In the before times, I loved getting multiple Alaska cards each time a heightened offer came out. Now that (a) BofA’s payment options aren’t what they used to be, and (b) the Alaska and Hawaiian merger completed so you can transfer Membership Rewards → Hawaiian → Alaska, this card is mid at best; especially when Membership Rewards card bonuses approach a half-million points with a little 15x fun.
If you time everything perfectly, that means that you only need funds in the present for 31 days, which is an effective APR of 43%. Last I checked, 43% was slightly better than, let’s say Chase, was paying on checking accounts too. Having this account will help with US Bank business credit card approvals, like the $750 Business Leverage or $750 Triple Cash rewards cards. (Thanks to DDG)
The American Express Delta SkyMiles personal cards have increased sign-up bonus for direct links and referrals, but the increased bonuses require the American Express random number generator to work in your favor. The offers:
– Gold: 80,000 miles after $2,000 spend in six months, annual fee waived first year – Platinum: 90,000 miles after $3,000 spend in six months – Reserve: 100,000 miles after $5,000 spend in six months
If you don’t see the heightened offer, try switching browsers, using incognito mode, or poking an Ed Bastion voodoo doll.
Have a nice weekend, and watch for a guest post tomorrow!
Q: Why does the Ed Bastion voodoo doll have a cape? A: AmEx works better that way.
EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to Graham, the author of the TC Tailwind Blog, who candidly shares his story on the dark side of credit card churning for writing this post. I’ll see you on January 1!
tl;dr: If you have multiple players with different tax situations, being smart about who earns taxable referral or bank account bonuses could more than double your post-tax earnings. Or it could make no difference at all. Calculate the difference it would make for you, by punching in a fake 1099 to last year’s TurboTax file.
In investing, Asset Location is the concept of putting assets with poor tax treatment into tax advantaged accounts (eg. holding bonds in your 401k to avoid paying annual taxes on the dividends). In the churning world, those of us with multiple players can practice a similar concept, by locating our taxable earnings with the player with the most favourable tax situation.
How much of a difference can this location strategy make? Let’s run a few scenarios. In each scenario, we’ll assume that:
It is equally convenient in our churning plans for P1 or P2 to receive the bonus.
There are no special tax situations, such as ample capital losses that one player or the other could use to balance out their earnings.
Here are a few scenarios:
The Best:
P1 is a very high earner in California and would be subject to a 37% Federal, 3.8% NIIT, and 12.3% State tax on the bonus, for a total of 53.1%.
P2 has no income, can take the standard deduction, and will be subject to no state or federal tax.
Results: P1 would pay $477.90 in taxes, keeping only $422.10 of the bonus. P2 would pay $0 in taxes, and keep the full bonus. Earning the bonus with the right player would more than double your earnings from $422.10 to $900.
The OK:
P1 and P2 live in Florida, and would be subject to only a 24% and 12% Federal tax respectively on the bonus.
Results: P1 would pay $216 in taxes, keeping $684 of the bonus. P1 would pay $108 in taxes, keeping $792 of the bonus. Earning the bonus with the right player would moderately increase your bonus earnings by $108 from $684 to $792.
The Wash:
P1 and P2 are married and file their taxes jointly, meaning they share a tax rate.
Results: It doesn’t matter who gets the bonus, it will increase their joint taxes.
Does taxable bonus location matter to you? Taxes are complicated, so it’s hard to know for sure. You might be able to eyeball the impact by looking at the above scenarios and seeing which looks closest to your situation. For an even more exact estimate, boot up last year’s TurboTax (or other tax software of your choice). Try punching in a fake 1099-INT with $900 in Box 1, for P1 and then for P2. That will tell you how much more each player would have paid in taxes last year, if they’d gotten this Chase bonus.
P.S. If you’re interested in more nitty-gritty financial optimization content like this, check out my blog. There’s a subscribe box at the bottom of every page, if you’re interested in seeing new content as it comes out. And if you think I’ve missed something, gotten something wrong, or should write future posts on a particular topic, please drop me a line.
– Graham
SideShowBob face-planing while howling in the distance.
I’m not saying banks colluded to drop a bunch of card linked and spend offers on the same day, but banks colluded to drop a bunch of card linked and spend offers on the same day:
The Citi Shop Your Way Rewards Mastercard, a phoenix that rose from the ashes of Sears, sent new mid-month spending offers for cumulative online spend:
– 250,000 Shop Your Way Rewards points after $1,000+ – 200,000 Shop Your Way Rewards points after $750+ – $70 statement credit after $1,000+ – $50 statement credit after $750+ – $30 statement credit after $500+
If your utility takes online payments, these will stack with those offers too. (Thanks to Ben, MS Ninja, Adam W, Jen T)
– $150 off of $750 or more booked with Carnival Cruises – $150 off of $700 or more at Hawaiian Hyatt Hotels – $200 off of $1,000 or more at Fontainebleau Las Vegas
Mahalo AmEx, and also stay classy. (Thanks to Shredder05)
The effective APR of this deal is 13.3% in the best case or 10.0% in the worst case, but the real reason to do this is for opening up Bank of America credit card approvals. (Thanks to DDG)
Chase’s Q4 Pay Yourself Back 25% bonus categories are: utilities, insurance, fitness clubs and gyms, gas stations, and annual fees. Bonuses are all only the Sapphire Reserve this quarter too. “Select Charities” remains at its 50% bonus value. So long high volume gold cash-out, but hello octopus insurance cash-out!
