The Potential Of Funding 1-3 Month CD's With A Credit Card

deplorable_1
  |     |   188 posts since 2020

I thought maybe we could help each other out in identifying some 1-3 month CD's with cc funding potential. I know folks don't want to kill the deals but this post will soon get buried and we could use the PM system or point people in the right direction, give hints etc. I have identified a couple of potential candidates for cc funding but I'm not 100% sure about the cc funding limit or if I can join out of state.

Both NFCU and Service credit union have 3 month CD's at .5% but cc funding of only $250 so very limited earning potential at 8.5%. Citi double cash counts as a purchase according to several data points. I'm sure there are several others with low cc funding limits but we should focus on at least $1,000 or more?

According to DoC Affinity FCU(NJ) has $5,000 cc funding and 30 day CD's however there is conflicting information on if it may be only a $1,000 limit now and if you can join out of state. The interest rate is .20% but using a 2% cashback card would yield 24.2% on a 30 month CD so you can see the earning potential if we can locate some of these deals.

Another potential is Affinity plus FCU which has the current high yield for their Superior MMA 2.02% on $25,000.

According to this post on DoC this account can be funded with a credit card up to $5,000:

https://www.doctorofcredit.com/affinity-plus-credit-card-35000-points-signup-bonus-with-2500-spend-nationwide/#comment-1002795

They also have 3 month CD's at .40% which would equate to 8.4% using a 2% cashback card. I'm still not 100% positive if their CD's can be funded with a credit card but I'm assuming if the savings account can be then so can a CD. There is a couple of data points on which cards code as a purchase in the thread.

If anyone has either of these Affinity credit unions could you post back if they do credit card funding of CD's and what the cap is and/or if they can be joined out of state. I came up empty last time I tried this due to residency restrictions for all the good deals. I'm sure there are other potential 1-3 month candidates out there so feel free to post even if they are restricted as this could help others who happen to live in those states. The most useful deals will have cc funding of at least $1,000 or more better yet $5,000 or more.




Dandy
  |     |   9 posts since 2019
Thanks. I saw on doc that Wings can be funded w/ $15K. it's may be a hard pull too. I haven't tried yet though
deplorable_1
  |     |   188 posts since 2020
It looks like Wings allows some out of state now and in the Detroit metro area. Last time I checked they didn't. It also looks like you can fund a total of $15,000 but only for a new checking and savings not for CD's? I was about to take a pass due to the hard credit pull when I found their credit cards come with a 12 month 0% no fee balance transfer offer. This may be worth a hard pull after all.
Dandy
  |     |   9 posts since 2019
I have never done one of those balance transfers. Is there a catch to it or as simple as it sound? I have one credit card w/ 7 months (BofA Business Cash Rewards) but I don't even know what entails.
deplorable_1
  |     |   188 posts since 2020
Well there is much you need to know before doing 0% no fee balance transfers the first thing being the "no fee". Way too much for a post on this thread. I have been doing them for 30 years so everything is now like second nature to me so I might unintentionally leave some small detail out. How about I PM you with a quick primer and a couple of good links with instructions in case I miss something? I don't want to bore everyone on here with the details.
Kaight
  |     |   412 posts since 2011
The thing is, all credit cards are different. In some instances it is allowed to manipulate your cash advance (CA) limit independently of your credit line. In other instances there is an unbreakable, hard tie between the two limits. Generally speaking:

If you cannot get your cash advance limit down really low, it is dangerous to pursue any new high dollar value MS (manufactured spending) opportunity without testing. I recently had such a test underway. I eschewed a $2500 first time CD purchase opportunity and went in only for the minimum, which is $500. Got lucky. The test transaction went through as a purchase. But I was brand new to MS at that financial institution and did not know, in advance, how they code. Now I know.

The idea for example, on a first time basis, of doing a $15,000 transaction would be a non-starter for me unless done on a card where I can set the CA limit myself . . . . or at least a situation where I'm sure the CA limit is south of fifteen grand and the financial institution can be relied upon not to grant "one time exceptions" (you gotta ask to be sure).

