Oops, I meant to post in the “Best cards” thread. I’ll repost there.
Eta: Not even right for that thread, made a new one.
1 Like
Just for the record, the above try failed. It fell flat.
That CU treats charges to credit cards, for purpose of opening new CDs. as cash advances!
If you’re thinking about playing the “buy CDs with a CC” MS game, be careful not to fall into the cash advance trap.
Note: “MS” stands for “manufactured spending”
2 Likes
While correct, I’d like to point out that NO Legal Hustle, (including employment), is providing the return margin over inflation that it did only short months ago.
2 Likes
So true. Sadly
This post will be of interest only to a very small number of participants here. Specifically:
- You must be an IRMAA victim
- You must be a person who engages in MS (manufactured spending)
I happen to qualify on both criteria because the side hustle under discussion here is a form of MS. So here goes:
I just received, from Social Security, my payment amount for 2022. Of course there, as always, is a really significant IRMAA gouge. But reading through what they sent something occurred to me for the first time. To wit:
You need at the outset to realize the size of your IRMAA hit is a function of your MAGI, or modified adjusted gross income. As one example of this, for many people their MAGI includes all of their routine taxable income PLUS all of their income from (supposedly) tax free municipal bonds.
MSers also have income similar to that which is, however and unlike tax-free bond income, off the books. What is the takeaway?
So far income from manufactured spending has not been a priority for the IRS. That is something I can easily envision changing with the hiring of all the new agents Biden wants. If the IRS begins to track MS income, not only will your taxes jump but, if you are an IRMAA victim, so will your IRMAA bite.
Keep a weather eye. A requirement to add MS income into your MAGI could become expensive and would not be a good thing at all.
2 Likes
I see my last side hustle update here was several months ago. And this isn’t exactly an update. The side hustle is going along pretty much as before. Instead:
In pursuit of my side hustle I am engaging constantly and incessantly with financial institutions. Such contacts are never ending as CDs are opened, run to maturity, and then are closed. As such, I can report:
The financial institutions are noticeably feeling the impact of COVID. One I contacted yesterday played an on-hold message saying they had twenty-five openings in their call center. OUCH!!
And I’m feeling the COVID impact in other ways as well. Service across the board is off. Items I submit for processing are not timely acted upon whereas, in the past, there was never any trouble. I’m in process of adjusting by allowing more time than in the past. Also, completed credit card transactions do not always result in a CD added to my accounts lists, owing to processing follow-up servicing shortfalls at the financial institutions. I have to do the follow-up personally and oftentimes must contact the financial institutions to prompt action which was routine prior and required no input from me.
So bottom line I am experiencing outcomes of financial institution short staffing right across the board. This causes my side hustle to run less smoothly than in the past. However, experience helps me anticipate the problem areas, matters continue to roll along despite everything, and money continues to be made.
3 Likes
(I apologize in advance am unable to share details here)
Happy day for this side hustle 
Not much new comes out of this endeavour. So I’m mostly silent. But today significant progress was made, which frankly is as unusual as it is most welcome:
I have unearthed a new counterparty, and guys these things are not all that easy to locate. What is more, it is a credit union where I’m already a member, albeit a dormant one for the last couple of years. I keep a lot of such memberships alive because you never know what is going to come along. Well, something came along! 
A counterparty, for the sake of this hustle, is a financial institution willing to sell me short CDs and let me fund the new accounts with a credit card. Obviously all such CDs, even though short, are Federally insured, so there is no risk of loss. Typical annual yields continue to run (mostly) between 8% and 10%, the latter using Alliant Visa Signature with a 2.5% reward. I do not pay tax on the rewards so am able almost to keep up with inflation.
But the more counterparties you have the better it is. Enables you to spread out the charges on any given card and that is a good thing. So bottom line a good day today for this old side hustle. Wish every day brought progress like this. But truth is it has been a long while since I’ve been able to add a counterparty.
2 Likes
I kinow you wont share their names, and underatandably so. But what’s the typical size of the CDs at your various counterparties?
I have a total now of five counterparties. Max allowed CD sizes are as follows:
-
$2.5k - 2
-
$3k - 1
-
$5k - 2
It works out. In the old days of this operation, when I was opening CDs of $10k and $20k like a madman, it attracted too much attention from my credit card providers and I ended up having a couple of cards cancelled.
It’s better to go in with a lighter footprint. I’m able to work with the above limits quite easily and meet my goals without undue stress anywhere in the system.
It is nice that this latest counterparty is offering me a $5k limit. I just opened a test CD for $500, which is their minimum. Everything looks good but it never hurts to “trust but verify”.
