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X1 Credit Card Review: 3%-10% Back on Everything-Great Value
The X1 Credit Card: Great Value for Many
The X1 credit card is a great value for many people, offering what may be the highest rate of rewards back available.
The X1 Credit Card offers 3% back on all purchases if one spends at least $1,000 a month on the card. Their app also offers useful “boosts” that provide 4% or 5% back on purchases in a variety of categories, such as gas or restaurants. There is no annual fee for the X1 card. Thus, the X1 card offers a very attractive rate for a card with no annual fee. For many people the X1 card could be an attractive option and a definite keeper, the default, go-to credit card for years.
Are there Downsides to the X1 Card?
While the X1 card is very attractive, there are some downsides to be aware of:
1.) You cannot call customer service. You have to use the app to contact them. What if you can’t get anywhere with the app? This is not my favorite. However, it is also possible that one calls an agent and can’t get anywhere either if a company has agents who are not competent, so being able to use the phone does not necessarily solve anything anyway.
2.) You cannot get paper statements. Your credit card statements are all received in their app. They do email you to remind you when a statement is generated, but I like paper statements.
3.) You cannot redeem the points at full value for cold, hard cash, only to cancel out transactions at selected merchants (kind of like buying a gift card for these merchants). Now the range of options here is quite attractive—there are over 50 options, including everything from Apple to American Airlines to Airbnb to REI to Hotels.com, so for many people this kind of redemption is almost as good as cash. But the fact that you cannot redeem your points for actual dollars at full value (although you can redeem them at a reduced rate for cash; instead of $0.01 per point value towards a merchant, while you get 70% of that for cash, so 10,000 points is $100 back at REI but only $70 in actual cash back) is a negative. Even if you never shop at any of the merchants where you can get the full 3% back (unlikely for most people) at a 70% back rate for cash, however, 3 points per dollar becomes 2.1% back for cash, which is still superior to a flat-rate 2% cash back card.
4.) If you spend less than $1,000 a month on your X1 card you do not get 3% back, but a (still decent) 2%.
Why Does the X1 Card Operate the Way it Does?
I can understand why the X1 card does these things-the fees merchants pay to take credit cards is less than 3%, in most instances, so a card that gave you 3% of actual cash back on everything would have an extremely difficult time breaking even, let alone turning a profit. It would be losing money every time you made a purchase. By the combination of extremely low overhead (no paper statements; no human beings who take calls with customer support; everything in their app; deals cut with companies that allow X1 to offer point redemption at face value while they get a discounted deal; some customers spending less than $1,000 a month and so not getting 3% back) X1 appears to be able to offer customers 3% back on all their purchases so long as they spend at least $1,000 every month with the card. In other words, they may be able to continue in the long-term as a successful business, like Chase or Citibank or American Express, instead of going bankrupt for offering people too high a rate of cash back.
For many people, the X1 credit card is a logical and reasonable choice for their default card for purchases outside of bonus categories. Someone who spends $50,000 a year on a credit card will get $1,500 back with the X1 card instead of only $500 back if he is using a credit card that offers 1% back or only $1,000 back with a 2% back card. With the bonus categories or “boosts” the X1 card offers, one can get even more back–4%, 5%, or more on selected categories that are often quite useful.
The X1 card is also made out of metal, not plastic. It feels nice in your hand. I really don’t care about how the card feels in comparison to what monetary value it offers me, but some people are into that kind of thing.
If you open an X1 card using the link here, you will also receive 4-10% back for a period of time on all purchases (a very, very attractive rate, which I will also get for a period of time if you open a card with this link). X1 has a system where they do not do a hard pull on your credit unless they are very likely to approve you. They tell you ahead of time before they access your credit file for this. Their application process first gets your approval to do a soft pull that does not negatively impact your credit score in any way and tell you if you are going to be approved or not. That is an attractive feature for those interested in the card; if you are not going to be approved, they don’t touch your credit score at all; they only do it if they are very likely to approve you.
Is This Credit Card For Me?
If you can live with the bare-bones features described above, I believe the X1 card is an attractive option that could be a financially reasonable default credit card for many people.
Click here to apply for the X1 Credit Card.
