Pragmatic Finance

There was speculation for awhile about Google’s new payment service with many referring to it as Gbuy, Google Payments, or even Google Wallet. Well, it appears that Google Checkout it now live. Interestingly, they struck a deal with Citibank to offer $5 bonus in dividend dollars or 1000 Thank You points if you enroll your card by Aug 1 and make a purchase with the card using Google Checkout by Sept 15.

Looking over the site it appears that its focused on buyers and merchants, allowing businesses to use it on their websites to accept credit card purchases. To be honest, I was hoping it would have all the features of Paypal and compete directly with them, even though they said it wasn’t aimed at challenging Paypal. Since I have been selling on Ebay recently, I have been getting eaten up by fees. Anything to add competition is always good. I guess there’s the chance that they will add these features later but I won’t hold my breath.

In case anyone out there does run a business that could utilize this, they are charging 2% + 20 cents per transaction and you get $10 discount off fees from sales for every $1 you spend on AdWords. Should have known they would tie those together. The NYTimes has a pretty good article discussing the details of Google Checkout (Use bugmenot for a login).

I can remember back when I was younger and it was monopoly or Super Mario Bros. Now my favorite game is without a doubt the 0% Interest Balance Transfer Game. Its a fun game I like to play in order to actually make money, instead of giving it, to financial institutions such as credit card companies. If you have glanced over my networth and wondered why I have such high credit card debt this will probably be a good read.

I first learned of this game a little less than a year ago when I got a Citibank Dividend Platinum Select card for the 5% off on gas, groceries, and pharmacies. When I activated the card the csr offered to transfer a credit card balance for no fees and 0% interest for a year. When I told him that I didn’t have any credit card debt he told me he could send me a check and I could deposit the money in my bank account. I was a little shocked at this as I had never heard of this. I think I must have asked him 3 times about the 0% interest and no fees before I decided to try it out. I could tell he was a little annoyed at having to repeat and confirm the same information over and over. I am certainly glad I did try this out as it has become a decent source of income, definately worth my time.

Simply put, I borrow money from credit card companies at low or 0% interest rates and then invest the money in an online savings account in order to earn a very good interest rate and therefore free money. Its really a form of arbitrage. It is very important if you decide to attempt to play this game that you are very aware of the details and fine print of the offers. Sometimes they are sneaky about the fees. I guess it would be helpful to have a little introduction on the whole process.

Selecting Offers: The first thing to do is to find the offers you want to take advantage of. Citibank is probably my favorite. Most of their offers are for 0% interest from 6 to 12 months and they allow you to get a check to deposit at your bank. Chase and Discover also have some interesting offers available, and there are many more out there. You need to make sure that you read the terms and are well aware of when you need to pay the money back so that you do not get charged interest. I normally pay mine back before the statement of the money it is supposed to end just to be sure I won’t get charged interest. Also some companies, for example, Discover, use a two month cycle to factor in interest rates. You must be very careful here to not get charged interest.

Putting the money into your bank account: This can sometimes be the only tricky part. Citibank will send you a check to deposit if you wish and you can request it online. I have also received offers for balance transfer checks from chase that I could deposit. If you can get the company to do this its the best. Otherwise you may have to transfer a balance into a Citibank card and then request a check online. I believe they will even allow you to request a check for a negative balance.

Making money from this game: The next step is to make sure the funds are in a safe, high interest online savings account. You want to place the funds into an account with a guaranteed return. Right now you can make close to 5% interest in these. If you plan to invest the money in stocks or buy a new car or something similar then you probably shouldn’t be playing the game. Otherwise, you can make some decent, passive income. If you had $10,000 invested in an account paying over 4% interest you’d be getting over $400 for a 12 month offer. If you were able to get much higher credit limits, for example, 50k, you could get over 2k for a year. Not bad at all in my opinion.

Potential pitfalls: You are still required to pay the minimum payment every month for the card. If you are late with a payment normally they will end any promotional interest rates and give you the default rate, essentially making the money maker into a money loser if you don’t fully pay off the card. You probably will want to set up automatic payments or have reminders with an online calender or yodlee. I will discuss some of the negatives in more details in a future post, but be warned that taking advantage of these deals will lower your credit score at least temporarily. Also, there is the potential that you could invest the money in something with risk or spend it on things you wouldn’t normally buy.

I started this deal last week and it looks really great so far. TD Ameritrade is offering a $500 account opening bonus and 45 free days of trades. You must deposit $10,000 when opening a non-IRA account and qualify for Apex status by making 5 trades per month for 3 months. The deadline is 09/05/06 for the account to be opened and funded. They say you will receive your bonus 3 to 4 weeks after qualify for Apex status and you will keep the bonus as long as you keep $10,000 equity in the account. One thing you must watch out when trading is that you follow day trading regulations. To make a long story short, if you do four or more day trades within a rolling 5 business day period you will classified as a day trader and must keep $25k equity in your account. There is a very long thread at Fatwallet discussing the deal.

