FIRE’d, frugal greetings to all my millionaire readers. (Hi Mom, Josh, and Miguel!) Okay, as most of you already know, I’m bat-guano crazy. Once my mind gets going on something, there’s no stopping it. In January my mind began to percolate on how to fund $2,000 to our son’s Coverdell educational savings account. Since we’re “retired” for now and living on a fixed income of $43,500, we don’t have lots of extra money just waiting to be invested. How could we get our hands on $2,000 without working, stealing, or dancing for tips?
Suddenly in a moment of clarity, it came to me. Instead of earning money in a traditional manner, I decided to reach out and grab some of the low-hanging, monetary fruit that’s all around us. No, I’m not talking about a magic money tree. I’m talking about the various bonuses offered by banks, credit unions, and credit card companies. Instead of walking past their free money offers, I decided to grab every piece of face-level, monetary fruit that I could get my hands on.
Here are the referral links for the credit cards we currently use:
It started last spring when I received an offer in the mail from a credit union (see doctored photo above). It offered a $25 credit if I spent $500 on my seldom-used credit card. Usually, I’d throw such junk mail in the trash and forget about the offer. However, this time my reptilian, travel-hacking mind sensed an opportunity:
- I could buy a $500 gift card for $4.95 to complete the spending requirement.
- Then, I could convert the $500 gift card to a $500 money order for 69¢.
- From there, I’d deposit the money order to my checking account, and use its bill-pay service to pay the credit card bill.
- The bottom line: $25 cash-back bonus – $5.64 of fees ($4.95 + 69¢) = $19.36 for low-hanging fruit (aka, free money).
Naturally, this was an offer that I couldn’t refuse; it might have been the easiest $19 I ever made. Even better, there was more low-hanging fruit to be had. When I was in the process of canceling a credit card, the service rep offered me a $100 credit if I spent $1,000 on the card. A thousand bucks? No problem! I took the offer, bought two $500 gift cards, flipped them to money orders, deposited them to my checking account, and promptly paid my fictitious $1,000 credit card bill. The math: $100 credit – $11.28 (fee above * 2) = $88.72 of free money. (Do you see what I’m doing here?)Our goal for 2017 was to generate at least $2,000 of monetary rewards so that we could fund our son’s Coverdell educational savings account at Vanguard. We accomplished our goals through the use of: six cash-back credit cards with sign-up bonuses, three credit union sign-up bonuses, and one credit card spending bonus. Here’s how we did it:
Six Cash-back Credit Cards = $1,776
In January we each applied for three credit cards offering various bonuses. Unsurprisingly, we were approved for all six cards. (I’d prefer not to name the cards, but I usually sign up for my cards here.) Here are the details on the three cards we opened:
- Card #1 offered a $500 bonus (with 2% cash back) after spending $4,500. After fees, we each generated $545 of free money from this card. Total = $1,090.
- Card #2 offered a $250 bonus (with 1% cash back) after spending $5,000. There is another $250 bonus after spending $10,000 within 12 months of opening the card. (We’ll start chipping away at that bonus in a few months.) This resulted in $243 of free money after fees. Total = $486
- Card #3 yielded a $100 bonus (with 1% cash back) after spending a whopping $500. Total = $200
All three of these cards had cash-back bonuses (of at least 1%) that covered the cost of purchasing gift cards. ($500 gift cards bought at $4.95 result in a fee of .99% ($4.95 / $500). That means that the 1% cash back covers the cost of buying the gift card. Did you get that?) The only other fee involved was the 69¢ cost of buying money orders.
Three Sign-up Bonuses at Credit Union = $135
Last spring we went to a Jacksonville Suns (now the Jumbo Shrimp) baseball game with our Cub Scout pack. We had a great time , and, better yet, we got to camp out on the field after the game. During a trip to the concession stand, there was a promotional table for a well-known military credit union. I spoke with a friendly representative and learned that I could join the credit union even though I had never served in the military. She took my contact information and called me a few weeks later. She intentionally delayed signing us up so that we could qualify for four $50 sign-up bonuses. One bonus went to a custodial account for Eduardito, and Edwina and I scooped up the other three bonuses. Since $5 had to remain in each account, we were able to get $45 from our three accounts (2 individual and 1 joint). The math: $45 * 3 = $135
One Spending Bonus on Credit Card = $94
Last December I received the following offer from my credit union: “Spend $500 on your credit card before December 31st and receive a $100 statement credit.” If you’ve read the post this far, you already know exactly what I did, right? Yes, that’s correct: credit card → gift card → money order → checking account → bill pay back to credit card. Once again my total fees on this maneuver were $5.64 ($4.95 + 69¢). The bottom line math: $100 – $6 = $94.
Here’s a table with the grand total for my visual learners:
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This Post Has 11 Comments
2 questions: 1) Did you have to leave the house, or was this all done online?
2) How far do you reckon you can take this? If this could drop your spending from 4% of investments to say 3%, and fund 1% from this technique, you will have almost nothing to worry about via sequence of return risk.
Thanks Yaacov. We did have to visit local pharmacies to buy the gift cards; we also bought money orders at our neighborhood supermarket. I’ll be learning how to buy gift cards online from this course. As for how far we can take this, I’m not sure. I’d love to be able to generate $8-10k a year from this, but that may be wildly optimistic. Our cost per spend of $504.95 is 1.12% ($5.64 / $504.95). If we could do this from home, it would be even better.
I get lots of credit card offers in the mail and I toss them all. I will try this method with one and let you know if I am brave enough…I mean, I will let you know the outcome!
Where do you purchase $500 gift cards? I have never seen these at my local grocery/pharmacy. Thanks for your help!
I have bought Vanilla Visa gift cards in Georgia at CVS, Walgreens, and Rite Aid. In Tennessee I bought them at CVS and Walgreens.
Great post. Thank you. I was wondering about how you sold the gift card with only 69¢ for a 500$ ? Online i saw high fees.
My costs on the gift cards were: $4.95 for the gift card purchase & 69 cents for the money order. None of this was done online; I had to leave the house to do this. This year I plan on learning how to do my minimum spends via gift card reselling online.
Thanks for the response. If I may ask where one can exchange a gift card of 500$ for 69 cents ?
Noury, you can got to the service desk of most supermarkets and purchase a money order for 49 to 89 cents. I know that Publix, Harvey’s, and Food Lion sell them.
Just found you via MMM. Long way from FIRE’d but thought I’d chime in. Not sure if you are familiar with it or not but you may want to look into raise.com. I’ve only used it to buy gift cards from Old Navy. Like their active wear (sorry am not MMM on active wear). Want to spend $30, search raise for gift card for $30 value but selling for only $25. Voila!
I believe you can sell there though no idea what they charge for a fee.
Thanks for the tip Jane. I’ll be looking into it very soon. I’ll let you know what comes of it. Thanks again! Ed