If you do not pay off your credit cards in full every month but instead pay high rates of interest, DO NOT SPEND MONEY ON CREDIT CARDS. Read the article here on the dangers of credit cards. Any rewards you get will be far outweighed by the horrible interest you will pay. Pay off the cards as soon as possible and stick to debit cards. The review above is only for people who avoid paying high interest rates on credit cards, which the large majority of the time can only be done by paying them in full every month.
–TDR
A Personal Financial Advisor to Invest with Biblical Values?
What can a Christian do when he wishes to honor the Lord with his investments? Can he use a personal financial advisor who is a Christian? I have written in the past, and highly commended, the Eventide family of mutual funds.
Their fund family includes the Eventide Gilead Fund (ETILX), Eventide Healthcare and Life Sciences Fund (ETIHX), Eventide Exponential Technologies Fund (ETIEX), Eventide Large Cap Focus Fund (ETLIX), Eventide Dividend Opportunities Fund (ETIDX), Eventide Multi-Asset Income Fund (ETIMX), Eventide Limited Term Bond Fund (ETIBX), and Eventide Core Bond Fund (ETIRX). (They also have class N, A, and C shares as well as class I shares, but I utilized the ticker symbols for the class I shares here.) When one invests with Eventide, he avoids companies that support wickedness like abortion, tobacco, cannabis, pornography, violent media, and so on. In addition, their investment philosophy goes one step further to ask important questions about integrity, business practice, and value-creation. I was very excited to find out about Eventide years ago, and still believe they are the best option for practicing Bible-based values in investing, for the reasons explained in my review of the Eventide family of funds and their second-best competitor, the Timothy Plan family of funds.
Are your investments clean, or at least as clean as the Timothy Plan–which is in many ways good, although at a lower standard of Biblical conformity than Eventide–would view it? You can get a complementary moral audit from them of what you own at a link on the page here. Why not find out? Are you afraid of what you will discover? Would you rather find out now, or at the judgment seat of Christ?
One might suppose that he could have a personal financial advisor assist him in investing in a clean, God-honoring way. Is having an actively (or passively) managed account with a personal financial advisor an option? Fidelity, Schwab, Merrill Edge, and many other investment firms provide the option of a personal financial advisor who will seek to follow your investment directions for a fee. On multiple occasions, when I have discussed Biblical, Christian values with such people, they have said that they could follow our virtuous, godly directives and set up something that was acceptable. Does this work? I recently tried it. How did it go?
As is common knowledge, in the San Francisco Bay Area homes and condominiums are very expensive. I would like to be able to buy a residence close to Bethel Baptist Church that fits our ministry goals and family needs. I have prayerfully formulated a plan to get there that also dealt with other financial goals. Because Scripture affirms the value of a “multitude of counsellors” for safety and being established in one’s purposes (Proverbs 11:14; 15:22; 24:6), I wanted to run my plan by more than one financial advisor. I got a complementary meeting with one from Schwab, while with an organization called Personal Capital, part of Empower, I scheduled a meeting because they had promised one would get $100 for meeting with a financial advisor and getting a proposal. I was willing to hear what the Personal Capital person had to say about my investment plan, and that they would give me $100 for meeting with him made it better.
Over the course of three meetings, I explained my Christian, Bible-based values and what I viewed as acceptable for investments. The financial advisor with Personal Capital said something like that he was a devout Christian himself. He said he managed the assets for numbers of Christians and others who, for example, did not want to invest in abortion. Now that sounded good, no? Surely if one can get one’s investments personally under the care of a financial advisor who is himself a Christian, and who manages the assets of numbers of Christians, one can invest cleanly, like one can with Eventide. The financial advisor provided a variety of reasons why he thought what he would offer would outperform an investment strategy that held strictly to a number of Eventide funds. (This post is not about the performance side of the question, but I am actually skeptical of his claim that his mix of investments would outperform what I was doing with Eventide. For example, since inception on 7/8/2008, the Eventide Gilead Fund has grown at an annualized 12.99%, and class I shares since inception on 2/2/2010 have grown at 13.60%. That is a long time for them to outperform by several percentage points what the Personal Capital gentleman said I could expect what he was offering me would probably earn on average.) His company has a section on its website promoting the option of socially responsible investing, which they advertise as a way “to align [one’s] investments with [his] personal values and beliefs.” In any case, for investing in a righteous way, he is certainly a better option. Right?
