Can You Still By Gte Financial Credit Union CD With A Credit Card

Intugumbo | Jan 20, 2020 | 41 posts since 2019

Several post on the Doctor of Credit Blog reference being able to buy CDs at GTE Financial Credit Union using a credit card. The credit card charges apparently, by GTE Financial Credit Union, code as purchases.

Is this still possible now? Do credit card charges for CD's code as purchases?

Here are the blog post:

https://www.doctorofcredit.com/gte-financial-visa-card-300-signup-bonus/#comment-567803

https://www.doctorofcredit.com/gte-financial-visa-card-300-signup-bonus/#comment-568022

https://www.doctorofcredit.com/gte-financial-visa-card-300-signup-bonus/#comment-567807

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Answers

Kaight | Jan 21, 2020 | 1,192 posts since 2011

The answer to your first question is "yes". I know because I just checked. As for the coding, mine always have gone through as purchases. However, this can vary depending upon credit card issuer. Best idea is to try a small ($500) CD first, just to be certain there are no "gotchas".

I used to open CDs this way at GTE. No longer, it has been a while, and all my old CDs have matured. I quit because nothing at GTE has changed as regards their low multiplier. The shortest CD they offer is six months, yielding a multiplier of only two. The lowest multiplier I will even consider today is four, and most often I am doing six. To get to four you need three month CDs. Three month CDs are not available at GTE. Period.

About the best you're gonna do today with a two multiplier, on a consistent basis, is 5% tax free. That would be using an Alliant Visa Signature card having a 2.5% reward and don't forget that card carries a stiff $99/year fee. OK, you could get to 6% tax free using a Discover Miles card . . . but only for the first year. Those two cards are the outliers. If you want to do big money the best you're gonna do, with a two multiplier, is 4% tax free. This is because a 2% reward is about it right now elsewhere. And with interest rates falling like they are, who knows how much longer 2% reward cards will be readily available? Your best bet there is to apply now and try to get grandfathered in if you can.

So bottom line two multiplier opportunities, like at GTE, kinda suck. Now take the above numbers and compute with a four multiplier and you've got something. 12% tax free with Discover is a decent return, even if only for a year. And you can do 10% with Alliant forever. That $99 fee gets paid off fast! The thing to bear in mind when purchasing CDs with a CC is this: it's all about the multiplier.

Oh, and I very nearly forgot. The other negative at GTE is their $5000 ceiling. You go nuts opening CDs in $5000 nibbles. And let me tell you, GTE cannot be relied upon to keep all the $5000 CDs straight. So if you do decide to go ahead there, keep an eagle eye on 'em. Best approach would be to open your first CD for $5000, then the next for $4999, then next $4998 and so forth on down to $4990. Rinse and repeat. That breaks things up a bit and helps GTE so they do not become confused looking at a sea of $5000 CDs . . . which is what happened to me.

Intugumbo | Jan 22, 2020 | 41 posts since 2019

I cannot thank you enough for your long, detailed answer.

To clarify when you wrote about "multiplier" you are talking about the number of times you can recycle your money per year buying Gte Financial CDs with cash back from the credit cards?

You referenced several credit cards: Alliant Visa, Discover Miles. You can personally vouch that purchasing CD's with those credit cards code as purchases?

Are there any other financial institution that allow you to purchase CD's with shorter maturity dates using credit cards?

Kaight | Jan 22, 2020 | 1,192 posts since 2011

Sorry, but there are limits on the amount of guidance it is wise for me to offer, particularly as regards higher multiplier CD opportunities. These each person must ferret out for himself/herself. One tip: Ken's website here can be a great help. This is because, in many instances on his financial institution specific pages, Ken reveals whether or not a particular financial institution offers short term CDs, along with exactly how short those offerings are. There is no sense further researching a particular financial institution if it does not, in the first place, offer the short CDs which best serve your purposes.

As for the multiplier, yes you're right. One month CDs have a multiplier of twelve, two month CDs have a multiplier of six, three month CDs have a multiplier of four, and so forth. Speaking from experience, with higher multiplier CDs the number tends to be somewhat overstated. When I did one month CDs it really was not possible to roll the money twelve times each year. This was on account of just the time lost cashing in the old CD and opening the new one. So a nominal twelve situation might, in reality, be only eleven, or eleven point five, or something thereabouts. You get the idea. It was still a minimum of almost 24% tax free so I never complained or got worked up over the details. And just for the record, I (sadly) no longer am able to accomplish twelve multiplier CDs. Most of what I do now runs on the low side of six. That is still a very welcome tax free return, but not a bonanza.

As for the credit cards, I provided information from my own experience but I vouch for nothing. As I wrote, run a test before you jump in with both feet. That's the best approach because it will tell you where things stand for each particular situation. There are too many combinations of CC issuer and financial institution for me to be able to go around making promises. Everyone needs to do his/her own homework.

Intugumbo | Jan 22, 2020 | 41 posts since 2019

Thanks for the advice about using the this website. I will definitely use this resource.

The "tax free" part of your response is from the cash back from using cash back credit cards?

I did not mean "vouch" as promised on my life, Mafioso style. Perhaps I used the wrong language. Let me clarify. Researching CD rates is pretty straight forward. But finding banks and credit unions allow you to purchase them with credit card is like finding a unicorn. So when I wrote "vouch" I narrowly meant "you know for a fact you can us a credit card coded as purchase to buy a CD". That is all.

Kaight | Jan 23, 2020 | 1,192 posts since 2011

Sure, no problem. Yes, quite simply CC rewards are not taxable. There are some interesting personal stories on the net about this (not posted by me personally, posted by others).

And, yes, there is no question it is possible to purchase CDs with a CC and the transaction is coded as a purchase. My own experience is that this is most often what happens . . . but NOT every time. Hence the advisability of testing first with a small CD before you go for broke.

I agree finding banks and credit unions willing to allow CD purchases with a CC is difficult and challenging. Of course you always could start with GTE, just to get going, and work hard to locate better opportunities. With a fresh Discover Miles card you can get 6% tax free at GTE, plus another half percent taxable. There are not many CD opportunities around today offering an equivalent return on an NCUA insured CD. But, again, after the first year this Discover deal turns into a pumpkin.

111 | Jan 23, 2020 | 672 posts since 2019

Speaking of "turning into a pumpkin" - word on the street has it that the Alliant Visa 2.5% cashback card will limit its cashback to $10,000 per month, starting 3/14/20.

Just sayin'.

Intugumbo | Jan 22, 2020 | 41 posts since 2019

One more thing, What other CD are giving you six multipliers?

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