I intend to make this a quick post to remind us all that there are companies handing out free cash and all kinds of perks for us to engage in activities that we already do.
I was reminded of this as I checked-in to the airport yesterday and saw that Visa is giving a free Southwest Airline round trip ticket for anyone who signs up for (and is approved) the credit card.
There is an annual fee of I believe $59. But even then, there is no minimum purchase required. So I figure I’d sign up, pay the $59, purchase a candy bar for .99 cents, get my 16 credits (which is equivalent to a free round trip flight locally within the USA), then cancel the card a few months down the road.
Similarly, there are tons of other credit card and bank account opening related perks out there. Credit card companies are offering perks that appeal to all kinds of lifestyles and activities, such as hotel points, airline miles, cash back bonuses, retail gift cards and much more.
Banks are literally handing over free money to anyone who opens up a checking or savings account. Just recently I received a direct mail add from a local bank offering a $150 cash award for opening up an account with them. These rewards are amplified when you own your own business, hence one more reason everyone should consider starting a side business even when employed.
Which is the best kind of offer? In my opinion it is the cash back option. Cash is King, and anytime you can get your hands on it, you should. That said, some of the perk promotions I have seen, especially recently as businesses are increasing competing against one another, are amazing to say the least.
Try to equate a dollar value to the perks to realize the offer’s cash value. For example, I signed up for a Master Card that would give me 40,000 American Airline miles if I met certain spending requirements within the first few months of use. 40,000 miles is the equivalent of $400 (roughly 100 miles to $1).
Signing up for this promotion is almost as good as getting $400 in cash. I can hardly deny easy money, especially free money! I slacked off for a good few months, but recently I have been applying for every single promotion under the sky that appeals to me. Another couple I recently signed up for awarded $150 in gift cards with retailers I shop with, without any minimum purchase requirement.
I worked hard for the stellar credit I have today, so why not use it to my advantage? You can do the same. I suggest applying for 2 to 3 at a time for a few reasons. First, when you apply for credit, these companies run your background check. Each time a credit check is run, your credit score is hit and temporarily decreases by just a little bit. When the hits occur within a 30 day period however, credit rating agencies treat them as one event.
This is because they understand that when a person is applying for credit, he or she is likely applying with multiple sources and not just one to obtain the best deal. The second reason is that by applying simultaneously, underwriters (or employees of these institutions who decide whether to approve you and how much to approve you for) do not know that you are applying elsewhere as well. When you are approved, your credit history will not immediately reflect your newly acquired credit.
Therefore, there is a good chance several underwriters approve your credit request simultaneously for several offers, which you may not have been awarded had they known you already have so much outstanding credit capacity. I hope you catch my drift and not get any wrong ideas here J
I am not advocating cheating the system! I am advocating using your hard earned credentials to your advantage. After you get the perks or free cash, you can keep the credit or bank account or cancel or close it. Consider the overall impact on your credit (FICO) score however before pursuing further.
If your intention is to capitalize on the promotions and not keep the account, do yourself a favor and get organized in managing multiple accounts. Soon after you are approved, you will be bombarded with all kinds of email, real mail, terms and conditions sheets, etc.
Many offers on credit cards waive the initial fee for the first 12 months, however they charge an annual fee on month 13 and onward every year. When you cancel, some companies give you a pro-rated amount back, while many companies are now declining to refund the annual fee.
Some bank accounts will waive minimum balance requirements for the first 6 months, and subsequently charge account maintenance fees after the promotional period. This makes it critical to stay on top of what you have and how to manage it, or you will end up paying instead of getting paid.
Consider setting reminders on your cell phone, personal computer or an online calendar, whichever you use most often. For example, consider using the Google Calendar to set reminders to ensure you cancel your credit card or close the bank account before the deadline. If you are glued to your email all day, consider sending yourself an email reminder.
Alternatively, consider maintaining an excel spreadsheet that details the vendor, the end of the promotional period, the customer service contact number, terms and conditions, and the promotion award you were promised.