But to be honest I still prefer testing before jumping in to a situation with both feet. There is lots of time for profit after you know for certain you are on solid ground.  Having any MS go through as a CA is a must to avoid.
deplorable_1
  |     |   188 posts since 2020
You seem knowledgeable about this Kaight. Everyone seems to suggest setting the cash advance limit to $0 but I disagree because I have seen some transactions initially go through as a quasi-cash transaction but then change to a purchase once finalized. I think these transactions would have been declined if my cash advance limit was $0. My CA limit is fairly low $1,500 but I see no reason for $0. Have you seen these quasi-cash or cash advances post initially and then turn into a purchase once final? What do you recommend setting CA limit to?
Kaight
  |     |   412 posts since 2011
I guess this is like anything else: opinions regarding various aspects are gonna differ. I have no problem with that. I agree with you that the notion of paying interest on a CC is amusing. In all the time I've been doing this I've never paid a nickel of interest! Why anyone would even write that is beyond me.

Anyway, obviously a bit more risk can be taken with respect to CAs than the amount with which I'm comfortable. It's a personal decision how much risk to take. Myself? I'm most comfortable with the lowest CA limit I can achieve. But as I wrote earlier, it is not always possible to set that limit independent of your CL (credit line). Rules vary depending on credit card. Again it is no more than personal preference. But I prefer generally to stay away from the "big banks" when I can. Still I am doing business at Citi and at B of A. But most of my cards, and I have a bunch of them, are from much smaller outfits. I've only been badly burned one time, and it was NOT from one of the big money center banks, either. NFCU got me and got me good. They are one tough outfit, let me tell you. I ended up cancelling my CC there. It was worthless.

On your point about nature of a transaction being recategorized when finalized:  you got guts!  And I respect guts.  I just don't have any.  Any charge of mine that went through as a CA I would panic from the jump and try to cancel . . . or pay it off ASAP.  You have a different approach.  It's OK.  God bless.
Kaight
  |     |   412 posts since 2011
On the topic of locating new financial institutions that allow you to purchase short CDs with a credit card:

I cannot comment very much regarding banks. But when it comes to credit unions I find Ken's own website, this website, to be the most helpful. Ken offers a list of "credit unions anyone can join". Ken also provides, for each of those credit unions, a dedicated page of information which includes the terms of CDs each offers.

Once you know you can join, and once you know the CU offers the CD terms you need, three months being the longest, well it's mostly shoe leather after that to learn if you can fund with a credit card. But by doing your homework here on Ken's website first you will avoid going down a bunch of blind alleys.

With banks it is, I guess, somewhat different.  Ken does not offer a list of banks where anyone may do business regardless where you live.  And some banks are persnickety when it comes to doing business with persons living outside their service region.  Ken's individual bank listings do provide us information about term length of CDs offered, and that is essential information.

My current two financial institutions for MS are both credit unions.  But in the past I did a huge volume of business at First Advantage Bank . . . . before that bank was swallowed by Reliant Bank and Reliant viciously and unceremoniously cut all us MSers off.  That was one big time loss of tax free income for us let me tell you, to say nothing of the job losses suffered by the First Advantage employees who used to service our CD purchases.  Nice people.  But life goes on and you have to adjust to new realities and do the best you can with whatever opportunities you have remaining. 
me1004
  |     |   988 posts since 2010
Actually, I see what appears like faulty logic in this approach -- but I appreciate the strategizing. Any interest you earn on the CD will be far and away surpassed by the interest you have to pay to the credit card issuer, so the approach would be an overal loss. I suppose if your monthly credit card statement happened to be timed just right, you might get as much as one month interest on the CD without paying interest on the credit card. But if that is the thinking, then why get locked into three months?

