When I pay my Verizon bill with a Citibank debit card, it recognizes it as such and changes it to an ATM purchase, but gives you the option to change it back to a debit purchase before you submit.
When I enter a SBoT, FABaT or M/A-Com debit card, it does not recognize it as such, and completes the tranasction as a credit purchase, without trying to change it to an ATM transaction.
I have two bills, a Sprint phone bill and Time Warner cable bill, that both allow me to enter a credit card as form of payment. The Sprint bill lists as "credit/debit" so I don't know which method they will use, but the TimeWarner bill allows me to choose either credit OR debit.
Has anyone split their bills to 10 different payments and had no problems with meeting the required monthly transactions?
alphaivt said: I have two bills, a Sprint phone bill and Time Warner cable bill, that both allow me to enter a credit card as form of payment. The Sprint bill lists as "credit/debit" so I don't know which method they will use, but the TimeWarner bill allows me to choose either credit OR debit.
Has anyone split their bills to 10 different payments and had no problems with meeting the required monthly transactions? I can't answer your first question about Sprint. When I pay my Sprint long-distance bill online, I don't see any mention of "credit/debit", just credit. Why not make a small payment, and see how it looks on your bank's on-line banking? You can always call the bank's help line if you need help interpreting the description of the transaction.
Lots of people, including me, have split a single bill into multiple smaller payments. As long as you authorize each payment as its own transaction, each one should count as a separate payment.
I suggest you read the contents of this thread, starting with the Quick Summary. Also look at the Reward Checking Account Available to All thread. These two threads will answer most of your questions.
As has been discussed in the Arizona B&T Rewards Checking 6.01% APY guaranteed until April 2009 thread, Arizona Bank & Trust is offering a Reward Checking account, Cash Rewards Checking, with the above terms. The cap is 20K. Originally, this account was restricted to Arizona residents, then they made it available to all, with no limit on the number of Reward Checking accounts one could have. On 5/20, AB&T reduced the maximum number of Reward Checking accounts to two per household, and again restricted the accounts to Arizona residents only.
I wonder if this is the start of a new trend and/or some marketing twist that BancVue (who developed the Reward Checking account product and sells it to banks and credit unions) came up with. Since the Arizona Bank & Trust available to all, unlimited number of accounts offering only lasted a few days after a new thread was started on FWF discussing it, I'm not surprised that Dubuque Bank & Trust is limited the availability of their account.
Dubuque Bank & Trust — Cash Rewards Checking Application Thank you, , for submitting your application via our secure website interface. A Dubuque Bank & Trust representitive will contact you about your application.
If asked, your application was for: Cash Rewards Checking Your application invoice number is: 000649
zoop76, I hope they don't do a hard credit inquiry. I probably would have simply called the bank and asked about the availability of the account and, if it were available to me, whether they do a hard inquiry. Best of luck, though.
Edit: No hard inquiry, you have to live within a 25-mile radius of one of their branches, and you must visit a branch to complete the account opening process.
Here's a Bank Deals post about Banks Reducing Nationwide Availability of Reward Checking Accounts and Discouraging Small Debit Card Purchases. A very interesting read, speculating on why Arizona Bank & Trust and Citizens Bank Minnesota have changed their available-to-all Reward Checking accounts to local-only accounts. In addition, a Citizens Bank Minnesota rep reportedly told an account holder that they may close existing accounts for what they consider abuses such as many small debit card charges or 9-cent online payments.
I had an interesting conversation with someone at Citizens Bank Minnesota, regarding their closing certain Reward Checking accounts, and changing their nationally available policy to allowing in-state accounts only. This was just a casual conversation, so I wouldn't necessaarily interpret it as an official statement from Citizens Bank Minnesota, and I can only speculate as to whether other Reward Checking accounts, particularly those that are nationally available, will start following this path.
In a nutshell, here's what I learned. The "bank" refers to Citizens Bank Minnesota, as discussed from this person's viewpoint.
* The bank intends their Reward Checking account to be used as a checking account, not as a savings account.