I opened this account very earlier last Thursday morning. When I went online around lunchtime my money was already in my account and ready to be traded. A free day of interest on your money never hurts anyone. I made 15 trades and emailed customer service saying that I had made the minimum number of trades and had qualified for apex status. To get the fastest service you should click on the contact us link at the bottom of your account, then select email and put the topic as client services and then apex status. I did this and they emailed me back without an hour or two and told me I had qualified and would get Apex status at the next system update.

It seems that one safe way to do this deal is to buy a stable, low risk stock such as a bond fund. I went with iShares Lehman 1-3 Year Treasury Bond (SHY). Then get your bonus, sell your stocks, and purchase a 9 month CD or a no transaction fee mutual fund with. Your effective interest rate then is 5% + whatever your cd/mutual fund gains. It should be easy to get 8 to 10% interest on your money.

If your experienced and knowledgeable at trading, unlike me, then the 45 free days of trading could be as good or better than the bonus. I played around buying a share or two such as Haliburton (HAL) and Apple (AAPL) and U.S. Oil Fund LP (USO) but I don’t really know what I’m doing at this point Probably best to avoid too much trading if your not experienced.

I put most of my money in SHY. You can also set up your non invested money to be swept into a money market fund through their TAP. You have to mail or fax the Total Asset Plan form to them. There are many choices of Reserve Funds but the Primary Class R seems to be the best for me since I’m not concerned about taxes. You will gain ~4% interest at the time of this post as long as you have 2k in non invested funds. I signed up with it but I’m not sure I will utilize it. I will probably put most of my money into one of their mutual funds, most likely a no fee one, once I start losing money trading stocks.

This is a fantastic deal. Even if you simply left your funds in the Tap account you would be getting about 9% APY for no risk. Of course, you could leave small amount of dough to have a little fun with no commision trading. Just be aware of the day trading rules if you do. If anyone has anything to add, or any tips about maximizing this deal, I’m all ears.

Fidelity appears to still have this deal going on. New customers can open a brokerage account with them and receive a $100 bonus. I had a 529 account with them before I did this and it still considered me a ‘new’ customer for the deal. You need to register through this link and then open your account within 30 days and then fund it with $10,000. You must keep the account open for 6 months to keep your bonus but this isn’t a big deal because there are no account maintenance fees if you sign up for electronic statements. After you get the bonus you can take all your money out. There is also a bonus for United Miles. I have read of people able to get both bonuses so if you are interested in double dipping and have the necessary money for both promotions you might want to call them and see.

I did this about a month ago. Opening the account is pretty easy. Only thing annoying is that it takes about a week to establish a bank account to transfer money in. Once my account was funded I received an email within a day or two confirming I had qualified for the promotion and I received the bonus several days later. I think I got my bonus within 3 to 4 days. You can then take the money out if you want or keep it in if you want to use the account. You can set the default account to fcash or one of their municipal funds that is tax free. I think they are in 3% range right now. After my funds got into the account I bought FDRXX which is a no transaction fee cash reserves fund that is paying 4.63% apy at the time of this post. I left several dollars in as I always do with accounts that I don’t want closed but you should be able to pull it all out.

This account is great if you have their investment rewards card that gives 1.5% back into your account. If you wanted to use the account for investing they seem to have some good expense ratios on index funds but they have high minimums to avoid fees. You will probably want to go elsewhere for stock purchases unless you are funding it with some major dough.

Ok, so I have been opening up alot of accounts in the last couple of months to get bonuses and try some online banks out. I recently applied for an E*trade money market account for a $50 bonus. It appears the deal is still ongoing until 05/31/06. Shockingly, I was denied for the account. I didn’t even know banks would reject you for a bank account. From the wording it sounded like they were saying it was denied by ChexSystems. I guess there is a limit to the number of accounts you can open in a certain time period. ChexSystems appears to be similar to a credit agency, only for banks. Like the credit agencies, they will send you a free copy of your ChexSystems report if you denied an account due to information on the report. I figured I would request my free copy if for no other reason to see what was on it.

Well, about a week later I received it. It was pretty bland, no where as interesting as a credit report. In fact, it really only listed the bank accounts I’ve opened in the last few years with the dates opened. I’m not sure if it was the number of accounts that I had opened recently or if it was due to the fact that I had opened a Netbank and GMAC account earlier that day.

Ok, so I’m running out of bank and credit card offers to sign up for. I had been avoiding this one for awhile because of all the hassle involved. Anyway, Netbank is offering bonuses for opening up several of their accounts. Note that if you change the last two numbers of the link above you get different promotions but the one I linked to seems to be the best. Heres the details.

$75 for opening up a checking account and maintaining a $500 balance for one month.

$75 for opening up a money market account and maintaining a $1000 balance for one month.

$25 Visa gift card for opening up a CD with a minimum of $1000 and 12 months.

