I just got my check from Fidelity for cashing out my 529 plan, courtesy of my MBNA 529 College Rewards Mastercard which gives me 2% cashback on everything I buy into that 529 account. My first disbursement request was lost in the mail, but my check finally came:

Out of the $1,600 I received, I would estimate that $900 was from my own deposits, $600 was from earning 2% cashback, and $100 from the tax-free growth of my conservately-chosen 529 portfolio. Nice!
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My $10,000 balance transfer from my Discover Miles Card was safely converted to cash and is now sitting in HSBC earning 4.80% interest. I also made one purchase to get the free 5,000 Miles. I’m happy to say that it all went smoothly. No balance transfers fee were charged, and the 0% APR indeed covered both balance transfers and my purchases as promised, so no interest was charged. I even got my 5,000 bonus Miles immediately after the first statement cycle closed. It’s nice not to have to badger a company for a bonus.

I also received their rewards catalog for their ‘Miles’ redemptions. Ugh, the selection is bad. Converting back to cash-back, it was in the neighborhood of .6-1% back. I can do so much better with my current 2-5% cashback cards. Still, I’m not wasting these points!

As with many credit cards with Points or pseudo-Miles programs, their rewards are supposed to entice you to redeem your points for something you like but don’t realize how poor the value is. Example: 20 GB iPod for 47,000 Miles. Even a 30 GB iPod is only $299 at Apple.com. Even with a simple 1% cashback card, you’d get $470 back – enough for the bigger iPod + $170 in your pocket. To top it off, their gift card selection is funky in that they only offer specific denominations for each store.

Stil, I have 5,028 points to burn. I made an Excel spreadsheet of the rewards I could actually see myself getting. (4,700 points for a football? No thanks.) I also computed the cents/Mile to measure value.

The $100 Airline Credit was my initial goal, but you have to use their travel agent and book 21 days in advance. If they book Southwest, maybe. $100 at Ruth’s Chris Steakhouse would be neat since I’ve never eaten there, but I’d need to charge another $7,700 on this card to get there.

Hmmm… Should I just take the $25 cash even though the value sucks? Or get the movie tickets? Right now I’m leaning toward the $50 Old Navy card, even though I haven’t shopped there in years.

Cash back credit cards are all the rave now, especially the 5% ones. Citibank has had their Dividend card giving 5% cash back for groceries, gas, and drugstores for years now. Chase then copied Citi with their own version. American Express and Discover now have ones with 5% off gas. But are they really that awesome?

I was catching up on some old Carnival reading and found this post on NoCreditNeeded about how cashback credit cards are crap. Granted, from the title of the blog you wouldn’t expect to hear praise for them, but there are some good points made. Of course, I disagree with some of them as well. Let’s hit each one:

People spend more with credit cards than with cash.
Overall, this is true. When McDonald’s started to allow people to use credit cards instead of paying cash, the average sale went from $4.75 to $7. I don’t know why this is true, but it is. On average.

Would I spend less if I carried cash instead? I can’t prove it, but I can honestly say no. If 1% cash back is going to make you rationalize spending more, then (1) you are really bad at math (1% of a $300 item you don’t need is just 3 bucks), and (2) yes, please shred your credit cards. As for myself, I’ve been using credit cards so long I don’t even think about it anymore.

The ‘protection’ by credit card companies is useless.
This may be a hassle for chargebacks, I’ve actually never had to do one. But, I have gotten my wallet lost or stolen twice. Cash lost: $200+ Credit Card money lost: $0. I got my recent fraudulent charge credited back to me with no issues at all.

Credit card companies are not stupid. They are around to make money.
100% Agree. They are there to make money. My friends use this one too. My reply is two words: loss leader.

Grocery stores are also not stupid and around to make money. You see the 99 cent gallon of milk? Or the $1.50 a pound chicken? If you walked in and only bought those two things and walked out, grocery stores would go bankrupt. But no. On the way to the milk, you see that cheese you like. Oh, and you’re out of peanut butter – why not try the new organic one? They are counting on you to make it up in the end.

