Funding IRA with rewards?

[JKSIMMONS]

Just had a good converstaion on another thread about funding a brokerage account at the end of the year with rewards you earn that year.

With cashback cards that actually give you cash, it's pretty simple. You just transfer it over.

For cards that give you a statement credit, you would use the credit to pay for something you normally pay, like a cell phone bill and then transfer the money you would have normally applied to the cell phone bill to your brokerage account.

If you are a heavy user I figure someone could fund a pretty decent portion of the $5,500 IRA limit per year.

Does anyone have any experience with this? Any best practices you can share?

[Themanwhocan]

If you are putting 6 figures through a credit card each year, you probably don't have to wrry about how you will fund your IRA.

[JKSIMMONS]

That's great. Who ever mentioned putting 6 figures through a card per year though?

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@Themanwhocan wrote:

If you are putting 6 figures through a credit card each year, you probably don't have to wrry about how you will fund your IRA.

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[Creditaddict]

Just get the Fidelity Amex and Fidelity Visa... makes this much easier!

[Themanwhocan]

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@hwturner17 wrote:

That's great. Who ever mentioned putting 6 figures through a card per year though?

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@Themanwhocan wrote:

If you are putting 6 figures through a credit card each year, you probably don't have to wrry about how you will fund your IRA.

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You did. It would take spending between $550,000 and $110,000 to earn $5,500 a year, assuming between 1% or 5% cash back on all purchases.

[JKSIMMONS]

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@Creditaddict wrote:

Just get the Fidelity Amex and Fidelity Visa... makes this much easier!

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I was talking to another guy on here and we had a good point come up. If you can get a card like the BCP which offers much more than 2% on a lot of stuff, you could just pay your investment account at the end of the year and use your statement credit to pay some of your monthly expenses. It's a little more work but it would be well worth it when you consider you get 6% on groveries and 3% on gas. Those two things are the largest non mortgage expenses for most people.

This is kind of why I started the topic. There have to be people that are doing this now who have best practices. I'm dying to see how people game this sort of thing.

As for the guy who stated people who run 6 figures through a card don't worry about maxing out their IRA. Stop. Seriously. People who run 6 figures through a card a year shouldn't need a card at all but they have one(or several) because they like to play with their credit rating and rewards etc, which is the exact reason this forum is so popular. People like to play the game. I wish people would either answer the question or not respond at all. It seems to be getting worse and worse lately.

[JKSIMMONS]

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@Themanwhocan wrote:

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@hwturner17 wrote:

That's great. Who ever mentioned putting 6 figures through a card per year though?

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@Themanwhocan wrote:

If you are putting 6 figures through a credit card each year, you probably don't have to wrry about how you will fund your IRA.

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You did. It would take spending between $550,000 and $110,000 to earn $5,500 a year, assuming between 1% or 5% cash back on all purchases.

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If you would kindly look back at my original post, I said a decent portion of the $5,500. Not the entire $5,500.

[Anonymous]

Well a decent portion would still be quite a lot!   But anyway, I don't really get the point.  The thing about cash is it can be comingled seamlessly, so of course money earned on one or several cards can be gathered together and put in a brokerage account or any other vehicle, either directly (e.g Fidelity Amex/Visa) or by accounting for statement credits reducing the amount you need to pay on the card, and putting the saved money in the savings vehicle.

But really this is no different than "I'm going to reduce the number of times I am going to Starbucks.  I will save 3 tall lattes a week, so each week I will take the $10 saved and put it into my savings account".   

[B335is]

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@Anonymous wrote:

Well a decent portion would still be quite a lot!   But anyway, I don't really get the point.  The thing about cash is it can be comingled seamlessly, so of course money earned on one or several cards can be gathered together and put in a brokerage account or any other vehicle, either directly (e.g Fidelity Amex/Visa) or by accounting for statement credits reducing the amount you need to pay on the card, and putting the saved money in the savings vehicle.

But really this is no different than "I'm going to reduce the number of times I am going to Starbucks.  I will save 3 tall lattes a week, so each week I will take the $10 saved and put it into my savings account".   

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+1

All of my cashback goes towards bills lol. As much as I tell myself I'm going to save that money it never happens. This is the primary reason I'm eyeballing that Merrill+ card because I dont have the self discipline to to drop that savings into an IRA myself.