* Keeping a balance close to 25K (their cap for the high interest rate), using their debit card to run multiple small debit card transactions through on the same day, with little or no other activity on the debit card constitutes using their Reward Checking account as a savings account.
* Meeting the ACH Debit/Direct Deposit requirement by transferring amounts between an investment account and Citizens Bank Minnesota, as opposed to peforming a true direct deposit from payroll or paying a bill from a payee's web site, also sends red flags to them about using their Rewards Checking account inappropriately. Apparently, they can distinguish between these different types of ACH transactions based on transaction code.
* Using your account in this manner, particularly with out-of-state customers, will possibly result in Citizens Bank Minnesota closing your account, which they have the right to do at any time, per their disclosures. I gather, but can't say for sure, that a local account holder is likely to be talked with, and possibly not have their account closed, if they start using it as a checking account. There's also the possibility that the local account holder might add more profitable products from the bank.
* As mentioned above, Citizens Bank Minnesota is taking a loss on these accounts, at least when they are used as savings accounts with the above-described behaviors by account holders. What makes the account more profitable (or at least less costly) to them, is using your debit card instead of writing checks, and of course, getting e-statements. Using their Bill Pay system saves the cost of processing paper checks, but it's still a net loss to the bank, because they pay a fee to the bill pay software vendor.
* If the bank closes your account just because you had numerous small debit card transactions, no negative information is reported to ChexSystems, unless you've done something else to warrant that negative information, such as bouncing checks or fraudulent activity.
So the big question -- finally -- is: Will other Reward Checking accounts, especially those available to all, start taking similar measures to Citizens Bank Minnesota's? My own opinion: Given the 2% Federal Funds Rate, and the resulting low deposit APYs, I think similar measures are likely. If the Federal Funds Rate were back to around 5%, then I think such actions would be much less likely.
People like scott1961, who have long warned against making lots of small transactions to meet debit card usage requirements for Reward Checking accounts, might eventually be correct about this. My take on the situation is that everyone -- FDIC-insured deposit account holders that rely on interest income, and banks and credit unions that are both trying to attract new business and be profitable -- is having a hard time dealing with the current interest rate environment. Even if interest rates creep up, we've a long ways to go before we see a situation where financial institutions and their customers are relatively satisfied with interest rates related to deposit accounts.
According to a recent interview with Fed Chairman, Ben S. Bernanke, rates are not likely to rise anytime soon.
Disclosures give banks the option to close rewards checking accounts at anytime without just cause. That being said, I think it may be wise to heed the advice given here (in this thread) or run the risk of having a relatively high liquid interest bearing account closed on you.
I think we all have to be careful of trying to "take more gold then we can carry". I understand we want to minimize the rewards checking transaction amount so we can use a rewards credit card for purchases and get Cash Back or miles among other things. In the end though, and I believe someone on the rewards checking thread calculated, we are not loosing much by paying with our bank credit card vs. say our Discover Card.
I am sure no one wants to be responsible for the demise of these rewards accounts. I think if we knew the monthly transaction amount that would keep the rewards checking accounts reasonably profitable, we would better be posed to make these accounts more of a long term partnership rather then a one way deal.
I ran a calculation to see just how much money in monthly transactions the rewards checking bank would need to pay the full interest payment (assuming they only make money on transactions (they don’t)). On a $20,000 limit account at 6.01%, the result is $3580/month. If you divide it by (10), that’s (10) $358 transactions per month. This pays for the full 6.01%. If we assumed the bank needs only half of this to be more like a 3% non rewards checking bank, then the amount is 10 $179 dollar transactions. It seems like a lot but remember this is just an attempt to dial in where our transaction amounts need to be. I think these calculation results are a lot higher then what is actually needed for transactions because these banks are making (and saving) money in other ways.
Note: The calculations above were made assuming when you buy something with the credit card, the place you buy it from pays Visa 3.5% and the rewards bank keeps %80 of that 3.5%. These assumptions came from this Web Page
In summary, I think it would be helpful if we knew all the sources of income the rewards bank have. At that point we could better estimate where our transactions amounts need to be. I think we all know more is better for the bank but we need to find that happy medium.