As for wherhter it counts as a purchase or a cash advance, it has been my understanding that that is determined by how the "seller" reports it to the credit card, so be VERY careful about that, you don't want surprises when you get your credit card statement.
Choice
  |     |   246 posts since 2020
Possible...Other funds are used to pay off cc each month...then repeat.  A true analysis would then include costs associated with all funds.  Note no one who is advocating this calculates the true or imputed cost of those “stand by” funds...divide by two the purported benefits?
deplorable_1
  |     |   188 posts since 2020
@Choice: By stand by funds do you mean "lost opportunity cost?" If so there is not much for me GM right notes pays 2.02% APY(my temporary holding fund no $ limit on transfers) and I use maturing CD's to pay off the newly opened CD's. Then there is Ally Demand notes at 1.1% for paying bills and I need to maintain a large pool of liquid funds anyway to pay off various rewards credit cards each month or to take advantage of bank bonuses. So not much lost opportunity cost IMHO.
deplorable_1
  |     |   188 posts since 2020
Pay interest on a credit card? lol No you would earn 2% in tax free cash back rewards and pay your credit card bill on the due date with other funds. In 1-3 months rinse and repeat.
@Kaight: I look for data points here so as not to be charged any cash advance fees:
https://www.doctorofcredit.com/does-funding-a-bank-account-with-a-credit-card-count-as-a-purchase-or-cash-advance/
Still there is a risk this is just data points but the Citi 2% card has yet to charge me a CA fee and I have done this with 4 FI's so far.
QED
  |     |   122 posts since 2013
D1

I've been doing this for a while and of course saw that long ago. Like Kaight, I prefer to run my own tests. A lot of the information on the net regarding this scheme is either outdated or not well updated. And of course once a great, highly prospective, financial institution becomes publicized, unfortunately that can easily be enough to torpedo the deal.

This is why I fish for my own opportunities. Not one my current financial institution "partners" is listed anywhere as being prospective. But using Ken's data they can be ferreted out and exploited. In this sense as Kaight explained in detail, Ken's website is a genuine gold mine for anyone willing to do the work.

Oh, as for her mention of First Advantage, I was a participant there, too. Until its demise, First Advantage Bank was a massive asset to our entire MS community. The loss was overwhelming, but as she wrote, life goes on.
deplorable_1
  |     |   188 posts since 2020
There are so many 3 month CD's to go through I usually give up before getting half way through. I wish there was a list of FI's on DA that do 1 month CD's. It takes a ton of work to locate any good opportunities. Do you know any other lists that like the one at DoC that lists bank accounts and credit unions that can be funded with a credit card? Some of the info on DoC is old and outdated. I saw that Citibank used to allow $100,000 in cc funding but that was before I was aware of this.
QED
  |     |   122 posts since 2013
I think there are other such lists out there, but quite honestly I don't bother with them. By the time a financial institution's name reaches such a list the opportunity likely is on its last legs.

This is the beauty of using Ken's resource right here. Ken does not spoon feed. Ken offers participant wannabes a fishing rod but not the fish itself. You have to work, starting with what Ken offers, and go on from there. That has the benefit of keeping out the riff raff. It excludes persons looking for an easy ride and a quick buck, and has the beneficial impact of concealing some pretty great opportunities, therefore safeguarding them. People who have had to work finding a good partner are less likely to blab it everywhere and kill it dead. But still, Ken does offer everyone the essentials, a great starting point. After that it is up to the individual to use Ken's pole gift and go fishing.
Jack11
  |     |   180 posts since 2019
I find it interesting you are willing to bother opening new accounts for relatively small amounts and short periods but you are unwilling to bother with reward checking accounts. I am the opposite. I have 4 RCAs and am considering a 5th but I am not joining a new CU for a $5000 CD despite credit card funding. I think the monthly transactions are less of a hassle than opening so many new accounts.
Kaight
  |     |   412 posts since 2011
I'll bet the skunks at Early Warning (EW) are salivating over your profile about now. Do not misunderstand. Those worthless rascals have messed with me, too, and I hate 'em. But at least I'm able to defend opening bunches of CDs. I mean, it is not unusual to do so and at some level it can be understood. But opening large numbers of DDA accounts? Really? That is a horse of a different colour, one far more suspicious and scammable.

Please don't get me wrong. I hate EW. They have hurt me personally in the past, and I'm no scammer and I'm not any threat whatsoever to any financial institution. My dealings are 100% honest and above board.  Following any other course would cost me money.  So I do not appreciate being lumped in with a bunch of criminals by those EW jerks just because I open a great many accounts (my EW report not too long ago was thick as a small town telephone directory).

