A few confirmations please, before I move forward...???

[Anonymous]

Please read all - Sorry in advance for the long post...

If anyone has suggestions on how to come out even further ahead - I am all ears. 

Backstory - This all started because my wife and I have 1% Cashback BOA cards from college back in 2004.  I started doing research on better rewards which forced me to look at Money Market/Savings rates, our banking relationship and a few other things.  So here are my findings and strategy...  First, our current cards to not qualify for product change, so we would need to apply for new cards.  We have 7% APR on the current ones so we will just sock drawer them.  We also Pay in Full (PIF) each month and have no other debt besides our mortgage. My credit score is 814 and my wifes is 812. Don’t travel a ton so Cash Back is best.

Deadly Combo - Bank of America Cash Rewards with Preferred Rewards/Merrill Edge

Step 1 - Money market transfer. My wife is conservative and likes to hoard cash so we have a sizable balance in our Money Market account.  Until a few weeks ago it was earning .16%.  Based on online banks I was able to negotiate 2.00% with my current bank.  That said, the more research I did, BOA lumps together their investment and banking relationships to calculate rewards bonuses.  In addition, there is a $900 Sign Up Bonus for transferring $200,000.  Within Merrill Edge they have a Preferred Deposit option that offers 2.07% APY. So slightly better than what we are getting on our money now…

Step 2 – Apply for 2 New BOA Cash Rewards Cards ($150 Sign Up Bonus Each) 

Step 3 – Assign each Card to the right category.

Groceries: $3,900 (BOA Visa 3.5% due to 75% Preferred Rewards Bonus) = $136.5
Gas: $2,500 (My BOA card – 5.25% due to 75% Preferred Rewards Bonus) = $131.25
Dining: $6,000 (Uber Visa 4% plus $50 credit when spending $5k) = $290
Costco: $2,000 (BOA 3.5% Due to Preferred Rewards Bonus) = $70
Amazon: $2,200 (Wife’s BOA Card 5.25% due to 75% Preferred Rewards Bonus) = $115.50
Everything Else: $5,200 (BOA Card 1.75% due to 75% Preferred Rewards Bonus) = $91

So from my calculations we would receive Sign up bonuses of $150+$150+$900 = $1,200.

Money Market funds would earn .07% more than current rate = $140

3 Card Combo (Wife and I share all 3) would produce = $834.25

Please let me know if my strategy/math is sound or if I am missing anything...

[Anonymous]

Any help?

[ridgebackpilot]

Your strategy makes a certain amount of sense given the depth of your banking relationship with BOA.

However, your BOA Cash Rewards cards are only competitive because of your relationship with them. My only thought is there are a number of cards out there that pay better rewards, including the Uber card you already have, the Capital One Savor card (pays 4% cash back on dining), and the Discover IT card that pays 5% on rotating categories (plus another 5% cashback match in the first year). So you might want to consider your options for non-BOA cards that would maximize your cash back.

[longtimelurker]

2% or even 2.07% is pretty low.   CIT pays 2.45, and some pay 2.5.    On $200K the difference becomes more important.   It may be worth doing it for the $900 bonus (but others may also have similar things) and keep it for the minimum time.   You then have to leave $100K(?) to get the maximum on the credit cards?  Have to compare that to using other cards and putting the $100K in a longer term CD....

[Anonymous]

My goal was to move some cash into my current brokerage account at TD Ameritrade anyway... If I opened the Edge account I would get the sign up bonus and extra credit card rewards.  I would leave the 200K in the account for 90 days until I got the bonus and then could invest 100K in a diversified portfolio (which would get more than 2.07%) and 100K in the Preferred Deposit account at 2.07%.  Or after the bonus I could transfer 100K to my TD Ameritrade brokerage account and leave 100K in the Deposit account to keep all the benefits.  I looked at EBSB and thier 2.5% High Yield Savings but dont want to have things too spread around... 

[ridgebackpilot]

If you're looking for good ways to invest $200K+, consider establishing a Private Client relationship with Chase. I placed my IRA with them and have been pleased with the results. 

Not only do you get the benefit of customized investment strategy from JPMorgan, but you'll receive a number of other benefits from Chase thanks to a deeper relationship with them. And almost certainly you'll make more than 2-3% return. However, your wife might not be comfortable with a riskier investment strategy, so YMMV!

[longtimelurker]

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@ridgebackpilot wrote:

Not only do you get the benefit of customized investment strategy from JPMorgan, 

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Do they have a fiduciary status?   Can't see it stated on the website.   If not, I would be wary, as their focus will be steering you towards "appropriate" (and perhaps even good, but perhaps not) products that make money for them.   That's not to say that the returns might not be good, but I always prefer to work with someone legally bound to MY best interest.

[Anonymous]

You can choose to have them manage the portfolio for you for a fee. Otherwise, It would be like any other self directed brokerage, where it would be on me monitor and execute the trades.  My wife likes to have 100K sitting liquid for any emergency and peace of mind.  My thought was - its sitting at our local Brick & Mortor anyway and if it could sit somewhere else and do more for us, it would be worth it.  We both max 401k and IRA contributions annually and have diversified portfolios.  This is the "under the bed" money that I want to be working the best for me given the situation. 

https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf

[NRB525]

I think the plan makes a lot of sense. If that is where you want to put the money market and related funds, that BofA bonus on the no-AF CC makes a ton of sense.

You might wiggle $20 more per year net out of some other more complicated scheme, but this makes a good return.

Have you looked at a Travel related card from BofA?

[Anonymous]

Have not looked at the travel card...yet...  The Uber is 3% on travel and airfare and we only fly to Florida once a year (roughly $1000 for tix) maybe 3-5 hotel stays locally each year.