Any other ideas on where and how much the rewards banks make/save from rewards accounts would be helpful to find the happy medium.
If a bank has your money on deposit, I believe it can loan out about 93% of it. It probably depends on the type of deposit (cd, savings, checking). Surely they have some people they're charging prime +1 or 2. So we're not that costly to them, but they can certainly review our accounts and see that we're not very profitable.
Many years ago banks made almost all their money from interest. Last year my local rag (notorious for inaccuracy) said bank fees now account for 50% of income! So responsible people like us still look bad to them.
Also, keep in mind reward checking is profitable to the banks and CUs based on how many people don't use them. Some people are using these accounts as their regular checking account and not completing the 10 debit transactions to earn the interest. So in a sense, these people are subsidizing us, but it depends on what the breakdown of deposits earning interest vs not earning interest is.
I'm not sure how these reward checking accounts are any different than 0% teaser rates on credit cards. Play your cards right (no pun intended), and you make profits at the expense of the bank. They're hoping you screw up and/or take on other bank-favorable products. On the whole, these accounts must be good for the bank. Otherwise, why would they do them? The question is this: To what extent will they monitor and act against the unprofitable few?
Seems like market forces are working here and will eventually render this discussion moot. The banks with the most customer-friendly reward checking terms (e.g., high max balances and interest rates) have begun lowering rates to the 4-4.5% range of the best "normal" savings accounts. (Think Toledo, First Arkansas, Air Academy, etc.) I personally am disinclined to chase any more reward checking accounts. Too much of a PITA for a month or 2 of 6% returns on $25K.
I agree with the observations that we need to place Reward Checking accounts, and whether they are good or bad for financial institutions, in context. If the FI is eager to increase deposits in order to have funds available for lending, then that might offset some of the costs of Reward Checking accounts. But in a lower-rate environment, the difference in interest between what FIs are paying their Reward Checking depositors and what FI's are receiving from their borrowers is obviously less.
From the perspective of someone with multiple Reward Checking accounts, I simply can't use all of them as regular checking accounts, and thus small debit card transactions are necessary in order to meet the requirements of all of my Reward Checking accounts. That means paying my phone bills, satellite TV bills, and other applicable bills in small increments ($1 or more), making automatic $1 or $2 monthly donations to charity, etc.
If people who have small Reward Checking account balances, have high dollar amount monthly debit card transaction amounts, or simply don't meet the requirements to get the high rate end up making Reward Checking accounts viable, then I'm grateful to them. Unless Reward Checking accounts are more profitable to me than other FDIC-insured liquid deposit accounts that require little or no effort on my part, then there's no point to my having Reward Checking accounts.
Some banks who offer reward checking simply lower their interest rate when their overall profit diminishes; i.e., instead of closing accounts with small debit transactions. The lower reward checking rate, say 4%, is pretty close to the higher tier of typical savings accounts without debit transaction requirements.
lhendricks92, I understand and somewhat agree with what you're saying regarding being disinclined to chase after any more Reward Checking accounts, because it seems likely that their rates will decline in a very short time frame. That might indeed be the correct decision for now. I'll mention why I've continued to chase them, up until now.
1. I haven't seen any adverse action on my accounts yet, and unless what Citizens Bank Minnesota did with closing accounts because of small debit card transactions becomes a trend, I won't worry about that until it happens.
2. I'm glad I chased after Arizona Bank & Trust. The guaranteed 6.01% APY until April 2009 is a relief. Unless they start doing the adverse action thing. I wish I could get an account at Dubuque Bank & Trust, which guarantees their 6.01% rate through January 2010.
3. As you stated, market forces are at work here. Although non-Reward Checking rates can be found in the 4% area, I believe the number of accounts offering that kind of rate is steadily decreasing. Unless the Federal Funds Rate starts rising, or some other factor comes into play that will cause FDIC-insured deposit account rates to rise, I suspect eventually even 4.0% APY Reward Checking account rates will look good. For example, AARP, although still at the 4% area, has had rate decreases in a relatively short period of time after their rates became publicized and people starting flocking to their savings products.