My suggestion to you would be for you at least to pull your own EW report. It is free to do so. Not all financial institutions report to those blokes. I certainly lean toward those which do not!!
Jack11
  |     |   180 posts since 2019
I have never heard of EW. And are you really calling me a criminal? My dealings are 100% honest and above board too.
Kaight
  |     |   412 posts since 2011
I apologize for any misunderstanding, Jack11. No, of course you're NOT a criminal. That was my entire point! Neither of us is engaged in criminal activity. But EW casts a wide net . . . far TOO wide in my opinion.

EW is intended as a resource for financial institutions to tip them off to customers who might be undesirable. Problem is, EW lacks the capacity and intellect to distinguish between undesirable and highly unusual. My own banking activity, I'll readily admit, is unusual. Buying CDs by the box car full is not commonplace. But that does not make me a criminal. Still I have been, on account of my EW report, denied membership in at least one credit union, probably more because they don't always give the reason.  And some people attribute such problems to their credit report, never realizing that it was really EW that caused their problem.

In your case the problem is worse, only because DDA accounts (checking accounts) are in general more suspicious than CD accounts . . . . NOT because you personally are more suspicious. I hope you understand now this is not any sort of attack on you personally. It is instead an indication of my total disdain for EW and their poorly conceived reports which can create the impression that upright people like us might engage in criminal, or at least undesirable, banking activity.  My belief is that any banking activity of mine which is honest deserves privacy.  Period!  And I bend over backwards to be honest not just because it is the right and proper thing to do, but also because it enables me to make more money in the long term.  

And I still suggest you request a copy of your EW report. It is free. Just Google "Early Warning". Not all financial institutions report to EW. You will be able to see which ones, if any, have reported on you.
Jack11
  |     |   180 posts since 2019
Yes, I looked them up. I had been rejected once for an account long ago but I had never heard of EW back then. More recently but still a few years ago I was intending to open a CD somewhere but multiple posters were saying they were rejected for no good reason so I did not apply. And after that I have kind of been being careful about opening new accounts. I missed out on an add on deal because I did not want an extra account showing up. 2 of my RCAs are fairly new and 2 are old. Another place lowered their rate so I quit using them. In fact the 2 old ones, I had stopped using because I was buying CDs at 3%. With no need for the 10-12 transactions. But as rates went down, I started back using them again. And one of the new RCAs I was already a member from a few years prior. So really, I just have one new FI in the last 2 years anyway.

Looks like a EW report is not that easy for me in that they are asking for a photo id and I only have my old one stored on my desktop and that one is expired. And no copier at home and I don't use a smart phone. I did get a copy last week for absentee voting in so I don't have to stand in a long line if there is one in Nov.

A few prior posters have cracked on people like me who have RCAs as cheaters because we don't spend large amounts. My 4 call for 49 transactions and I have been doing them all by the 3rd from my easy chair. Years ago, I would do small gas transactions but many of the stations started turning the pumps off and one even called the police on me. I should have started doing them online sooner.

Is there another firm like EW? Seems like I recall a different one but I never went thru with seeing mine on it either. (And I have not been rejected in probably 15 years. Im guessing they can only go back 7 years at most like credit reports. Is that right?
deplorable_1
  |     |   188 posts since 2020
RCA's are way too much work for me personally. I prefer bank bonuses, CD's, investments but to each their own I'm not knocking them if you can make it work for you. I use cashback credit cards rather than debit cards for 99.99% of my purchases even utilities and DMV. I understand small purchases etc. but I have way too many things going on to keep track of RCA's. My wife told me she would divorce me I wanted her to do all those small purchases each month! She is awesome at keeping track of all the credit card rewards programs and doesn't mind that at all.
Credit card rewards are also 100% tax free with no 1099's. The only real cap to the rewards is your credit line and that renews each month when you pay it off. Making over 4% is very easy and no rate drops to worry about either. Your cash is also essentially liquid as CD's will be maturing every month before long.
Jack11
  |     |   180 posts since 2019
Good point on the 1099s but they are not that much trouble. And you get them with bank bonus deals too. The RCAs are really not that much work.

