Profiting from Junk Mail – How to Make Money with Credit Card Offers

You may have easy money just waiting for you in your mailbox and not even know it.  Typically after collecting the mail you end up with a pile that gets shredded without even reading it.  Three weeks ago I found a credit card offer that I couldn’t resist.  (I would have posted this deal sooner but I always have to verify the deals myself before I post them to my blog)

Chase recently offered the following deal:

-          0% APR Balance Transfer Checks (To pay off another card, a wedding, etc.)

-          No transaction fee (Typically there is a 3% fee)

-          Can write a check for a maximum of $3000

Here’s how you make money with this promotion:

Write the check to yourself for the max amount of $3000.  Deposit the check into your interest-bearing checking account and let it make you money for a year.  At the end of the promotional period either pay off the card with the money from your checking account or look for another balance transfer offer and transfer the balance to another 0% card.  $3000 @ 2.75% (People’s Community CU) will make you $82.50 for the year in interest.

*Keep in mind you will still have to make a minimum payment each month or you will default on the 0% rate and it will jump back up to the standard percentage.

*Also note that if you currently have a balance on the card, do not write a check that will exceed your credit limit.  This works best when you have multiple credit cards so you can stop using this card for purchases for the year and just use it for the interest-free money.  Your other purchases will still have to be paid off on time.  Thanks to the new Credit Card Act any payment the rules are now in your favor if you have two different APR’s on your card.  The law states that any payment over the minimum payment will be applied to the balance with the highest interest rate.

Can You Pay Off a Student Loan with a Credit Card?

Unfortunately the Student Loan lenders won’t let us play ball on this one, yet.  Most lenders only allow payment of a student loan with a debit card which does not benefit our cause.

Why would you want to do this?
The main idea is to pay with cash back or airline miles credit cards to obtain rewards.  Combine this with the use a 0% intro balance transfer offer (with no transfer fee) and you could have a stellar deal where you can utilize that money for free for a whole year before having to pay it back.  The money could generate extra cash in an interest-bearing checking account for one year and then be used to pay off the balance at the end of the promotional period.

The argument against this method is that “you must read the fine print and that banks can be tricky.”  It is true that banks can be tricky, but the reality is, fine print is just a rule book that they distribute in small print to intimidate the customer.  If you have student loans you went to college so I am assuming you CAN read (If not I hope you kept the receipt for that college education)… therefore read the fine print and if you think you can make money on the deal, go for it.  Watch out for things like “3% balance transfer fees,” short-term balance transfers (typically less than 6 months), and offers that are not at 0% APR for the intro period as these terms will make it more difficult to be profitable.

How to Make Money with a College Loan

This is an advanced strategy about how to use OPM (Other People's Money) to generate income for yourself.  This is only for those that have extreme discipline as you must be able to resist the urge to spend these large sums of money.  This is valuable for someone serving in the military and can use tuition assistance or if you have an alternate method of paying for school and don’t need the loan to pay for tuition itself.  Student loan money is paid directly to the student and in some cases does not accrue any interest while you are in school (These are the offers we are looking for).  This money can then be deposited into an interest-bearing account where it will earn money for you for the duration of the time you are attending school.  Once the deferred interest period is over, pay off the principal loan amount to avoid paying any interest, and keep the money that your account generated. 

The only loans that are worth attempting this with are Stafford Subsidized Loan, or a Career Starter Loan through the military.  These loans both DO NOT accrue interest while the student is attending school.

Subsidized Stafford Loan
Subsidized Stafford Loans as of this post have an interest rate of 3.4% after graduation.  Your amount of “need” will dictate the amount of money you can receive for your loan.  Note this is not a grant; it is a loan and the student will have to pay this money back.  $10,000 is a realistic figure for your 4 years of school but will vary depending on the college.  $10,000 @ 2.75% earns $275 annually.  Over 4 years of college this would be in excess of $1100; not a bad graduation present.  At this point in time pay the loan in full and pocket the interest.

Career Starter Loan
This is a loan only available to those entering officer training programs for the military.  Generally this loan is obtained at the beginning of your senior year of college.  Upon commissioning as an officer in the military, a Career Starter loan raises from 0% to a 3% interest rate.  This loan is available through USAA.  The amount is generally significant, totaling up to $30,000.  $30,000 @ 2.75% is $825 for the year.  At the end of the year, use the money to pay the loan in full and pocket the interest.

How to Attain a Free Credit Report 3 Times a Year

The Fair Credit Reporting Act states that you are eligible to one free annual credit report from Experian, Equifax, and Transunion each year.  You can request this report at https://www.annualcreditreport.com/cra/index.jsp.

You can also request a report by phone at 1-877-322-8228 or by mail by completing the request form found at https://www.annualcreditreport.com/cra/order?phone

The site will allow you to select which agency you would like a report from.  I recommend requesting a report from one agency at a time and spacing it out every 4 months.  This will allow you to look into your credit 3 different times during the year.

You will need to submit your information (Name, date of birth, social security number, address, etc.).  The site with then ask you some verification questions about addresses where you may have lived, credit cards you may use, etc.

After successfully answering the questions you will be provided with your credit report.

