Month: June 2019

The classic credit card debate! To use credit cards or not to use credit cards? This is the real question we need to answer.

There are a lot of advantages of using credit cards, if used properly. There are also a lot of disadvantages of using credit cards the wrong way. Many credit cards create sign up point bonuses after a certain spend. If leveraged properly, you can gain sign on bonus points and use those for free travel or redemption’s.

One MAJOR thing I want to alert you on with this myth. If you do not pay off your credit cards in full each month, you should not use credit cards. Carrying over a balance for the sake of receiving signup bonuses is NOT the right thing to do and I do not recommend one bit. Paying your minimum balance due is a way credit card companies trick you into going into debt. This is a big reason why credit card companies can offer these signup bonuses.

In the new role I have with my company, I have been able find a way of leveraging my situation to get many sign on bonuses. A few months ago I asked my boss if he had any issues with me using my personal card for business expenses. Nobody had ever asked before and I was always using the corporate card because, well, that is what I thought we were required to do. He told me he was completely fine with it as long as I took pictures of all receipts for expense reports

This was HUGE! I could now begin opening up credit cards and easily hit the min spend requirements to get signup bonuses. I spend roughly $1,500 per week between flights, hotel and car rentals. Most credit card rewards programs require $3-5k spend in a 3 month time span to hit the signup bonus. If it weren’t for being able to use my personal cards for work, there is no way I would have been able to get as many signup bonuses as I have been able to. I am naturally frugal person and tend to spend less than $1,000 a month on expenses I would typically put on a credit card.

Below are some of the credit cards I have opened up this year and associated signup bonus I received (note: these may not be the exact signup bonus the card is currently offering):

1. Chase Sapphire Preferred: 50,000 points earned after $3k spend in first 3 months
2. Marriott Bonvoy Boundless: 100,000 points earned after $5k spend in 3 months
3. Barclay Arrival+: 70,000 points earned after $3k spend in first 3 months
4. Gold Delta SkyMiles: 75,000 points earned after $3k spend in first 3 months

I have been able to hit each of the signup bonuses for the above cards. I am in the current process of looking for the next credit card to open. Will see what is out there and look up reviews from sites like NerdWallet and ThePointsGuy for recommendations.

Key Takeaways:

• Credit cards should not be used if you can’t pay your balance in full every month
• Credit cards can be used to leverage signup bonuses that can be redeemed for travel rewards
• Look on websites like NerdWallet.com and ThePointsGuy.com to help find credit card signup bonuses you could benefit from. Be wary that these websites can be affiliates of certain cards. This means they could be paid to show certain cards at the top of the list.

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Who is your current Savings Account with? Did you know there is a good chance the company you are keeping your cash with is royally screwing you. That was the exact case for me and my Savings Account I was using with Bank of America.

Week after week I would receive items in the mail from Bank of America thanking me for being a platinum gold whatever bullshit member. Little did I know how much I was being taken advantage of. After seeing a few posts from different members in the F.I.R.E. community, I decided to start doing a little bit of research.

How did I determine my Interest Rate being earned in my Savings Account?

After logging into my Bank of America account, I performed a simple search for interest rate in Savings Account. Here is one thing I found extremely interesting, when performing this search on Bank of America’s website, I couldn’t find the interest I was earning after trying the search 5 different ways; however, when doing a search on google, I was able to find the interest in 30 seconds…lol wonder why?

The below picture outlines what I was able to find from Nerd Wallet from earlier this year:

Dang, that hurts. It’s always important to have a baseline which I know have. My account was earning .03% interest with minimum requirements, monthly fees, and a potential to earn up to .06% if I became extra special in Bank of America’s eyes.

What does .03% look like?

I can’t wait for you to read this and see a real world example that happened to me so you can see how much money Bank of America screwed me out of. As I was going through liquidating and consolidating my money to invest in my cousins bar, I worked to get all my money into my Savings Account with Bank of America. So now I had $201,000 sitting in my Savings Account. Okay, ready to see how much interest I earned from this? Well here you go….

Yeah, you read that right. That is an actual screenshot from my Savings Account showing that gucci interest Bank of America so politely paid me for having my money in their account.

What does .03% Interest look like annualized on $201,000?

Being an engineer by trade, I wanted to understand how much money Bank of America would so kindly pay me if I were to actually keep the cash in my account for a full year.

Annual Interest Earned on $200k @ .03% Interest = $201,000 * .0003 = $60.30

Knowing this, it would only take me a million years or so to earn what I would want to. There must be a better way. So I started doing further research for what are called High Yield Savings Accounts.

What is a High Yield Savings Account (HYSA)?

Good question, a HYSA, in most simplistic terms, is a savings account paying a much higher interest rate than your normal Bank of America :). Many companies are beginning to offer HYSA’s to try and attract new customers.

What HYSA I Switched To?

After doing research and speaking to other members of the FI community, I moved forward with a Wealthfront account. This account offers a 2.51% interest rate. Yes, 2.51%. Let me do some quick math to find out how much I was getting screwed by Bank of America.

2.51% / .03% = 83.67

Quick math shows I am now making almost 84 times as much in Interest on my Wealthfront account than I was in my Bank of America savings account.

Wealthfront has many tools that can be used outside of a simple Savings Account, but so far I like everything I see. The dashboards they have are intuitive and the website has been extremely easy to navigate.

What I want you to take away from this post:

1. If you have a Savings Account, find out what interest rate you are currently making
2. Find out if your Savings Account has any fees, minimums, and/or other perks
3. If you are making less than 2%, take action and research HYSA’s that could work for your particular situation

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