But for now, I agree that the lower Reward Checking account rates are too close to the higher high-yield savings account rates. As I said -- I could be wrong of course -- I think we will see an increasing gap between the two. My guess is that the stabilizing point (although I think nothing is particularly stable these days) of Reward Checking accounts is higher than for other types of accounts.
4. Just as with 0% credit cards, there's a bit of a game going on here. I admit that I enjoy finding places to park my liquid funds that have much higher interest rates than average. And if some of those liquid funds come from 0% BTs, that gives me even more motivation to find the highest rate, even for the very short term.
5. By keeping small amounts in my various Reward Checking accounts that aren't looking so good right now and not bothering trying to meet their requirements, I feel I'm positioned to take advantage of those accounts, should their rates start to look good again.
I don't know if I'll chase any more of these accounts for the moment, unless a really spectacular deal appears. Of course, that's what I said about a month ago.
Regarding the dedicated thread that was started about MidWest America Federal Credit Union's 7.01% APY Reward Checking account that turns out to be open to all:
Unfortunately, every thread I've seen dedicated to a Rewards Checking account with one major exception I can think of, Charter Bank, has seen the lifespan of that account end within seemingly weeks or less of starting that dedicated thread.
I started the First Arkansas Bank and Trust (FABaT) thread with its great 6.06% uncapped rate on 12/31/07; the rate plummeted to 4.44% a little over a month later, and a cap of 70K was added. Actually, FABaT doesn't look so bad anymore.
Likewise the Air Academy Federal Credit Union (AAFCU) thread that I started on 5/2/08; on 5/8/08, AAFCU announced effective 6/1 that the 6.01% APY would decrease to 4.50% APY, at least it still has the 50K cap. But they recently restricted the number of MAAXIMUM checking accounts to one per primary SSN.
mh83 started the Arizona Bank and Trust thread on 5/16/08. It was open to all with a guarantee of the 6.01% APY (capped at 20K) through 3/31/09, no limit on the number of accounts. On 5/20/08, a branch visit was required, and they limited the number of accounts to two per household right around that time.
I'll spare you all further examples.
To be sure, more than the FatWallet/Bank Deals effect is at work. The Federal Funds Rate has plummeted.
Date Change Rate
-------- ------ ----
2008
Apr 30 -.25 2.00
Mar 18 -.75 2.25
Jan 30 -.50 3.00
Jan 22 -.75 3.50
2007
Dec 11 -.25 4.25
Oct 31 -.25 4.50
Sep 18 -.50 4.75
2006
Jun 29 +.25 5.25
So my best guess is that at most the FatWallet effect delays the inevitable. Also, there are questions as to how profitable Reward Checking accounts are, especially when people keep large balances in order to maximize their interest earnings, and keep withdrawals to a bare minimum. There might be ways for banks to make money from these accounts by attracting additional business to more profitable products, but it's an open question as to how effective that really is. You can only save so much money with e-statements and the like.
My prediction is that the MidWest America Federal Credit Union 7.01% APY will inevitably fall, regardless of the FW effect and regardless of whether the CU becomes no longer available to all. IMO however, the FW effect will hasten this process.
Discussion of whether the FWF community should try to mitigate the FW effect by not starting dedicated threads to fragile deals raises many issues, such as the conflict between communicating the best deal to the FWF community, while trying to keep that deal going as long as possible so that the maximum number of people can benefit from it. It would take a far wiser person than I to figure out the balance between these two goals, and perhaps the discussion of this deserves its own thread.
I concur with all of your points with one exception. I believe the FW effect directly affects the fall of the rewards checking APY. You cite many examples here. I was advised by an AAFCU rep that one of the deciding factors to lower their rate down to 4.50 was based upon the major influx of new accounts AND that the majority of those new customers were satisfying only the minimum requirements with minimal charges to their account. Apparently banks and credit unions receive a transaction fee that is tiered on a percentage amount of the charge.
