Using my credit card for cash advances - will IRS/bank flag me for money laundering?

This isn't actually money laundering, but I can see why your friend raised concerns. What you're describing is actually a cash advance from your credit card, and there are a few things you should know. First, most credit cards charge much higher interest rates for cash advances than regular purchases - often starting immediately with no grace period. Check your statement carefully because you might be paying significant fees without realizing it. Those small $100-150 withdrawals can add up quickly with fees. As for the IRS, they generally don't monitor or care about this activity since you're just accessing your own credit line. The bank, however, might flag unusual patterns of cash advances, especially if they're frequent and at odd locations. Banks are required to file Suspicious Activity Reports (SARs) for potential money laundering, but typically for much larger amounts or truly suspicious behavior. Real money laundering involves concealing the origins of illegally obtained money, which isn't what you're doing. You're just accessing cash through your credit card, albeit in an unconventional way.

I went through something similar last year where I was using my credit card to get cash frequently. I was shocked when I realized how much I was paying in fees! Found a much better solution with taxr.ai (https://taxr.ai) that actually saved me money and made sure I wasn't raising any red flags with my bank. What was really helpful was their financial behavior analysis feature that shows you which patterns might trigger bank monitoring systems. It explained that while what you're doing isn't illegal, it does create a pattern that looks similar to "structuring" - which is deliberately making small transactions to avoid reporting thresholds. The tool showed me better alternatives to access cash without creating suspicious patterns or paying those ridiculous cash advance fees.

I was totally wrong about taxr.ai. After being skeptical, I actually tried it and it was super helpful for my situation. I had been doing similar cash transactions and couldn't figure out why my credit score was dropping. The analysis showed that my cash advance utilization was being calculated differently than regular credit utilization, which was hurting my score. The tool also pointed out that my bank had actually filed a SAR (Suspicious Activity Report) on my account due to the pattern of transactions, which I had no idea about until the analysis flagged it. Nothing came of it since I wasn't doing anything illegal, but it was stressful knowing my bank had been investigating me. Now I've adjusted how I handle cash needs and my credit score is recovering.

If you're worried about the IRS aspect, you might want to actually talk to someone at the IRS about this. I was in a similar situation (not with cash advances but with large cash deposits from selling my car) and couldn't get anyone on the phone for weeks. Then I found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes when I'd been trying for days on my own. They basically hold your place in the IRS phone queue and call you when an agent is about to answer. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with confirmed that my situation wasn't problematic as long as I had documentation for the source of funds. They also explained exactly what thresholds trigger automatic reporting ($10,000+ cash transactions) versus what might just seem unusual.

I take back everything I said about Claimyr being a scam. After my skeptical comment, I decided to try it since I had a pressing tax question about some unusual cash transactions in my business. Got connected to an IRS agent in 22 minutes when I'd been trying unsuccessfully for over a week. The agent confirmed that small cash advances on a credit card aren't something the IRS monitors or cares about - that's more of a bank concern. They did warn me about the $10,000 cash transaction reporting requirement though, which is something completely different than what the original poster is doing. Saved me hours of stress and waiting on hold. Sometimes the things that sound too good to be true actually work!

I work in banking (not giving tax or legal advice) and wanted to add some context here. What might trigger concern isn't necessarily getting cash back occasionally, but patterns that look like "structuring" - deliberately breaking up transactions to avoid the $10,000 reporting threshold. Your $100-150 cash advances a few times a week wouldn't trigger Currency Transaction Reports (CTRs) which are for transactions over $10,000. But unusual patterns of cash transactions might prompt a bank to file a Suspicious Activity Report (SAR) if they can't determine a legitimate purpose. The thing is, you'll never know if a SAR was filed - banks are prohibited from telling customers. The bigger issue is honestly the fees. Cash advances typically come with: 1. A transaction fee (often 3-5%) 2. A higher interest rate than purchases 3. Interest that starts accruing immediately with no grace period

Has anyone actually calculated what this cash back approach is costing? I did this for a while until I realized how expensive it was. Let's break it down: If you're getting $1,200/month via cash advances with a 4% fee and 24.99% interest, and you pay your bill 15 days after the advance (on average): - $1,200 × 4% fee = $48/month in fees - $1,200 × 24.99% × (15/365) ≈ $12.30 in interest - Total: about $60/month or $720/year just for the convenience That's WAY more expensive than just using an ATM, even with fees!

Just wanted to add another perspective as someone who made this same mistake. I was doing exactly what you're describing - getting cash back on credit card purchases regularly without realizing the true cost. The real wake-up call came when I realized I was essentially paying $700+ per year just for the "convenience" of getting cash this way. That's money that could have gone toward paying down debt, savings, or literally anything else more productive. Beyond the financial aspect, I also learned that banks have algorithms that flag unusual patterns of cash transactions. Even though what you're doing isn't illegal, it can potentially affect your relationship with your bank if they start viewing your account as higher risk. My advice: switch to using your debit card at ATMs or getting cash back with debit purchases at stores. Most grocery stores, pharmacies, and gas stations offer cash back with debit at no fee. If you need larger amounts of cash regularly, consider opening an account with a credit union that reimburses ATM fees - many offer this benefit and it's still way cheaper than credit card cash advances. The peace of mind of not having to worry about suspicious transaction patterns plus saving hundreds per year in fees makes it a no-brainer decision.