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Old 11-17-2007, 09:36 AM   #21
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So i'm laying there not sleeping.... Looking at it from PenFed Visa's point of view: Bob is one of our "bad" customers; he charges $1000, pays his bill ($987.50 every month after 1.25% rebate) in full each month and charges $1000 the day after paying. PenFed gives Bob 1.25% of that $1000 back each month. What does PenFed have to keep on hand to keep Bob's account ticking along? Less than $1200, allowing for a bit of reserve. At the end of the year PenFed has given Bob $150 for the privilege of loaning him $1000. Heck of a winning business model! So what's PenFed get for it's $1000 loan? Assuming that Bob shops at a store using Costco's merchant Visa processing processing program (picked because i figured it was fairly cheap) the store gets charged 1.64% + $0.20 per transaction, or $49.20/year to PenFed after paying Bob his $150. So PenFed gets maybe a minimum of 5% for it's $1000 loan vs. Bob's $15%. For some reason i thought merchant fees were higher.

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Old 11-17-2007, 10:13 AM   #22
Recycles dryer sheets
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Originally Posted by maddythebeagle View Post
I wouldnt count on the autopay feature either with cc's changing statement dates...I agree with T-AL, and I pay and the double check...I have even seen people post on another board complaining that they thought that they paid through the cc's online pay feature and didnt since some have a few layers that you have to confirm the payment....
I set up recurring bills (pnone, D-TV, etc.) to charge to my cc, but I don't have the cc auto pay. I scheduled monthly reminders on my phone to check the cc's when the statements close. I travel 100% of the time, so I do everything on the internet...mail never arrives in time to make timely payments. After I check the charges to be sure I made them, I schedule electronic transer payments two days before it's due, and I have a log where I always write down the payment confirmation number. One cc sends me an e-mail when the payment posts, and I log on and check the other. I only use two cc routinely, but when I use any of the other cc (to keep them active), I just log on and pay them immediately.

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Old 11-17-2007, 09:35 PM   #23
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No doubt i'm kinda fuzzy - but 1.25%/month is 15%/annum. I'm making the money on money they loan me! I don't lock up $1000 of mine/month - the card company loans it to me each month in hopes that I'll forget to pay the bill. On money that is gonna get spent anyway on recurring bills er whatever, i'm up for snagging that 15%! Good point about the $12k worth of purchases though - of course i don't charge all that $ on January 1, so would you think that the interest earned on the money borrowed should be 1/2 way between 1.25% and 15%?
calmloki, you definitely have a point, and I think this is an interesting problem. As you said, from PenFed's point of view, they are giving you twelve short-term loans of $1000 throughout the year, and paying you $150 to give you that money. However, from your point of view, it's not like you can actually "make" any money off this deal.

To actually make money, you'd have to be able to get 1.25% back on cash advances, or you'd have to be able to sell all the merchandise you're buying ($1,000 a month) for exactly what you paid for it. So really, from your perspective, this deal is like Al said: it's like everything you buy is on sale for 1.25% off. Still not bad, but nothing like a guaranteed 15% return on your investments!
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Old 11-18-2007, 04:17 AM   #24
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I don't know if my thinking is fuzzy or not but I just looked at my 11/07 PENFED VISA and it indicates that they have "paid" me about $125 in rebates (they even broke it out by the Gas 5% and the Other 1.25% amounts). Since these are purchases I would have made anyway I look at the $125 as "found money" or money I had to spend that I would not have otherwise had. In order to "get" $125 it would take about $2,500 a MMA or bank paying 5% interest. Granted the "principal" in this case is non-existent but the "earnings" are there.
Vietnam Veteran, CW4 USA, Retired 1979
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Old 11-18-2007, 08:48 AM   #25
Give me a museum and I'll fill it. (Picasso)
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I am my Mother's son. I bend over to pick up pennies (and gum wrappers). "Watch the pence and the pounds will take care of themselves".

Most of our money is spent on the rentals - that is, invested in something we hope to rent or sell for more money after the investment. To that extent it is like we are buying dollars with our Visa, if you accept that the rental property value is equivalent to cash and therefore fungible (really like that new to me word). The more we spend the more we make! And it's all free money!?

Or maybe we have 800# of birdseed, and if we buy another 200# we get a free budgie. I am my Mother's son.

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