I, for one, am disappointed to learn that a new thread was started about MidWest.
glxpass said: Regarding the dedicated thread that was started about MidWest America Federal Credit Union's 7.01% APY Reward Checking account that turns out to be open to all:
Unfortunately, every thread I've seen dedicated to a Rewards Checking account with one major exception I can think of, Charter Bank, has seen the lifespan of that account end within seemingly weeks or less of starting that dedicated thread.
I started the First Arkansas Bank and Trust (FABaT) thread with its great 6.06% uncapped rate on 12/31/07; the rate plummeted to 4.44% a little over a month later, and a cap of 70K was added. Actually, FABaT doesn't look so bad anymore.
Likewise the Air Academy Federal Credit Union (AAFCU) thread that I started on 5/2/08; on 5/8/08, AAFCU announced effective 6/1 that the 6.01% APY would decrease to 4.50% APY, at least it still has the 50K cap. But they recently restricted the number of MAAXIMUM checking accounts to one per primary SSN.
mh83 started the Arizona Bank and Trust thread on 5/16/08. It was open to all with a guarantee of the 6.01% APY (capped at 20K) through 3/31/09, no limit on the number of accounts. On 5/20/08, a branch visit was required, and they limited the number of accounts to two per household right around that time.
I'll spare you all further examples.
To be sure, more than the FatWallet/Bank Deals effect is at work. The Federal Funds rate has plummeted.
Date Change Rate
-------- ------ ----
2008
Apr 30 -.25 2.00
Mar 18 -.75 2.25
Jan 30 -.50 3.00
Jan 22 -.75 3.50
2007
Dec 11 -.25 4.25
Oct 31 -.25 4.50
Sep 18 -.50 4.75
2006
Jun 29 +.25 5.25
So my best guess is that at most the FatWallet effect delays the inevitable. Also, there are questions as to how profitable Reward Checking accounts are, especially when people keep large balances in order to maximize their interest earnings, and keep withdrawals to a bare minimum. There might be ways for banks to make money from these accounts by attracting additional business to more profitable products, but it's an open question as to how effective that really is. You can only save so much money with e-statements and the like.
My prediction is that the MidWest America Federal Credit Union 7.01% APY will inevitably fall, regardless of the FW effect and regardless of whether the CU becomes no longer available to all. IMO however, the FW effect will hasten this process.
Discussion of whether the FWF community should try to mitigate the FW effect by not starting dedicated threads to fragile deals raises many issues, such as the conflict between communicating the best deal to the FWF community, while trying to keep that deal going as long as possible so that the maximum number of people can benefit from it. It would take a far wiser person than me to figure out the balance between these two goals, and perhaps the discussion of this deserves its own thread.
mm04 said: I concur with all of your points with one exception. I believe the FW effect directly affects the fall of the rewards checking APY. You cite many examples here. I was advised by an AAFCU rep that one of the deciding factors to lower their rate down to 4.50 was based upon the major influx of new accounts AND that the majority of those new customers were satisfying only the minimum requirements with minimal charges to their account. Apparently banks and credit unions receive a transaction fee that is tiered on a percentage amount of the charge.
I, for one, am disappointed to learn that a new thread was started about MidWest. Thanks for sharing that information; it makes perfect sense. Taking it literally, it was "one" of the deciding factors. When I've asked AAFCU CSRs about the rate drop, I was told that the 6.01% had been around for a long time, despite drops in the Federal Funds Rate, and they felt that they had to finally adjust somewhat for it, while still having a competitive rate. I think it's fair to see that the factors you mentioned combined with the huge gap between their rate and the Federal Funds Rate made the drop happen.
So the question is: if there had been no FW effect (major influx of accounta and miminal spending), would AAFCU have dropped their rate anyway? I suppose if the MAX checking account were making enough money to compensate somewhat for the difference between the Federal Funds Rate and the AAFCU rate, the answer would be "No, AAFCU wouldn't have dropped their rate." In this rate environment, the increased spending you describe would have been necessary to maintain the rate. The other way to look at it is that in a more favorable rate environment, AAFCU could have had the major influx of new accounts and the minimal spending on those accounts and still could have kept their rate high.