I use cashback credit cards too for every meaningful amount.

I was not criticizing you by the way.
micheleforan
  |     |   15 posts since 2018
You should consider the concept of cashing in your credit card funded CDs early and paying the fee. I have done this many times and the fee was just a dollar or two (since the early withdrawal penalty is usually a half year's interest or less and the interest is so low to begin with). In fact, my credit union waived the fee earlier this year (COVID benefit), so I did not even have to pay the dollar or two. This way you do not need much available cash to get a huge rate of return since you can repeat purchases every month or two using only your $5000.
deplorable_1
  |     |   188 posts since 2020
You know that is a really good idea except that I would be worried about the whole thing getting shut down or being black listed. The financial aspect is spot on though but I'm sure if I was doing that each month the FI would get very suspicious. I don't think any of us want to kill the cc funding deals we already know about. Doing 1 month CD's is almost the same thing if I can find any repeatable ones.
This would be a great idea if you did need the liquid cash for a emergency though and you already got 2-3% back for funding with a credit card. A fast easy and cheap way to access to your money. I just wouldn't do it too often.
QED
  |     |   122 posts since 2013
I was gonna remain quiet. But D1, you have hit the nail on the head so I will speak up. Locating and retaining great partners for this enterprise is paramount. To paraphrase slightly a line from South Pacific: Once you have found them, never let them go!

To say it my own way, nothing is worth losing a great partner. And what better way is there than to continually close CDs early? In all the time I've been doing this I've never closed early, though I have long been aware of the option. D1, you are right.  Playing it straight is the smart way to hang onto very valuable relationships long term.

True story

Couple years ago I was making a fortune at this one CU.  It was because they offered one month CDs.  I never cheated or misrepresented.  I was 100% honest in my dealings and I respected all CU rules.  But I made a mistake in that I was opening SO MANY of those delectable, irresistible, CDs.  Finally my activity came to the attention of higher ups at the CU and they shut me down.  That is all they did.  I'm still a member there since I had been operating within their rules.  They never even threatened to cancel my membership.  But the feeling I got in the pit of my stomach after being shut down was most unpleasant.  I was making SO much money, it all came abruptly to a screeching halt, and there was not a darn thing I could do.

If I had it to do over, if I had just one more bite at that apple, I would be FAR more moderate in my CD buying.  But you don't get do-overs.  And when you lose a partner, for any reason, it is for keeps.
deplorable_1
  |     |   188 posts since 2020
Do you think it was EW like Kaight was talking about that red flagged you or the CU itself and their system? Also do you think 3 CD's/mo. is too many at one FI?
QED
  |     |   122 posts since 2013
Hello, D1. No, it was not EW in that instance. It was the CU itself. I was doing, at times on and off, one CD every business day. That was stupid and I should have known better. Genuine one month CDs you can purchase with a CC are remarkable and unusual. I got carried away. Gold mines do that to people who lack self restraint. Live and learn. And it was not just the CD purchases. I also obviously had a great many instances of needing service when the certificates matured, which was happening with great frequency.

Three per week? I can only offer an opinion. I really don't know. At a larger financial institution it might go unnoticed. At a smaller financial institution . . well . . who knows.

In general, the more cards you are operating and the more partners you have, the better. Spreading this stuff out is a good thing. Doing so is smart. That is my view.

I have lost two cards so far. It was my fault. I was stupid and over concentrated large charges to those cards. Everything was great for rather a long time; until it wasn't. The closures came like a bolt of lightning out of the blue. It was a dopeslap. When you're making a lot of money, and nothing is going wrong, you can become overly confident.
Infinityy
  |     |   13 posts since 2020
How exactly did the credit union shut you down? Did they simply refuse to allow you to open any new certificates?
QED
  |     |   122 posts since 2013
Exactly. A VP, I think it was a VP or else it was a member of their management team, spoke with me. And that was it.

Of course I was still permitted to open new certificates in the conventional manner, with cash or cash equivalent. No profit there, though. So I was done.


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