Banks are also not stupid and like to make money. Capital One 360 used to let you open with $1 and walk away with $26. If everyone did this they’d be broke. (So they raised the minimum to $250. I guess this weeded out the people who couldn’t save $250 in the first place?) No, they want you to get nice and comfortable, and keep all your money there at 3% interest while they’re lending it out at 6%. Clever, eh?

Does this mean you shouldn’t shop at the grocery store or use banks?

The sad truth
The sad truth is that I know that the only reason that I can get money at 0% APR and make thousands of dollars off of it, is because my neighbor is going also do the deal, spend the money, and then want a nicer car and put off paying the balance when the promo period ends. Oops, nows he’s paying 18% APR. He’s also got the new ’06 BMW 330Ci. With the nice rims. And parks it right in front of my house. Bastard.

Therefore, my advice is the same as NCN – Be honest with yourself. But instead of a blanket statement, I would add that everyone is not the same. Some people should not have credit cards. As for me, I will continue enjoy the occasional cashback checks and free $100 bonuses now and then.

What do I think? Pretty much what Caitlin of Clutter2Cash thinks. Pass.

My first statement for my Citi Professional Card closed recently, and I just checked my rewards balance for the promised free $100 gift card. To my delight, my 10,000 free ThankYou Points have already been deposited! I swiftly went to the ThankYou Rewards site and traded them in for two $50 Target Gift Cards. I shop regularly at Target, so it’s basically the same as cash for me.

It seems that once you get to the $50 range, 1 point = 1 cent in gift cards. It was hard to find the Target reward option, but the search function saved me. Other good rewards options I found were Shell and Exxon/Mobil Gas Cards or Gap/Banana Republic/Old Navy Gift Cards. For those with student loans, you can even get a $100 loan payment for the 10,000 points. Here’s a screenshot of my points:
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I just finished setting up my free money from my recent Discover Miles Card application. As mentioned in my best 0% APR offers list, it offers 0% APR for 12 months on both purchases and balance transfers, no balance transfer fee, and 5,000 (now they offer 12,000!) free miles after the first purchase. Here is a real-life example of my post on how to do these deals.

1) Applied online, and requested a $7,500 balance transfer (BT) to a Citi card, and a $7,500 BT to an American Express card on the third page after the 7 steps. (It’s there, you can put in junk to test if you want) I always ask for more than I think they’ll give me. They ended up giving me a $11,000 credit limit, with a $5,000 BT to each card ($10k total). Not bad as I already have balances elsewhere. It took some time for the application to go through, but it went through smoothly.

(Note: I would usually just send it to one card, but I wanted to make sure American Express still worked for negative balances.)

(Note 2: Per the Terms and Conditions, you need to request the balance transfer with the application in order to have no balance transfer fee. If you wait until you already have the card, there may be fees.)

2) I got the card, and activated it. One day after getting my card, the two $5,000 balance transfers showed up in both of my Citi and AmEx accounts.

3) I secure messaged Discover to make triple-sure that I had no balance transfer fee to pay, and that I could make both purchases and balance transfers at 0% APR for a year. I got a message back in 24 hours that confirmed it. Gonna keep a copy of that message just in case, but I’m just paranoid like that.

4) I went online to Citibank and requested a credit balance refund as shown in this post. They had to “verify the payment was legit”, but approved my check in a couple days. No humans, easy as pie.

5) I called American Express and said I had an overpayment and asked for a check be sent to me for the overpayment amount. They approved it over the phone without any trouble at all. Two $5,000 checks coming my way in about 5 business days!

6) I paid my cell phone bill with the Discover, so I’d get the 5,000 miles for the 1st purchase. These are Discover-specific “miles”, so I’ll need to figure out the best way to cash these out. It seems 10,000 miles give you a $100 credit on a plane ticket, but there are other non-travel rewards too. Therefore, I estimate the bonus 5,000 miles to be worth $30-$50. I can do this without worrying about interest because the purchases are also at 0% APR for this offer.

