(Guest Post by Joe Taxpayer)
Ever watch movies that have those great car chase scenes? The Fast and Furious series for instance? At the very end of the movie, we see a disclaimer something to the effect of “the stunts were performed by professionals on closed roads, don’t try this at home.” As a financial blogger, I have to preface today’s post in the same manner: Attempt these things at your own risk!
Earlier in the year, I received an offer in the mail by my local bank (where I had my mortgage and checking accounts), offering a cash back credit card with no annual fee. The thing that caught my eye right away was:
Get 10% back on all gas, grocery and drug store purchases for the first 90 days.
Not too bad. My wife and I already spend about $400 each on gas every month, and about $200 on groceries each week too. So after our normal spending of $1600 there alone, multiplied by 3 months, we’d be looking at a cash reward already of $480. But is it worth the trouble?
Then, I saw the rack. You know, the rack of gift cards for everything from iTunes to Home Depot to Target, etc? And there they were – Visa Gift cards. You can load them with up to $500 max, and then pay a fee of $4.95 to activate them. I wasn’t sure at first if these would generate a rebate, so I took a chance, bought two of them, and then went home to read the fine print. No exclusions! And two days later I saw a credit of $101 hit my account.
Over the next few weeks I learned the following things:
- CVS will request ID when making large purchases of gift cards like these.
- While the credit card companies (Mastercard and Visa) have rules that prohibit making ID a condition of purchase, I decided to not be a jerk and cause an issue every time I bought one.
- I also learned that some card issuers will freeze your account if the purchases look suspicious. Buying $4,000 worth of these cards in one day went over the line.
- Last, I learned that I must have been the first person to think of this, as two weeks into my shopping spree I noticed the deal wasn’t available anymore to any new customers.
The punchline is that I bought $50,000 worth of these cards. Including some Amex gift cards, as Costco doesn’t take Visa. I bought 100 of them at $500 each, racking up a total rebate of $5,050 and netting me a total profit of $4,550 (after taking into account all those $5.00 activation fees).
What have we been doing with them all? Methodically using them for all our regular expenses, as well as reimbursable business expenses. When I consider all the deals that people chase – the coupon cutting, the mailing in rebates, the Groupon purchases – I think this deal was one I couldn’t walk away from. $4,550 is close to the median monthly family wage. A month’s wage for a stop at the drug store on my way home every 2 or 3 days…
Could anything have gone wrong? I suppose. If any of the cards I paid for didn’t load properly, I’d have to spend the time and effort to make a claim to the issuer which would have been tougher than for a regular credit card. It’s also taking a bit of effort to track the spending and balance remaining on all of the cards too. Turns out, though, that supermarkets are pretty good about accepting partial payments off a gift card and letting you use up the small balances that might remain.
Will I get rich by deals like these, or with other zero interest credit card offers? No, not likely. But I’ll also not get rich walking by hundred dollar bills left on the ground waiting to be picked up either :)
Joe is a personal financial blogger, and when he’s not chasing crazy deals, he writes at www.joetaxpayer.com.
EDITOR’S NOTE: I asked Joe if having all these gift cards now made him spend money faster since it doesn’t seem “real” anymore, and he actually told me he’s spending LESS! So there’s even more savings that’s not calculated into the overall numbers yet… Pretty interesting (and bold) stuff!
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