Unfortunately, no–wrong. First, he said that he did not have the ability to actually determine whether individual companies were actually engaging in evil behaviors, or actively seeking to do good, the way that Eventide would do. Trying to make investments clean would just be, with him, taking a base strategy that did NOT evaluate things from the perspective of the kingdom of God, and simply attempting to improve it a bit. What he could do was take out some notorious companies such as a casino here and there. Would the personalization he offered be clean, according to the complementary moral audit mentioned earlier in this post? Highly unlikely.
Furthermore, he also wanted to diversify into foreign companies (a reasonable idea; nothing wrong with that). But for the foreign investments, he would simply have me get ETFs (Exchange Traded Funds) that had no moral or Christian component whatsoever. So domestically, I could be part-owner (through ETFs or other investments) of companies that were engaged in evil, although not as notoriously. Outside of the USA, I could own companies that were chopping up little babies in the womb, selling abortion drugs, or marketing cigarettes and booze to twelve-year-olds. No filters whatsoever. Problem.
After the third meeting, when I got his actual proposal, I looked over the companies that he wanted me to invest in. I cannot share on this blog post what they were, because it is proprietary information with them. However, without even doing a complementary moral audit, I knew that many of them would fail, and that a Christian had no business owning them. It would be a tremendous step backward were I to join the Christian clients of this professedly devout Christian financial advisor. My investments would not be clean, much less focused on companies that are positively doing good. It would be a bad choice.
If blog readers assume that their investments are clean because they have a financial advisor who goes to church, reads the Bible, and even possibly is a truly born-again Christian, they should make very, very sure about it. At least with my situation, the fact that this advisor told me that he was committed to Christian doctrine and managed the money of a good number of Christians, and could personalize investments to avoid what is bad turned out not to mean a whole lot. It meant we could take a framework focused solely on gaining filthy lucre and could clean up bits and pieces of it. With Eventide, everything is built around a Biblical framework of investing. What a difference–and what a blessing! Eventide won hands-down over the professedly devout Christian financial advisor who said he could personalize investments to be suitable for Bible-believers.
Naturally, I did not sell my Eventide investments and move over to Personal Capital with Empower. Personal Capital would not have allowed me to invest in a way that glorifies and pleases the Lord.
Other reasons why I did not move over to them–such as that Empower had poor customer service when they were the 401K company for one of my jobs in Wisconsin (I was able to invest in Eventide through them, and that’s all I did), that what the financial advisor said would be their likely performance is lower than how Eventide has performed since their Gilead Fund and other funds started, that Empower / Personal Capital never even gave me the $100 for spending a lot of time with them and having several meetings, that they did not have a phone number for me to call to get help with this, but only an email, and that their customer service here in California seemed to have even more room for improvement than they did in Wisconsin, were less important, although they were not very promising. These all could have been reasons for me not to go with them. That I could not invest cleanly was necessarily a reason not to go with them, but stick with Eventide.
What about you? Do you have confidence that what you invest in pleases the Lord, and will be something you can be happy about when you stand before Christ on judgment day? Don’t assume that you do, just because you have a financial advisor who claims to be a Christian and who says he can personalize your investments.
–TDR
Consider Fighting Inflation with Safe 7.12% and 9.62% Interest Rate I-Bonds
Because of our current high rates of inflation, Inflation-protected Treasury Bonds (I-Bonds) are set to earn 7.12% interest for the next sixth months, followed by 9.62% interest the six months after that. In addition to mutual funds with Christian values, which tend to adjust to inflation in the longer-term, but, as with all mutual funds, can have big swings in the shorter term, someone who wanted a guaranteed rate of return might find these US treasury bonds attractive. I view their security as comparable to FDIC insurance. If you have confidence your money in your checking account is not going to disappear, the money in the I-bonds is not going to disappear unless the US government defaults on its debt, which is probably not going to happen in the short term, at least (and, while the high rate of inflation is terrible, it reduces the real value of our national debt, and so actually is a debt-fighting strategy–devalue the currency to devalue the debt–albeit an immoral one that repays lenders with currency worth less than what they lent out).