But I will concede that it was probably only *after* the Federal Funds Rate had dropped so precipitously that the major infux of new accounts to AAFCU occurred with the minimal spending. After all, people had lots of alternative financial institutions that offered high rates and no stringent caps or requirements to get rates that were lower than 6.01% APY, but in the lot 5% APY's. I even remember a brief time -- a couple of weeks? -- when BoA's Defenders of Wildlife Cash Maximizer was at 5.71% APY.
I'll just point out that we have too many people taking advantage of too few good rates, and the very act of taking advantage of those rates is making them disappear.
I can post that these post office transactions are coded and most of the time a rewards credit card will not pay on them...so maybe this is not a profitable transaction at all for the bank in a rewards checking account, even if they count it.
Indeed this would be a good way to use up 10 transactions if the bank does not care. I prefer for the bank to define what I must do, instead of judging me an unprofitable customer and closing my account without warning.
ES
flwsoldier said: Has anyone had success meeting the 10 point-of-sale requirement by buying stamps out of the new kiosks inside post offices? please post, if so.
Clearly if you want the good rates to last on *your* bank's reward checking account, you should not be racking up $1 purchases. Spending $150/month on debit instead of on a 1% CashBack credit card, you are only losing ~$18/year in CashBack. ($27 @1.5%. $36 @2%.) These rewards accounts get at least 2% APY above the best non-rewards accounts. With that extra 2%, you will earn back $20 on your first $1000. Balances beyond that are pure profit. You can afford to make some real purchases in order to keep these rates in effect.
How about we brainstorm some other small purchases that
So how about we brainstorm some other small purchases that you would really make every month? I have trouble getting above 10. I don't make too many purchases under $50.
Some thoughts... movie rentals (NetFlix subscription, Redbox.com, ...), audio books (Audible), movie tickets (at theater, at Fandango), purchasing or adding balances to gift cards (Walgreens, Costco, ...)
doublegammon said: So how about we brainstorm some other small purchases that you would really make every month? I have trouble getting above 10. I don't make too many purchases under $50.
Some thoughts... movie rentals (NetFlix subscription, Redbox.com, ...), audio books (Audible), movie tickets (at theater, at Fandango), purchasing or adding balances to gift cards (Walgreens, Costco, ...)
Has anyone tried any of those? Other ideas? Cat food. $4 generic prescription drugs. Fresh fruit (buy every few days so it doesn't rot). Milk. Bread (you do bring your lunch to work, don't you?). Stop at grocery store on your way to work Monday am and pick up 6-pack of soda or green tea or whatever (or beer, but that's to drink after work).
doublegammon said: Clearly if you want the good rates to last on *your* bank's reward checking account, you should not be racking up $1 purchases. Spending $150/month on debit instead of on a 1% CashBack credit card, you are only losing ~$18/year in CashBack. ($27 @1.5%. $36 @2%.) These rewards accounts get at least 2% APY above the best non-rewards accounts. With that extra 2%, you will earn back $20 on your first $1000. Balances beyond that are pure profit. You can afford to make some real purchases in order to keep these rates in effect.
How about we brainstorm some other small purchases that If you're correct that spending $150/month on debit card purchases each month will make the good rate last on your Reward Checking account, then why would the FI care where those purchases came from? For example, add up your phone bill, cable/satellite TV bill, water bill, garbage bill, etc. Is the total $150? If so, and the payees accept multiple credit card payments, you're set. Split the payments among your payees to give you the minimum required number of transactions, and you've met the requirements, without leaving your house.
I'd guess that most people could find $150 of bills each month that allow payment by credit card at the payees' web sites, and allow multiple payments. If not, then split the payments anyway to get the required number of transactions, and then make one or two transactions at the grocery store in order to bring the total up to $150.
IOW, I don't see why one would have to take a lot of time and trouble to make 10 or 12 in-person purchases a month in order to meet the transaction requirement of their Reward Checking account, unless that was a stated type of transaction you had to make, e.g. a PIN-based transaction. I believe those PIN-based transactions are less profitable to the FI than signature-based transactions, which is probably why many Reward Checking accounts specifically say that the transactions must be signature-based in order to meet the transaction requirement.
