When Points Are Better Than Cash Investments!
The title might sound weird, but soon you’ll find out that points really are a better investment than cash.
A few days ago, I posted about how you can buy a car with points. In that post, I talked about how points are sometimes worth more than you think. Today I’m going to expand on that a little more.
Chase is known for offering a ridiculous amount of points and cash back, but what most dont think of is investing in points.
Let’s say I hypothetically have $20,000 lying around. This is money that I need to invest somewhere to get the most return. I usually put it in a CD account that gives me 0.9-1% interest over 12 months. After 12 months, I receive 20,192.85 (assuming it compounds 12 times/year)
That is an interest amount of $192.85
YOU NEED PATIENCE FOR THIS TO WORK!
Sounds good for the economic situation we’re in, but what if I worked a little bit to get a little more money?
Here’s what I would do.
As always, I know that A Chase Ink Bold card gives me 5 times extra points at office supply stores.
Using this knowledge, I put my $20,000 in my bank account and charge my Bold card $2,500 per month to buy prepaid gift cards from Office Depot.
This costs me about $2,500 + $24.75 (Processing Fee for each $500/Card) Total = $2,524.00
By doing so, I earn 12,500 points + the initial $2,500 purchase points. Total = 15,000 points
After purchasing the gift cards, I immediately take $2,524 out of my $20,000 and pay my Bold Card.
At the same time, I am using $1000 worth of gift cards that I purchased to churn into cash again by going through amazon payments.
Amazon payments is a system in which you can charge up to $1000 per month on your credit card and have it be transferred to your bank account without a fee. This is the most simple way to earn back the cash you used up to buy those gift cards.
So, lets recap. I’m spending $2,524 per month for $2,500 in gift cards. I am then using $1,000 of those gift cards to churn back into cash that will be transferred to my bank account leaving me with $1,500 in gift cards.
I can do this for 7 months in a row before I use up my Initial $20,000. You’ll be tempted to use the $1,000 you get back every month, but dont unless you know you wont need that liquid cash for about 15 months or so.
I know that each month, I earn 15,000 points and get $2,500 in Visa gift cards, but in the end have $1,500 in Gift cards.
If you’ve been paying attention, you’ll see where i’m going with this by now.
At month 7, you will do nothing but keep charging your gift cards back to amazon at $1,000 per month. Month 7 is also crucial because this is when you earn all your “Interest” back. You earn it back in the form of points.
1,000 points = $10
so naturally, 105,000 points equals to $1,050 (1%)
To make sure people understand what just happened, I just EARNED $877 in addition to earning all my money back.
If you want to be technical, I earned (1,050-173 credit processing fee) $877
This is pretty unbelievable considering I wouldn’t even have $125 at this point if I put my money into a CD.
If I continue to withdraw the giftcards, at month 12, I will have about:
I will fully withdraw the gift cards and interest at month 19.
This is if I withdraw all my gift cards, but after month 12, I can easily use my giftcards to get whatever I was gonna get after my CD “expired”
If you dont understand, I’ll explain.
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