and sell gold to complete "money laundering."

This means that under the soaring gold prices, banks are facing more severe compliance challenges, on one hand, how to eliminate new forms of credit card cash-out activities, and on the other hand, how to strengthen reviews and protect consumers' legal rights.

Industry insiders believe that this cash-out method carries significant risks.

A precious metals industry insider pointed out that this method is "troublesome, costly, and faces price difference risks."

There are cost and price fluctuation risks between buying and selling gold; if gold prices fluctuate, the actual payment cost after a series of "operations" may even be much higher than illegal POS machines; At the same time, some banks have stricter reviews for credit card transactions, and frequently using credit cards to purchase large amounts of gold may raise concerns.

Currently, several banks have issued risk warnings regarding related cases.

Zheshang Bank has reported that since March 2023, individuals such as Li have been involved in money laundering and profit-sharing by purchasing gold jewelry in bulk using credit card accounts and then reselling them.

It is reported that this case has been prosecuted by the Wuxi People's Procuratorate in Jiangsu, and the court sentenced Li to five years and nine months in prison for money laundering and credit card fraud, while other involved parties are being handled separately