It is important to be cognizant of the terms. For example, some credit cards will want you to make a certain amount of purchases within the first X months of usage. If you don’t meet their specifications, you do not get the promotion. So make sure you understand the terms of the offer before you even sign up for it.
Save a copy of this spreadsheet on your desktop and email yourself a copy. Set yourself a reminder to check the spreadsheet on a certain date. When you are done cycling through one set of credit cards and bank accounts, close the accounts, update the spreadsheet and move on to the next set. I suggest 2 to 3 offers at a time, with 2 that do not require any minimum commitments.
The spreadsheet tracking method is extremely effective and efficient at the same time. My wife uses the same method to keep track of payments received from mystery shopping vendors. I also advocate using spreadsheets to track various get paid to do stuff offers as well that have expiring promotional period dates.
How much is your time worth to you is the main question that comes into play here. Is a $100 or $250 extra bucks here and there too small to sweat? Or is it something worth pursuing given your alternatives?
If you have better alternatives for your time, then by all means go do them. But for many, capitalizing on such promotional offers is well worth it. Always think about time invested vs. returns gained when contemplating should you or shouldn’t you.
I take advantage of these offers because I have developed a system that is fairly automated and hands-off. I have also experienced the cash and perks add up over time significantly. For example, I projected the net cash equivalent benefit of these activities to be approximately $4,300 if I were to hit all the promotions on my target list within the next 18 months. That equates to an extra $239 per month of free money. Not to mention it is fun for me. At the same time I learn about what’s out there and what companies are doing to attract customers.
My VA handles these tasks for me. I scope out the offers, but she does the rest. Not everyone can do this overnight. I have had a long standing relationship with my VA, who assists me with all kinds of tasks. VAs are not expensive in my opinion, especially if you take into account all the benefits derived from the relationship, but a more critical aspect of consideration here is the privacy of your personal information.
I trust my VA, and I share an awful lot of personal information with her. Should I? It’s debatable, but so far so good. Of course it helps tremendously to have a world class identity theft protection subscription in Todd Davis’ LifeLock program. I highly recommend this company for you, especially if you have a successful career and a growing net worth. This company is simply superb.
With a fairly automated system developed, and a solid identity theft protection service, I capitalize on promotional offers left and right with ease and peace of mind.
I have not talked about the slight detriment involved in this gig. In all the time I have done this, I have not run into any barriers, problems or issues. The only detriment I can think of is a temporary hit to your credit score due to the frequency of credit applications, account opening and closing activity. You can wash out that effect rather quickly.
Sure, there will be vendors and institutions who will get suspicious, but what’s to fear when you have nothing to hide? I flat out tell them over the phone what my intentions are often encountered by a pause of silence. What can they do? If you are credentialed and qualified, they can do absolutely nothing. However, I URGE you to think about and consider the bigger picture before embarking on all these free rides.
Have I closed all my accounts? Actually no. Because I have several registered businesses, I have kept several bank accounts and credit cards for my personal or business use. I keep a separate credit card and bank account for each one of my businesses. Each one of these gives me perks for continuing to use them beyond the promotional period.
I suggest you do the same. This not only ensures separation of personal and business finances (prevent comingling), but also makes your review of finances easy. I like to look at one statement online each month rather than ticking and tying loose receipts together. It is also convenient for tax filing and record keeping purposes. The perks add up over time and can be redeemed for all kinds of freebies.
The bottom line is that there are all kinds of freebies out there, so definitely take advantage of it if you can. I won’t go into the best promotional offers on credit cards and bank accounts because there are a million personal finance blogs out there that already discuss this in depth. This blog’s purpose is to help you get more out of life, and reinforcing the availability of these offers is one way that helps achieve that purpose.
So are you taking advantage of such offers? What has been your experience like? What tips can you add for our readers’ benefits?
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Sure it is – but either way you file, the point is that of simplicity of record keeping, which a tax prepared refers to when it comes time to file.