You’ve heard it a thousand times “rice and beans.” Dave Ramsey loves people saving and never getting into debt. As Polonius said to his son “neither borrower nor lender be”. The Bible I think put it most succinctly:
The rich ruleth over the poor, and the borrower is servant to the lender.
Proverbs 22:7 (KJV)
What if there was a way to save and earn on purchases? This topic has become a point of contention for me, because any rewards which involve the use of a debit or credit card involves the payment processors who not only get a treasure trove of consumer data but are also racking up money with every swipe from the merchant. In tragedy of the commons fashion everyone not using this method is left behind while price hikes are passed to the consumer. Until businesses start making cash discounts more common this is the way things will be. If you can’t pay off a credit card balance every month then this option is for you.
How do you earn interest on purchases without credit cards?
Some banks have debit cards where you earn a fixed percentage based on the amount in your checking account. The one I have recently gotten is offered by a regional credit union called Liberty Federal Credit Union. They have some odd requirements to earn the 3.45% on balances up to $20,000. Making 15 purchases a month seems easy enough, but maybe not for someone on extreme rice and beans mode. Many utility bills will charge more for paying with a credit or debit card, so these would be gas, groceries, and discretionary purchases.
Why is this account not a “best option”?
Well for starters 3.45% is pretty bad when you can get up to $10,000 a year in I-Bonds paying 4.30%. There are even some 9-month CDs paying higher (as high as 7%!), but Treasury Bills are exempt from state and local taxes so weigh your individual benefits on the percent or two difference. You can also chase higher yield in the corporate bond or stock market, but these are definitely riskier options.
Anyways hope you learned something and expanded your financial horizons. Off to work on my five other spinning plates. The grind never ends and I’d have it no other way.