Who knows what is required for them to sustain these rates, but $1 purchases and partial payments are (1) clearly artificial compliance, (2) a red flag, (3) 10x the loss as $10 payments, (4) set up no useful, lasting relationship with the bank, (5) unreal / artificial spending data. Real payments give them real information about your purchases and a real relationship, which may have some value in aggregate to them at no cost to you. And real payments will be several times larger than the BS payments being suggested here.
Ten - 12 in-person purchases a month are only a problem if you have multiple multiple accounts. With only one or two rewards accounts, it's easy to buy groceries, pick up cat food, pay for lunch and other you-have-to-do-it-anyway type purchases. Then push in enough $$ to cover your purchases and fulfill the direct deposit requirement and you're all set.
I wouldn't think small purchases would be such trouble for most people either, but the discussion in this thread seems to be making a lot of trouble out of it: $1 gifts to charity, splitting up utility bill payments, making extra store visits for the sake of single item purchases... Such a hassle and stingy.
I don't want to resort to such stinginess, but I only make about 1 small POS purchase a week, mostly at small shops where I couldn't or wouldn't want to use a debit card. Most of my POS shopping is at a farmer's market or Costco. I do not make stops for single items, except for ice-cream.
Only in my dreams do my household bills total only $150. They are all above $50 each. Anyway, they are already automated. I would change them if I were guaranteed that rate for a good length of time. Otherwise too much hassle.
Other low-cost purchases?... photo printing, garden supplies, pizza. Thanks for the suggestions so far. Would love to think of something I could set up for weekly automatic payments.
glxpass said: I believe those PIN-based transactions are less profitable to the FI than signature-based transactions, which is probably why many Reward Checking accounts specifically say that the transactions must be signature-based in order to meet the transaction requirement.Definitely. Pin-based for me are a flat $0.30 while signature-based are $0.25 + a percentage ranging from 1.64% on a standard card up to 3.79% on a premium rewards card.
TyroneSchulace said: Definitely. Pin-based for me are a flat $0.30 while signature-based are $0.25 + a percentage ranging from 1.64% on a standard card up to 3.79% on a premium rewards card. Are you a merchant? They charge merchants more if the card is a rewards card?
doublegammon said: Are you a merchant? They charge merchants more if the card is a rewards card?Yeah, more on rewards cards, biz cards, corp fleet cards. I'm not at the front, so I don't see exactly the cards, but I've test-run a few. Last time I looked, there were at least 9 categories of V/MC, 3 AMX rates, and 1 or 2 Discover. But every debit card was the same. That's what makes me wonder about FAB&T.
It's quite a mess.Well, that explains it. My bank pays a percentage of the debit cards to FAB&T, even though I don't. Either my merchant servicer or my bank is losing money on debit transactions and making it back on the credit transactions.
doublegammon said: Who knows what is required for them to sustain these rates, but $1 purchases and partial payments are (1) clearly artificial compliance, (2) a red flag, (3) 10x the loss as $10 payments, (4) set up no useful, lasting relationship with the bank, (5) unreal / artificial spending data. Real payments give them real information about your purchases and a real relationship, which may have some value in aggregate to them at no cost to you. And real payments will be several times larger than the BS payments being suggested here. You can define your points however arbitrarily you like, but I see $150/month as just a guess on your part, unless you have some evidence to back it up with. 2% of $150 is a whole $3, not very much to offset all the interest the FI is paying you.
If you want to make a Reward Checking account a true checking account, then treat it like one. Otherwise, you're gaming the system, making "BS payments" just like those "stingy" people of which admittedly I'm one. You're simply hiding your BS payments under the guise of plausible purchases, and limiting the number of those purchases. If you want a real relationship with a FI, don't only treat the Reward Checking account as a true checking account, but also get other products from the FI in addition to the Reward Checking account.
