Taking Advantage of Rewards Programs

In late May and during this month of June I have made some changes in my life that will generate some additional income and savings for the DFG family.  It all started when another frugal minded person mentioned in their blog about different investment platforms that were low cost.  After reading the article and doing some research the winner was Bank of America Preferred Awards.

The move is not easy and involves lots of account setup and transfers of funds from my old banks.  As I write this in July I still have not transitioned all of my bill payments over so my old checking lingers.

The only thing left behind were my kids savings and investment accounts.  That will be another project to undertake when the snow flies this winter.  All in all I was able to transfer over enough funds to make the Platinum level.  The catch is the funds have to be with BoA/Merrill for 3 months before you can sign up for the rewards program.  For me that will land in August.

Banking Advantages

First I opened up an interest checking account.  As long as you have combined more that 10k between all your accounts the minimum balance and fees is waived.  So now I get paid interest in my checking!  Sure interest rates are super low right now but I will take it over my no interest checking in my old account.  If you need checks they are completely free (even shipping.)  There is also no-fee ATM transactions at non BoA ATM's.  Up to 12/year for my tier.  Luckily there is a BoA ATM near me as 12 won't go very far.

Second I opened a rewards money market savings account.  I will use this as my new savings account.    Right now the APY is 0.03%.  Once my reward tier kicks in in August it will jump to 0.05%.  I will say this, Capital One 360 (my old savings) did beat this.  Right now if you have under 10k it is 0.60% APY and over 10k you get a whopping 1.00% APY.  My kids savings accounts at 360 get a generous 0.75% APY regardless of the balance.  I checked some other banks and they are similar to BoA.  I am not sure how Capital One does it.  I mainly transferred this just to keep my accounts in one place to simplify my life. 
If you are going to have a credit card ensure you can pay off the balance each month to avoid any interest charges.  If you can do that then sign up for one that gives you rewards.  They have their rewards credit card.  Just for opening it up and making some purchases they kindly deposited $100 into my savings account.  The other benefit is the bonus program.  It is fairly typical of others.  1% at most places, 2% for groceries or wholesale clubs, and 3% for gas.  Right now I also get a 10% bonus because I deposit it into my savings account.  Once my rewards kick in the bonus will be 50%.  For example if I earned $10 in rewards they would deposit $11 into my savings.  Then in August when I move up rewards tiers that $10 will turn into $15.  Not bad (just remember to pay off your balance every month!) In June I earned $40.22 in rewards.  That is way better than any APY from a savings account.

Investment Advantages

The bulk of my assets came from moving my IRA over to Merrill Edge.  This is what got me to the Platinum level and it is the main reason for the move.  Some stocks I moved 'in kind' over.  Some I sold to take advantage of the great bull market we have been experiencing and then moved the cash.

There are fees associated with the move so always make sure the gains outweigh them.  For me the fees were a fraction of a percentage compared to the gains received by selling some stocks as part of the move.  Even with the loss of dividend income for a few months that fraction bumped up a little but I still came out thousands of dollars ahead.

OK so why the big move.  First, there is a bonus for moving your IRA.  Sometime in August when I can get into the rewards program I should also receive the transfer bonus of  $150.  Second, and also the biggest reason is the FREE trades.  In the beginning they give you 90 free trades for the first month.  That allowed me to get back into dividend growth stocks when the Brexit dip happened. In August I will then be eligible for 30 free trades a month.

I always struggled with monthly purchases because I was unable to save up enough to justify the $7 fee associated with a buy.  Now with 30 free trades a month I can purchase any number of stocks for any price and dollar cost average my way into more dividend income.  This will saving me hundreds of dollars a year in fees.

Am I Happy With the Decision?

Being able to buy a stock or two with a few hundred dollars every week or two is worth it to me.  Just contributing to my snowball machine when I have some savings will keep me energized and willing to save and invest even more money.

I encourage all savers and investors out there to take advantage of the system and find a way to reduce your investment costs and boost any rewards from them.  They offer them to lure in those who don't pay off their credit cards or fall under minimum balances to  rack up fees.  Living well below your income level and staying on top of your finances will lead to additional income from these companies.  That gets me excited.  FREE money!

What are your thoughts on this move?  What is your experience with BoA and Merrill Edge?  Anything I need to watch out for?


I am not associated with Bank of America (just a customer now!)


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This webpage is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any security. If you have any questions please feel free to contact me at dividendfamilyguy at gmail dot com.