Saturday, August 4, 2012

Earn Money by Screwing Your Neighbor

Back when I was a full-time captive employee with a sustainable wage, and the span between Noon and Sunset yawned wide, I blithely socked a portion of my earnings into the employers' high-risk/high-yield retirement accounts. I mean, why the hell not?  I could afford a gamble.

Post global economic crash, job elimination, and the come-hitheriness of that Sunset, I learned I'm not much of a financial risk taker. (Although in the Suze Orman universe, I'm a Nero-ette playing my violin.)

Also, I'm not very knowledgeable about investing in the stock market.  I can say ETFs, but truthfully, I don't know what the hell they are.

Now being rootless and of modest means, I find myself making a little bit o' money through the larger category of Smoke and Mirrors, in the specific subcategory of Screw Your Neighbor.

These schemes don't work for me when I'm outside the U.S., but while I'm domestically rootless, they're good. Legal, too. 

Money and art in Yerevan, Armenia

High-yield checking account

When I first moved my money into my financial institution's high-yield checking account in March 2010, it paid 4%. This was an astonishing amount, given the dismal CD rates out there then (and now). Not to mention the uncertainty of the stock market (and see risk-averse me above).

Since then, my high-yield interest rate has dwindled to 2.25%, but this still beats hell out of most alternatives for liquid assets. 

There are also hoops I have to jump through every month to get my interest rate:
  • Use my debit card in credit mode at least 15 times (the purchase still comes immediately out of my checking account); 
  • Look at my account online at least once; and
  • Have at least one automatic deposit into (or online bill paid out of) the account.

The cap for the account at my financial institution is $20,000. Exceed this cap and there ain't no 2.25%.

How does this account screw my neighbor? Well, every time I use my debit card in the credit format, the vendor I'm using has to pay my financial institution a fee. And of course, such fees are built into the cost of goods and services, so all of us consumers pay more for our goods and services to cover the fees the credit card companies charge the vendors to accept the cards.

Smoke and mirrors, ladies and gentlemen.

If you're interested in a high-yield checking account, look at your current financial institution, but also shop around, looking carefully at the hoops you've got to jump through and what the minimum balances and maximum caps are.

I saw one financial institution that offered a whopping 6% return, but you only received that for the first $500 in your account. Even this could be worth the hoop-hassle if all you've got to work with is, say, $1000. Thirty bucks a month ain't shabby - it'll pay for 2/3 of a tank of gas, a fair amount of groceries, or most of a pay-as-you-go phone for a month. (6% x 500 = $30).   

Plastic rebates

A l-o-n-g time ago – years ago - one of my sisters, who is more frugal than I, went completely plastic. That is, she got a Discover card and paid for everything with it. Her groceries, her gas, everything. Everything, that is, that accepted the then-new Discover card. At the end of each year, she got back about a thousand bucks in cash from Discover.

I was a cash-or-check girl back then. The idea of charging everything made the old-timey, Swiss Mennonite blood in me recoil in virtuous denial.

But last year, Chase Bank offered me a deal I couldn't refuse:
  • Get its Freedom card
  • Charge $500 in the first three months; and
  • Get back a $150 bonus. 
You read that correctly. A hundred fifty bucks kicked back to me for buying stuff I needed to buy anyway. Since then, I earn a 1% or 5% kickback on all of my purchases, with the 5% rate focusing on this or that purchase category (i.e. gas, restaurants), which changes quarterly.

That $150 bonus offer is gone now, but here's a summary of the best reward cards for 2012. Read the comments, too.

Ok, so anyway, once I meet my high-yield checking requirements (15 uses of my debit card in credit mode), I switch over to paying for everything with my Chase Visa card. 

Exception: I pay for all high-ticket products (i.e. gas) with my Chase Visa, as there is a direct correlation between amount spent versus amount recouped. It's the reverse with my high-yield, as only the quantity of purchases matter. Consequently, a $1.60 coffee purchase has the same "value" as a $50 gas purchase.

As a rule, I only pay cash for a product that is less than $1 or if I'm at a venue that only takes cash.

It should go without saying that if you don't pay your monthly credit card bill in full every single month, then you're only screwing yourself. 

1 comment:

AE Challinor said...

I currently buy everything on a credit card that gives me Air Miles. It's a nice idea to take out your weekly budget in cash and only pay with that, but you're potentially giving up a lot in rewards (never mind an excellent credit rating when you pay your bill off in full every month!).