– $300 travel credit resets in December as usual for use past your December statement – Remainder of unused December credit becomes a statement credit on December 31 – $300 travel credit for January 2025 – [your anniversary date] – $300 travel credit for [your anniversary date 2025] – [your anniversary date 2026]
I think this means a bonus $300 travel credit in 2025.
Chase’s has a few targeted promotions for booking through the travel portal:
– 10,000 bonus Ultimate Rewards after booking a hotel stay of $400+ by January 31 (via email) – $100 back on $500 in spend by October 31 (via Chase Offers)
These will stack, and these are (probably) both gameable. (Thanks to FM)
Pay yourself back hiccups when buying Octopus insurance.
Do this now: Activate Q4’s quarterly rotating credit card categories:
– Chase Freedom: PayPal, McDonalds, pet shops, vets, and some charities – Discover IT: Amazon and Target – Citi Dividend: Currently the page errors out, cause #CitiGonnaCiti, but in theory it’s restaurants and Citi travel – US Bank Cash+: I choose utilities and electronics stores
For gaming these in the absence of organic use: PayPal P2P works well, Amazon and Target both sell gift cards, utilities usually allow overpayments, and electronics stores like BestBuy sell gift cards. Amazon, Target, and electronics stores are also typically good targets for buying group activity.
The Citi Shop Your Way Rewards card, run by a team who seems to think that they’re a venture capitalist funding a FinTech that will make money “really soon now”™, sent mid-month offers for online spend. We’ve seen:
– $30 statement credit after $500 spend – $50 statement credit after $750 spend – $75 statement credit after $1,000 spend – 200,000 Shop Your Way Rewards after $750 spend – 250,000 Shop Your Way Rewards after $1,000 spend
– Leading Hotels of the World Leaders Club: 25% transfer bonus – Avianca LifeMiles: 25% transfer bonus
Both are solid choices, and if you’ve never looked into Leaders Club redemptions, it’s probably worth your time to do it. (Thanks to yt-nthr-rddtr and Oofzies)
The Chase Avios co-braneded cards have increased sign-up bonuses for 100,000 Avios after $7,500 spend in six months. You can choose between British Airways, Iberia, or Aer Lingus cards, and once you have Avios you can transfer them between programs. The $95 annual fee is not waived the first year. Note that smaller benefits, like economy companion certificates or flight statement credits after lots of spend aren’t the same on all three cards.
Yes, it’s possible to collect all three, but maybe grab some Inks with a referral instead and transfer into Avios programs if you really need them?
Side note: I can’t decide if this deal is above the line or below the line for this site. $15 is below, but n*$15 may not be, so I’m choosing metaphorical violence today I guess. #sorrynotsorry
As usual, the least sus way to game these is to buy gift cards at the front desk. What’s the most sus way? Look, I’m not choosing that much violent. (Thanks to DDG)
– $300 with a $5,000 deposit – $800 with a $30,000 deposit
If you deposit the money on day 29 and withdraw on day 61, then you’ve only got the money tied up for 32 days and are still eligible for the bonus. You can’t have had an existing US Bank Business checking account in the last 12 months.
I got “book and take a trip in a premium seat 1 time to get 5,000 bonus award miles” through September 13. Sounds great at first, but the fare must be $500 so it’s not that great.
You’ve heard of Bilt, right? They are to credit cards what Marriott Bonvoy is to Loyalty Programs; sure there’s value to be had, but you have to wade through plenty of sludge and grime to find it. A few choice examples:
Well, they’ve found another way to #bonvoy their early adopters and presumably biggest fans: At the end of the year, they’re closing cards opened in 2021 and early 2022 issued under Evolve Bank, which, side note, leaked customers’ private data for funzies. Don’t worry though, they say if you apply by the end of August they’ll give you 10,000 bonus points, so it’s all cool right? No, not right. At least you can lock all of your credit reports, apply and get denied, and still earn 10,000 points. (Thanks to pizza42bob)
I think there’s a niche for this card, specifically if you don’t spend many nights in Marriott Hotels but occasionally need them when nothing else is available. I fit this bill, but very much nothingelse has to be available.
Chime has a $301 or $318 portal sign-up bonus for new customers that apply through the end of the month and have two direct deposits (or “direct deposits”) of $200+ in 30 days. (Thanks to FM)
Have a nice weekend friends!
Better alternative to Marriott Courtyard: No $39 parking fee and no $59 resort fee on free night stays.