You can purchase up to $10,000 in I-bonds a year, per person (corporations can buy $10,000 each as well) and get up to $5,000 back on your tax return in I-bonds. Whenever you sell them, you lose the last three months of interest if you have held them for under five years–after five years you don’t lose any interest. So if inflation suddenly comes under control and their rate of return declines correspondingly (I’m not super hopeful), it would be wise to hold them for at least 15 months so you don’t lose out on the 12 months of high interest. You also can’t sell them before holding them for a year, so only tie up money you won’t need for at least a year.
I believe that churches, as charitable organizations, can also buy up to $10,000 a year, and a church school, as a separate entity, could do so as well. There may be ways for individuals to buy $10,000 worth and donate them or get refunded for them by a church that wanted to get a lot of these instead of having inflation eat up their savings account, but I have not extensively looked into this possibility (feel free to post anything useful in the comment section of this post in this regard).
You do not pay federal taxes on I bonds, but you do pay state and local taxes, I believe. (I am not a tax advisor.)
To lock in the 7.12% and 9.68% rates, you need to buy them before the end of April. So you might want to look into doing this soon. The interest rate is very attractive.
Get more information or buy I-bonds online here. I am thankful for Doctor of Credit for bringing this opportunity to my attention.
By the way, while I believe Biden is doing a terrible job, high inflation was just about inevitable after the insane increase in the money supply and crazily low rates of interest that we have had for years. If Trump had won, we would still have had high inflation right now, in all likelihood, although perhaps not quite as high, if Trump and Congress had not spent so much money this last year (by Trump not helping two Republicans lose in Georgia, flipping the Senate to the Democrats, and giving the Democrats a unified government so they could spend even more recklessly). Trump was “lucky” to lose and not be the one who gets the blame for the foolish money policy the USA has been pursuing for years.
–TDR
Cryptocurrency (like bitcoin)–A Biblical, Christian Perspective
I believe people have liberty in Christ to own bitcoin or other cryptocurrencies if they wish to do so. If you bought bitcoin or other crypto before its price exploded, and you made a lot of money, I am happy for you. However, I am staying away from it. These are my reasons, as a Christian, to stay away from cryptocurrency. (This article is my opinion, protected by the first amendment, not official financial advice. I am not a financial advisor.) This post is just the bullet points. The entire article can be read by clicking here: Read “Cryptocurrency: A Christian, Bible-believing perspective” here.
1.) Cryptocurrency does not actively do good.
If one invests in the Christian mutual funds associated with the Eventide family of funds, he is investing in many companies that are not only attractive investments but also actively are doing good things. At best, if one buys and holds bitcoin or other crypto, what he has purchased just sits there. It does not do anyone any good.
2.) Cryptocurrency is very frequently used to actively do evil.
There is substantial evidence that a high percentage of cryptocurrency is used by evil people to do evil things, whether funding drug cartels, supporting human trafficking and pornography, supporting terrorist organizations, engaging in money laundering, assisting rogue regimes to evade sanctions, and the like.
3.) Cryptocurrency lends itself toward speculation, not rational investment.
I can’t explain why bitcoin should be priced at $20, $200, $2,000, $20,000, $200,000, or $0 a coin. I can’t give you a reason why in thirty years bitcoin is likely to continue to appreciate in value, rather than becoming worthless.
4.) Your cryptocurrency can easily vanish.
If you lose your password, your crypto is gone—you can never get it back.
Furthermore, if your crypto account or wallet gets hacked, you can’t get your crypto back.
It is not surprising that crypto firm Coinbase has an “F” rating with the Better Business Bureau.
The Bible says all riches are “uncertain” and we need to trust in God, not in money (1 Timothy 6:17). However, with cryptocurrency the “uncertain” is written in all caps in flashing neon lights, surrounded by warning signs illuminated by floodlights, while sirens blare “UNCERTAIN, UNCERTAIN.”
5.) Arguments for cryptocurrency are unpersuasive.
In my opinion, arguments for crypto fail to convince. Reputable financial advisors who say to steer clear of cryptocurrency are legion. Reputable financial advisors who even offer it as a suggestion (not a recommendation) are much less common, and those who even throw it out as a possibility say to only put a tiny percentage of one’s assets into crypto, and only if one is wealthy, and warn that one could lose 100% of the investment.
To read more, please read the complete post “Cryptocurrency: A Christian, Bible-believing perspective.” Feel free to comment below, but if you comment, please read the complete article first. Thanks.