The 1 year cd is paying 5.25% so that may or may not be worth the trouble. The netconnect silver money market is 3.52% and 0.75% for the free netvalue checking. There are several fees that make this deal somewhat troublesome. There is a $25 fee for closing the accounts within 6 months, $7.50 after that. You must maintain a minimum balance of $500 in order to avoid a $5 fee on the money market account and there is a $5 dormant account fee after 12 months of no activity. If there is no activity in your checking account for 3 months you get a $5 per month fee. If you’re still reading this then you must really enjoy doing these deals. Sooo heres the plan:

1) Open the mm with $1000, the checking with $500, and a 1yr $1000 cd.

2) Qualify for the higher interest rate netconnect silver mm. Basically you have to satisfy two of several requirements. Getting a debit card and opening the cd seem to be the easiest. You could also link the checking to mm for overdraft protection if you don’t want the cd.

3) After one month the bonuses should post so I will draw the money market down to $500.01 and the checking $0.

4) Transfer in a small amount of money and immediately use bill pay during months 3 and 6 to avoid the inactivity fees.

5) Wait 6 months and close the two accounts. After 12 months close the cd.

I think that should cover it. If you don’t mind the hassle this is a nice deal, especially if you’ve exhausted the other bank deals out there. I opened it last week and my accounts are funded this week. The site seems pretty good. It shows your interest accrued so far like ing and even has what appears to be a yodlee like function where you can add other bank accounts, credit cards, etc. Its too bad they aren’t competitive with interest rates and have so many fees or I would consider actually using this account. Oh well.

Just when you think your done getting credit cards you see another great deal. Sony revived their deal on this Sony Card. It gives a $100 dollar credit to your account 8 to 12 weeks after your first purchase. You need to apply by 12/31/06 and you have until March 31, 2007 to make, no sweat.

That right there would be enough to get me to bite but theres more. It also offers 0% APR on purchases and balance transfers. Here is the details on the terms of the card and this explains the 0% BT game. The maximum fee for a balance transfer is $75 so if you get a high enough limit you can make some money off this. When I do this deal I am going to move almost all of the limit from my Chase Cash plus rewards card over to this one and get a really nice BT.

Over the last year or so there has been several promos with Citibank to earn money for opening up an EZ checking account. Also, if you link your account up at the thank you network you earn points each month if you have 3 or more “products.” If you have an account open you might want to consider this strategy to increase the amount of thank you points you earn each month. If not its probably best to wait until they have another promo for new customers and get $100 to $200 for that.

Before I get started note that it seems as though Citibank likes to make hard inquiries for every new product or account, so be aware of that if you want to open up new ones.

The amount of points you earn each month is based on the type of checking account you have and how many “products” you have. Midway down the page here is a listing of what qualifies as a product and how many points each account gets. In addition to what you’d expect for savings, checking, cds, etc you will notice that direct deposit, bill pay, and having a debit card count as products. So if you have a debit card, pay bills, and have direct deposit that is already worth the equivalent of 75 cents each month for an EZ account, which is what I have been earning until recently. Add in their new esavings account and its $1.50 per month. If you wanted to do more you could add a cd and checking plus(overdraft protection for $5 fee per year). Only caveat is the credit hits.

However, if you switch to The Citibank Account, your points more than double. The main requirement here is that you keep a balance of $6000 in your linked accounts. While the esavings is at 4.5% apy which isn’t the leader, it is still pretty decent. Up until now your probably thinking its not worth the hassel but the interesting thing is that the balances on certain linked credit cards from citi can count towards the total. So if you have large sums of 0% Balance Transfer money out you can link the accounts and not have to deposit the 6k to avoid service fees.

So with the checking, esavings, and doing bill pay and direct deposit you can net $48 dollars per year or if you wanted to add a cd (500 minimum) right now at 4.7% apy and checking plus you would net $96 $91 after the fee. You should have a debit card from when you opened the checking account and you can set up regular deposits from ing and regular bill pays to satisfy the other requirements. Paypal also counts toward the dd requirement. If you dont mind the hassel to set it up and the credit hits you can net some nice change.

Haven’t seen this deal mentioned much so I’ll go ahead and post it. Offer expires 4/30/06. Open an account at HTH Worldwide Bank and enter code 25FREEHTH in the referral box on your application. You need to open it up with a $50 deposit and you should receive your bonus in 6 weeks. There is a $30 fee for closing within 90 days but there is no minimum deposit so you can take your money out asap. You get a debit card, bill pay, and a first set of checks free if you wanted to use it but with 0.39 to 1.22% APY you probably won’t.

I opened mine about a month ago. As soon as I get to my bonus I will probably use bill pay or write a check to get all but one dollar out and close it after 90 days. Note that there is an ACH out fee and also a dormat account fee if you have no activity for 24 months.

It did take a few weeks to get things sent out to me but not as long as HSBC and there was no hard credit inquiry so no problems.