7) Once the first statement closes, I’ll set up my automatic online billpay as described here, and I’ll be pretty much set. Even though Discover uses two-cycle billing, as long as I pay it all off before the 0% period ends I’ll be safe.

(Although two-cycle billing is less desirable than other billing methods, it shouldn’t matter here as long as I pay off the balance within the correct deadline. What two-cycle billing does is eliminate your grace period, but balance transfers have no grace period anyways.)

Total time spent: About 20 minutes
Total potential money earned before taxes: ~$490

~4.5% interest x $10,000 x ~12 months = ~$450
5,000 bonus miles = ~$40

This is a rough estimate, but interest rates will also rise as the year goes on, so it should balance out. Typing this post took longer than it took to do the deal, so I hope it helps some people out 😉

I still track all of my accounts in Yodlee, which is somewhat controversial because if someone found my password for Yodlee, they would have access to all my accounts. The flip side is that I can see almost immediately if something funky is up with one of my dormant accounts. Just now, I noticed that my old US Bank card (which I never use) had a charge for $80 on it, which ended up to be some random charge from a Spanish soccer team?

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Even though I participate in a lot of bonus offers, I always read the fine print, as credit card companies can be very tricky in their wordings. Here’s a pop quiz – What’s wrong with this offer?

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As noted in my net worth updates, I have 529 account as part of my Fidelity 2% Cash Back card. The 2% is nice, but the only way to get your contributions and earnings out of the 529 tax-free is to have real college expenses.

Now that I’m in college, no problem right? But then I read that the same college expenses cannot be both reimbursed by a 529 account and be used in claiming my Lifetime Learning Credit. I don’t have more than $10,000 in tuition, and getting 20% back is much better than cashing out my 529 tax-free. So I was bummed, until I read that 529 plans are also allowed to cover room and board, which the Lifetime Learning Credit does not. Yes!
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So you’ve gotten yourself a nice credit card or two, and have already started or are thinking about playing the 0% APR balance transfer game. Now, there are two simple but very important things that you need to remember to do: pay the minimum balance every month on time, and pay off the entire balance when the 0% APR period is over on time. Here’s one tip/tool for each:

Pay the minimum each month automatically with Online Bill Pay – I love Online Bill Pay, I don’t know how I lived without it. Say I have a $20,000 balance at 0%. When you get the first statement, you’ll see the minimum payment is usually something like 2% of the balance, for example $400. As long as they don’t change this, then every single payment after that will be less than $400 as your remaining balance decreases. So, just set your Online Bill Payment to automatically pay that account $400 every month, and you’re set!
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So I asked if I could transfer my credit limit from my other Citi credit cards to my new Citibank Professional Card, as discussed previously. I got the same answer that other readers got – No, because it is considered a professional/business card. So I can’t increase my current $9,000 limit. But then I recalled that most business cards are not reported on your consumer credit report, but on a separate business credit report. I asked a Citi Rep about this but she obviously didn’t know the difference. I’ll have to check my credit report after 30 days to see.

The reason why this is good is because if I it is not on my credit report, then I can take out the whole amount and it won’t affect my regular credit score! Which means I can apply for more cards with bonuses later 😉

So I asked if I could transfer my credit limit from my other Citi credit cards to my new Citibank Professional Card, as discussed previously. I got the same answer that other readers got – No, because it is considered a professional/business card. So I can’t increase my current $9,000 limit. But then I recalled that most business cards are not reported on your consumer credit report, but on a seperate business credit report. I asked a Citi Rep about this but she obviously didn’t know the difference. I’ll have to check my credit report after 30 days to see.

The reason why this is good is because if I it is not on my credit report, then I can take out the whole amount and it won’t affect my regular credit score! Which means I can apply for more cards with bonuses later 😉