–TDR
Make Your Child a Millionaire With This American Express Platinum Roth IRA Loophole?
Before reading this post, please remember that the Bible forbids any “trust in uncertain riches” instead of in the “living God, who giveth us richly all things to enjoy” (1 Timothy 6:17). If you are reading this because of money, but you are not born again, nothing in this post will benefit you eternally. Click here to find out how you can be saved from sin, death, and hell through the Lord Jesus Christ.
Also, please keep in mind that I am not a financial advisor, a tax advisor, or anything of the sort. What is below is just my opinion and I am not giving you advice about doing anything. If you want financial or tax advice, consult a professional, not me.
Also, if you have troubles paying off credit cards in full each month, maybe my opinion that you should stay far, far away from them is correct. I would encourage you to read my series on the dangers and rewards of credit cards here.
It also is not a good idea to go crazy with credit cards if you are about to try to get a home mortgage or something like that, although in my opinion the deal below is good enough to make it worthwhile even then.
There are two parts to this post. In my opinion:
1.) Contributing to a Roth IRA is a great financial vehicle
With the important caveats above in mind, in my opinion I believe there is a way to get more into your Roth IRA or a child’s Roth IRA without violating the $6,000 yearly contribution limit.
Why does this matter? Consider the Roth IRA calculator at the Biblical Financial Stewardship section at FaithSaves. Let’s say you add $1,000 into a Roth IRA at the age of 18 and never contribute to it again until (if God spares your life and the Rapture does not happen first) you reach the age of 65. If you got the average stock market rate of return of around 8%, the $1,000 would have become $37,000. Not bad to have your money grow to 37 times its original amount–all tax free at withdrawal. If you put $2,500 into a Roth IRA at age 18 and contributed $2,500 a year to it until you were 65, you would have over 1.2 million dollars with a average rate of return of 8%. If you put the same amount of money in the Christian-based, clean mutual fund the Eventide Gilead Fund, and earned the 18.63% lifetime rate of return it has earned since its inception (I am not saying that is realistic and you should not count on that), putting $1,000 in at age 18 and leaving it alone would net you $3,000,000, and $2,500 a year would get you over $48,000,000.
What if a five-year-old child was able to get $1,000 into a Roth IRA and never touch it until age 65? At 8% the $1,000 would become over $100,000! At 18.63% the $1,000 would become $28,000,000! At 8% the $2,500 / $2,500 scenario above would yield the five year old child over $3,000,000 at age 65, and the (likely too rosy) 18.63% rate of return on the Eventide Gilead Fund would leave the child with $450,000,000.
2.) A Loophole to Put More into a Roth IRA
It is, therefore, wise to max out a Roth IRA at the $6,000 limit if you can do it. However, there may be a way to get more than $6,000 a year into a Roth IRA without violating IRS rules. (Let me remind you again that I am not a tax professional nor a financial advisor.) You don’t want to violate IRS rules because the penalties are not very nice. So is there a loophole?
The American Express Platinum Card with Schwab allows you the option of redeeming the membership rewards points you earn from the card at 1.25 cents each. Points are deposited into your Schwab account (any ordinary citizen can open a Schwab checking or Roth IRA account). The Membership Rewards points you earn with Schwab are not cash–they are just points. The IRS has traditionally not recognized these as taxable income for that reason. Furthermore, when you redeem them into your Schwab account, you are not contributing income, but Schwab is depositing a bonus into your account. It is kind of like the way that sometimes brokerages give you a bonus if you roll money over from another institution to them; they sometimes add a bonus to your account, but it is not money that you contributed.
Right now the Schwab Amex Platinum card comes with an opening bonus of 100,000 Membership Rewards (MR) points. That can be deposited for $1,250 into a Schwab account–including a Roth IRA–and since you are not making a contribution, but Schwab is giving you a bonus that is not based on cash but on non-cash Amex Membership Rewards, it does not affect contribution limits (in my opinion, which I believe I have very good grounds to think is correct, but I am not a tax professional.)
A child can only put into a Roth IRA what his own income is–so if he makes $100 from mowing lawns, he can put that (or you can make him put it) into a Roth IRA. But since the Amex MR points are not cash, you could deposit them into his Roth IRA, and to the $100 he earned from mowing the lawn you could add $1,250 as a bonus. If you earned a lot of Amex MRs through other means, you could sock away a huge amount of money into his Roth IRA and secure your child’s financial future as much as it can be done with uncertain riches.