It doesn't take much of a guess as to why Reward Checking rates have fallen, just like other deposit account rates. It's been said before: the Federal Funds Rate is at 2%. In July 2007, it was 5.25%. Although spending around $1.00 per transaction doesn't help, spending $150/month doesn't even come close to filling that gap.
Although it's fine to figure out how to make small purchases that meet your standards, please don't be hypocritical about what consitutes artificial compliance and a useful, lasting relationship with an FI. Thanks.
ETA: I realize what I've said comes across as harsh, but I'm aware of only 1 FI so far that has made an issue out of $1.00 transactions. Naturally, if this becomes a trend, I'm willing to adjust my thinking on this matter. In any event, I won't digress from this discussion any further.
See X35's post in this thread for an excellent analysis of what it would take to make a Reward Checking account profitable to an FI. Hint: the monthly spend is much more that $150.
Call me whatever adjectives you like. Doesn't change the fact that there is a substantive difference between charging purchases you normally make anyway and creating $1 payments by dividing up larger ones. I am willing to use their debit card for my genuine small purchases if it meets their requirements. Setting those requirements is up to them. Upping the requirements is different than expecting people to make normal charges, not artificially small ones. Personally, I would not be willing to use a debit card for large purchases, not just because of the cash-back, but because debit cards do not offer the same protections as credit cards. If making large purchases becomes a requirement, these accounts will not work for me no matter how good the interest rate. (Unless they also change the protections governing debit cards.)
Glxpass, I am not being a hypocrite. I am not deliberately limiting the number of my purchases. On the contrary, I posted in order to get help coming up with more of them... I was quite forthright about having a limit on what *size* of purchases I am willing to make on a debit card (and to whom). As I said, I do not make many small purchases at large retail establishments. And I won't use a debit card for large purchases for several reasons, the most irrevocable being protections. My only alternative is to start making more small purchases, or adding some regularity to the ones that I do make. That's why I asked for help brainstorming, right? edit: grammar
I'm no more calling you a hypocrite than you are calling me stingy. For reasons I've stated -- that of course you're free to disagree with -- I felt that some of the statements you made were hypocritical. We don't know each other well enough for actual name-calling.
Personally, I'm not convinced that the type of purchases one makes has any effect on the longevity of a Reward Checking rate. Again, I'll spare you from repeating my reasoning. We all have different comfort levels about how to handle these accounts. I understand (I hope) your comfort level better now. You want to use your debit card for "normal" transactions.
So how about instead of statements debating the value of our respective approaches, such as:
I wouldn't think small purchases would be such trouble for most people either, but the discussion in this thread seems to be making a lot of trouble out of it: $1 gifts to charity, splitting up utility bill payments, making extra store visits for the sake of single item purchases... Such a hassle and stingy.
I don't want to resort to such stinginess, but I only make about 1 small POS purchase a week, mostly at small shops where I couldn't or wouldn't want to use a debit card.
you focus on gathering suggestions for using the debit card in a manner that makes you more comfortable?
BTW, I agree with your concerns about debit card usage. Ironically, making signature-based transactions with your debit card (i.e. using it as a credit card) generally makes you liable for $0 with Visa and MasterCard, even though fraudulent activity is currently more prevalent that way than fraudulent activity associated with PIN-based transactions, which generally offer you less liability protection.
glxpass said: BTW, I agree with your concerns about debit card usage. Ironically, making signature-based transactions with your debit card (i.e. using it as a credit card) generally makes you liable for $0 with Visa and MasterCard, even though fraudulent activity is currently more prevalent that way than fraudulent activity associated with PIN-based transactions, which generally offer you less liability protection.
When the laws about liability were written, PIN based transactions were pretty much done only to get cash out of ATMs, I think. Cash is the first choice of thieves and fraudsters, and getting value out of fraudulently acquired cash isn't nearly as cumbersome as getting value out of fraudulently acquired store purchases, so I guess the focus was on pushing more liability on customers in the case where the fraudulent transaction could be executed a lot quicker by the thief, making quick reporting more important, and where the customer was the first one who was going to learn about the theft.
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