3 Likes
I’m guessing the size limit is due to the funding method? Does this also mean you’re limited to one CD at a time?
Dunno. Probably.
I don’t think so. But I’m not sure. It’s because I do not try to double up at the same place on the same day. I have options and I use 'em. Two large charges to the same counterparty on the same day (or on days not well spaced out in time) on the same card might trigger review. I do my best to avoid that. In fact:
I make an effort to rotate charges among my counterparty options over time, and intersperse those charges with non-hustle charges to the best of my ability. Hence you can see why I’m so happy to have a new counterparty option.
2 Likes
Why else would they put such low limits on CDs? Anything else doesn’t make sense to me.
I’m impressed. None of mine are over 2.5k, and most are 2k.
1 Like
It’s the funding method. Cant speak to his targets since I dont know what he uses, but any I’ve seen have different maximums for different funding methods.
2 Likes
Over time, and having operated this hustle with counterparties that allowed much larger limits in the past and now smaller ones, I really do not see $2k or $2.5k as a problem. In fact, perhaps strangely, it’s almost a help.
It all comes down to not setting off any alarm bells, having a good system, and having patience. One example:
I operate my two B of A cards (one Visa and the other Mastercard) having otherwise the same terms and conditions. Do this to harvest the 3% reward even though spending is capped. I like 3% rewards and I don’t mind getting only $600 each year, year after year, from this endeavour between B of A and myself. However:
Typically with those two B of A cards I open CDs sized less than $1500. And I spread 'em out among my counterparties. This in attempt to maintain a low profile and keep that B of A golden goose alive and in good health. Hence:
Any of your $2k counterparties would work just fine in this situation. That B of A golden goose has been strutting around for a while now paying me $600/year with no tax. I’m not too haughty to accept such largesse humbly and gratefully - from a goose. 
And I know you understand geese! 
1 Like
Been a while since I posted here but bit of a kick in the head for me this afternoon. I dislike posting bad news and this is bad:
One of my counterparties has discontinued offering ability to purchase CDs with a credit card. 
A single such event of course does not a trend make. But I certainly hope this is not commencement of a trend.
For a while I was quite upbeat and positive about CD purchase opportunities using a credit card for payment. But obviously financial matters everywhere, stock market, inflation, availability of some goods, are falling apart right now. I didn’t realize prior to this that I might become a victim like so many others; I did not see this coming.
It has been about a month since I last opened a CD with this one counterparty. When I tried earlier today the credit card funding option had simply vanished. I called and they confirmed the change.
This side hustle of mine is the only way I have to even come close to keeping up with inflation and taxes. That CD I was unable to open would have netted me 12% APY with no tax. I did shift the transaction to an alternate counterparty without trouble, so the 12% is still in the bag. But this reduction in the size of my counterparty stable is quite troubling.
Things are bad. You don’t know whence will come the next torpedo. At least I don’t know. 
2 Likes
My take on this is you are very smart…BUT how are you sure that BOA 3% online sales and Alliant and others code as online purchase and not cash advance?
I mainly do bank bonuses with opening funding with my Citi double cash. I opened a few checking accts for at least 300.00 bonuses and Citi codes these as purchases. Did 3k opening deposit at 3 banks in past year netting 1100. In bonuses (taxable) but also 240.00 in Citi rewards. Plus I use these accts to deposit mo.
And I have big CL on PedFed 2% card Citi double and Santander 3% card. How would I find out the coding before it’s too late? That would be a big no no in doing this. I admire you though.
Thanks. That is kind of you.
Again, thanks.
What I always do, when it is a new CC or a new financial institution, or both, is to run a test. Most often it is possible to open a CD for as little as $500. So that is the amount I choose for my test CD. I open the CD, then stand back and observe how things transpire . . . . purchase or cash advance.
If the former, fine let it ride and open larger CDs going forward. If the latter I pay off the cash advance ASAP and charge the (small) interest cost up to “lessons learned”.
It has been “so far so good” with the above system, but a word of caution:
My principal, “go to”, credit cards are not from the big money center banks. They are issued, instead, by smaller/mid size credit unions. The latter are less sophisticated than the big banks when it comes to ferreting out people who do what I do. One example:
I have a Citi DoubleCash card with a decent line. I have not used that card for a long time. I don’t need it, and I am concerned about the high sophistication level of a bank like Citi.
That said, I do use two B of A cards on a quarterly basis and have had no pushback. So there are no hard and fast rules except to be as watchful and prudent as it is possible to be.
3 Likes
Some credit card issuers let you change the cash advance limit. I would change the limit to zero if possible.
1 Like