So let’s say you opened the Schwab Amex Platinum card and deposited the $1,250 opening bonus into his Roth IRA at age 5. You have just given your child $126,571 at an 8% rate of return at age 65. If the (high) rate of return on the Eventide Gilead Fund were to continue, at 18.63% just putting the bonus in from opening the Schwab Amex would give your child $35,300,000. Of course, the value of $1 is highly likely be less at that time because of inflation, but this is still a very, very good investment return–and you pay no tax at all when you take the money out at 65.
I don’t know the future and I have no way of knowing what will happen with investments as time moves on, but in my opinion it would be a wise financial decision to put as much as possible, as young as possible, into a Roth IRA.
The facts above were convincing enough for me to apply for the Schwab Amex Platinum, and to use practically the complete stash of Amex points that I had, not for amazing travel as I have been accustomed to using them, but for cash, specifically into a Roth IRA. I just got the opening bonus on my new Schwab card and, as I write this, have just moved the points from that opening bonus and practically all my other Amex Membership Rewards points into a Schwab Roth IRA. It was easy to do–maybe a five minute process to redeem, and about another five minutes to buy some God-honoring Eventide mutual funds.
The Amex Platinum card has a lot of extremely luxurious benefits. You get:
1.) $200 hotel credit
2.) $200 airline incidental credit
3.) $200 Uber / Uber Eats credit
4.) $240 Digital Entertainment credit (Audible, Peacock, etc.)
5.) $100 Saks 5th Avenue credit
6.) $100 Global Entry credit
7.) $179 CLEAR credit
8.) $300 Equinox credit
If you used all those credits, the card would save you over $1,500. Furthermore, they are calendar-year credits, so if you decided to open the card but then decided you didn’t want to keep it, you could use the credits this year and next year to get $2,000-$3,000 in savings before cancelling it, on top of the $1,250 opening bonus of 100,000 Amex MRs. You also get things like access to very nice airport lounges, Hilton gold status (free meal when you stay at a Hilton and room upgrades), and many other benefits.
For these ultra-premium benefits, Amex charges a nasty annual fee of $695. (If you keep a lot of money with Schwab they will refund you $100 or $200 off the annual fee, but that is only if you hold $250,000+ or $1,000,000+ with them.) Furthermore, the credits are not worth their face value but are worth what you would pay for them. For example, if you use Uber Eats once a month anyway, you might value the Uber Eats credits as near $200 in cash, but if you don’t care about the Equinox fitness credit (I don’t), you would value the Equinox credit as $0. Would I pay $100 for a Saks 5th Avenue $100 gift card? Nope. Most of their stuff is too expensive, although they do offer discounted items online. Would I pay $40? Maybe. If I paid $20 a month on Audible already for a subscription or audio books, then the $240 credit on digital entertainment is worth a straight $240. If I don’t, and have no use for the other options for the digital entertainment credit either, but I would pay half of that face value to buy audio books, then the credit is worth $120 to you. The $200 credits for their hotel collection is nice, but you can’t pick any hotel you want, so it is not quite worth a straight $200, although to me it is worth at least $100, I think, maybe more since when you book with Amex the hotel gives you nice things like expensive amenities, free breakfast, etc. In any case, that’s the sort of thing you have to do to value these credits.
In the first year, at least, getting 100,000 Membership Rewards (MR) points worth $1,250 makes the annual fee worth swallowing. Is the card a keeper after that? Perhaps, and perhaps not; it depends on how you value the credits and benefits.
The Amex Platinum has some bonus categories that earn 5 points per dollar spent. In non-bonus categories, it only earns 1 point per dollar. I therefore combine it with the Amex Gold card, which earns 4 MRs per dollar at grocery stores and dining, and the Amex Blue for Business card, which earns 2MRs per dollar on all spending categories where another card does not already give me something better. These can be redeemed into a Schwab IRA at 1.25 cents each–bypassing taxation and contribution limits (so take whatever rate you pay in income, social security, etc. tax on income and multiply the cash value of the points by that amount). The Blue for Business is a business card, but if you teach lessons, or sell things on Ebay, or do work as a handyman, etc. you have a business and can get a business card.
