Comments on: How Are Credit Card Offers and Bank Promotions Taxed?

By: ApporamaMan

ApporamaMan — Mon, 19 Feb 2007 14:00:41 +0000

$50 signup bonus were not worth it me at first, or so I thought. Now that I have it spreadsheeted and a system going it is well worth it. In fact the $50 signup bonus is woth $150/hours to me. It only takes me 20 min for setup, spend, payoff, spend again, pay off, retire card. The $100, $150, and $250 bonus are worth…well you can do the math.

And now that I understand crecit utilization, credit scores, Balance Transfers, etc., every card I get is worth more than just sign up bonuses.

Since 10/01/06 and this includes my wife we have in excess of $11,000 worth of signup bonuses, $1300 of that being cold hard cash (well, credit to credit cards). 100k Amex points–my wife enjoyed the $1000 in gap/banana republic cards. Without looking, I believe 450k+ frequent flyer miles (I value at .016/mile). Numerous Starpoints, Priorityclub points, marriot reward, etc., etc.

So far $107,000 in BT. I figure these are worth minimum of $700/hour

Credit Protector will make me over a $1000 for the year!!!!!!!!!!

No, this is not for everyone. But if you are intelligent with your money, money smart, have a balanced checkbook, act as though it is cash and payoff immediately and only make $100/hour or less, have a little free time (instead of sitting on the couch, it is very much for you.

ApporamaMan

By: Free Money Finance

Free Money Finance — Fri, 08 Dec 2006 11:21:13 +0000

Star Money Articles for the Week of Dec. 4

Here are interesting posts and news this week from the MoneyBlogNetwork members and beyond: Consumerism Commentary has some thoughts on Quicken 2007. AllFinancialMatters lists 401k contribution limits for 2007. MightyBargainHunter wonders how much his …

By: MoneyFwd

MoneyFwd — Thu, 07 Dec 2006 14:26:40 +0000

It’s good to know that the money/gift cards/whatever from points programs isn’t taxed.

In response to MoneyMan, I’m in the 25% tax bracket and I have basically no money to invest at all. $100 is a lot to me at the moment, and that extra $50 can go a long way. Also since it’s not taxed, it’s well worth it. Compared to having $1000 in an ING account which would take over a year to gain $50 in interest and is also taxed.

By: jim

jim — Thu, 07 Dec 2006 05:10:08 +0000

While they didn’t get rich playing the balance transfer arbitrage game, some of the qualities of people doing the arbitrage (willing to take risks and try something new, willing to continue to educate themselves) are similar. Understanding and learning the system so you can use it to your advantage is what it’s about.

I also think it’s a little foolish to think that what works for you will work for everyone. I don’t agree that I would be better off taking 30-40 minutes to listen to music on my couch, it may be what is refreshing and re-energizing to you but it’s not for me.

By: MoneyMan

MoneyMan — Thu, 07 Dec 2006 04:03:19 +0000

I have seen a lot of posts by basically every personal finance blogger (what’s the count now, a million of us?) telling people to get $50 for signing up for this card, or $100 for signing up for this account etc… However, I think we need to be more responsible as a group when talking about this stuff. If you think of all the time a person spends opening a credit card account and dealing with the paperwork, cancelling the card after a trial period if need be, accounting for the tax implications, hurting their credit score, adding yet another username and password (and account to hack) to their digital empire… the benefits of a $50 account opening bonus are dwarfed by the administrative burden of having another account open.

For a college student, $50 is a big deal. That will provide them with umpteen cases of Bush Lite. However, for most adults, a one-time $50 (which is only about $30 after taxes) bonus that leaves a legacy on your credit record is simply not worth the hassle. You would be better off taking 30-40 minutes sitting utterly still on your couch, listening to relaxing music, and meditating.

Let your money serve you. Don’t become a slave to the $50 account opening bonus!

If you were to list the 5 richest people you know and ask them how they got that way, I guarantee you they are not going to say it was the result of applying for credit cards and playing the balance transfer arbitrage game.

That’s just my $0.02.

By: David

David — Wed, 06 Dec 2006 22:59:35 +0000

As far as putting this in perspective with your “Investing with $100″ post – most of those who would be investing with only $100 would be in a low tax bracket in the first place so they would be only losing out on a small amount of those bonuses to tax.

By: samerwriter

samerwriter — Wed, 06 Dec 2006 22:06:11 +0000

It’s not clear to me how the $100 back from the Citibank Credit Protector works. The explanation I’ve heard for the rebates is that rather than these being “income” they are just “decreased charges” for card use.

But it doesn’t seem like that same explanation holds water for the credit protector thing.

Of course it’s worth noting that just because one doesn’t receive a 1099-INT or 1099-MISC, it doesn’t mean the income is not taxable, it just means that the entity did not report the payment. If one knows the income should be taxable, he is still obliged to report it and pay taxes.

By: jim

jim — Wed, 06 Dec 2006 16:46:10 +0000

The bank is not required to report interest under $10 and tie it to an taxpayer identification number but you are still required to report it as interest on your return.

By: eROCK

eROCK — Wed, 06 Dec 2006 16:04:16 +0000

I always knew how the bank and incentives programs, but always wondered about the Credit Card promotions, interesting. One thing also to note … in my experiences, if the interest gained on any account is less than $10, you don’t need to report it.

-Erich