NOTE: YOUR CREDIT REPORT DOES NOT SHOW YOUR CREDIT SCORE.
You can view the Fair Credit Report Act at http://www.ftc.gov/os/statutes/031224fcra.pdf

The Smart Way to Make Big Purchases

We all want nice things, isn’t that the point of saving money for down the road, so we can someday afford to have the lavish lifestyle that we’ve always dreamed about?  Stuff like that comfortable king-sized bed, air conditioning for the house, surround sound for the big screen, you get the idea.  The problem is many Americans purchase these things on credit before they actually have the money to pay for them.  The new question is; Does the person own the item, or does the item own the person?  If the person who buys everything on credit before and can’t cover it with their savings were to lose or quit their job today, could they still afford purchases that had made weeks sometimes years (cars) prior?  We become slaves to the things we “own” when we buy on credit with money we don’t already have.  People ending up having to work just to pay for things they already bought months ago and are constantly behind.

The solution is still to make purchases on credit.  Credit is a great tool we can use in our favor.  We are still going to make our big purchases, but we are going to wait until we have the money in our savings account to cover the expense in full.  Here’s the strategy.  Big purchases (usually totaling over $300) generally offer financing deals (The worse the economy generally the better the deals because these establishments are enticing you to buy).  Finding “no interest or payments for a year” is not uncommon as many consumers know; the problem is we have to mentally allocate that money for the purchase because that money is technically already spent.  The money that we saved to make these purchases is just in case we make a mistake.  The “fine print” is notorious for screwing over the consumer.  It happens to the best of us.  The bottom line is everyone misses details now and then but through proper planning we can minimize the damage to our credit and our savings when we make one of these mistakes.

Let me give you a scenario to illustrate this point:

John N. Debt and Bob B. Saving both purchase an identical flat screen TV on a store credit card that offers no interest but minimum payments each month on the TV.  The payments will only be around $80 per month which is a great deal.  3 months down the road they both get busy and forget to make a payment on their respective TV’s.  The fine print of the deal now states that a late payment defaults on the original 0% interest and send it to a regular rate of 11%.  John N. Debt is mad about his mistake but doesn’t have the extra money to cover the cost for the TV.  He will now have to eat the extra interest each month that he hadn’t budgeted for.  Bob B. Saving on the other hand is also mad about his poor financial decision but he had the money in savings to cover the cost of the TV he quickly pays off the cost of the TV and avoids paying the 11% interest.

Another more advanced solution would be to shop around for other 0% intro credit card balance transfer offers with no fees and to transfer the balance of the TV.  This would extend the life of the 0% interest rate and allow you to retain your money for longer.

I have some money saved, should I invest in the stock market?

I am no longer a fan of the stock market, as I lost a lot of money when the market crashed.  In fact that is the main reason I turned back to running my own business and web marketing.  At least with your own business you control your fate, and you aren’t at the mercy of people who manipulate the market (I’m still a little bitter about it as you can see).  For those that do choose to get into the market anyway, you may like trading the Indexes.  It is much easier to track (daily announcements on radio and almost any finance homepage), and they tend to outperform most mutual funds. 

The stock market is basically high stakes gambling for the beginning investor.  You read up on a company, and hope that they become successful.  If they succeed, the price goes up and you make money.  If they fail, you lose your money.  Even when things are looking profitable you can never count your money from the market until you sell the stock.  One day you may make large profits and feel untouchable, only to watch them disappear the following day as the market crumbles.  This type of investing is not for the faint of heart.

Be wary of the market advice out there.  Everyone states to “Diversify your portfolio,” meaning buy stocks in several different types of unrelated companies (Sectors like medical, oil, industrial, etc.) however most famous people that have made it big in the stock market did it on one large gamble.  They came across what they perceived to be a good opportunity, went all in buying as many shares as they could, and when the stock performed well they made a lot of money.  Only after they became successful did they promote diversification.  What you don’t hear about are those that invested heavily on a position and ate a huge loss.  These people are the majority.

There are many people that make a great living investing in the start market, just ensure you know what you are getting into before proceeding into this type of investment.  Remember we are in a recession, and while the market has somewhat recovered, we have not fixed the issues with our economy that got us into this trouble in the first place.

I am an advocate of keeping money in a high interest savings or checking account where it is safe, until you have enough put away to start your own business.

Loose Change – Put it to Work

Loose change gets lost all of the time; in the seat cushions, the floor of your car, the bottom of your purse, etc.  This change is wasted money that could be working for you, earning you interest in your savings/checking account.

Think of your finances as a business and each penny as an employee; would you let you employees go for vacations for years at a time, just sitting around on the sofa, or in a jar on your desk?  NO, you would put them to work.

If you are following the strategies I outline by using your rewards credit card for every purchase and paying it off each month then you won’t have change lying around, however if you do, here’s what to do.

Take your change to your local bank or credit union.  Just about all banks and credit unions have a change counting machine that you can use for FREE if you are a member/customer.  DO NOT USE KIOSKS like CoinStar.  These will charge you fees just for allowing use of their machine.  Why would you pay for this when you can already get it for free?!  It’s like throwing money away. 

Your change will multiply as it sits in your interest bearing checking or savings account.  I recommend People’s Community Credit Union as it is currently paying the highest amount in the Clark County area. 

*For other areas conduct a Google search and look for accounts in your area that pay high amounts of interest and have no monthly fees.