Membership Rewards can also be transferred to travel partners for very good travel redemptions–for example, you can transfer them to airline partners and fly, for example, in first class on ANA to Japan or to Europe and back for 60,000 MRs each way–which could be the cost of flying economy in cash, but instead you are flying in an amazing first class cabin that could cost you $20,000 if you paid cash. But this post is about Roth IRAs.
Schwab is reducing the cash redemption value of their points from 1.25 cents each to 1.1 cent each on September 1. I highly doubt that they are going to eliminate the cash redemption option entirely; I believe they will keep it, just at the lower value. But with that upcoming devaluation, now is the time to go crazy getting American Express Membership Rewards points and putting them into a Roth IRA at maximum value. If you have multiple Amex cards you can pool all your points and put them all into the Roth IRA. You could combine opening bonuses, for example, by getting a Schwab Amex Platinum (100,000 points, $1,250 tax-free into Roth IRA redemption value), an ordinary Amex Platinum (another 100,000 points, $1,250 tax-free into Roth IRA cash redemption value), an Amex Gold (60,000 MRs, $750 tax-free into Roth IRA redemption value) and an Amex Blue for Business (10,000 MR opening bonus, or $125, with no annual fee and 2 MRs per dollar, a good keeper card for the long term), and get $3,375 that you never have to pay tax on put into a Roth IRA to grow tax free. If you did those four cards, and put them into an IRA of an 18-year old and got 8% until 65, just the credit card bonuses, if you never contributed again, would be over $125,000 at 65. If you put them into a Roth IRA of a 5 year old, at 65 it would be $341,000. If you get more than one Platinum card you can then double up on all the credits (or for the first year you can both use the credits now and then again in the new year so that you can triple-up or quadruple-up on them if you and a spouse both get the cards; that could be $800 for use at hotels, as well as $800 at Uber Eats or Uber, $800 for airline incidentals, etc.; you could get enough credits for a nice trip as well as a financially beneficial Roth IRA contribution.)
The opening Membership Reward point bonus for each card requires certain spending in the first months after opening the card, but if you are not able to meet that requirement through ordinary spending (don’t just buy things you don’t need in order to meet the opening bonus, obviously) you can just do things like pay your taxes ahead of time with a credit card (and get refunded for an overpayment after you file), or pay utility or other bills ahead of time, or meet minimum spending requirements while helping the poor by getting Kiva loans, which probably gets you your money back in just a few months to around a year, etc. I have invested in a lot of Kiva loans and am thankful to be able to help needy people while meeting spending requirements, and I have had a default rate of under 1% over a long time frame. (Of course, that doesn’t mean that this very low default rate will continue into the future, nor that you will also have a default rate that low, but it is very possible.)
By the way, you can take out the principal that you put into a Roth IRA before age 65 without penalty. You just can’t take out the interest / gain before 65 (with certain exceptions) without a tax penalty.
In my opinion (again, not as a financial professional or a tax professional), this is a fantastic opportunity. You can apply for the cards below if you are interested. They are affiliate links except for the Schwab Platinum, which is not.
Click here to sign up for the Schwab Platinum Card and get points worth $1,250 along with lots of other benefits.
Click here to add another regular Amex Platinum to get another $1,250 worth of Amex MRs and another $200 in Uber / Uber Eats credits, airline credits, etc.
Click here to add an Amex Gold card to get another $750 worth of Amex MRs and 4 MRs/5% cash back on groceries, restauraunts, etc.
Click here to add an Amex Blue for Business card to get another $125 worth of Amex MRs and 2 MRs on all spending up to $50,000 a year.
Note: the offers above are the ones that I have; I have not checked to see if there are better ones for any of these cards, but if there are, by all means take them instead.
If you think I am crazy for getting all these credit cards, that is fine. In my opinion, if you pay cash for everything and just put a lot in a Roth IRA the more conventional way, while riches are uncertain, you will be very likely to be glad that you did. If you think all these cards are a very good opportunity, I agree, although, again, this is just my personal opinion, I am not a financial or tax advisor, and I am against using credit cards if a person pays high interest rates on them instead of paying them off.
Finally, please also consider the post here on tithing or giving more than 10% under grace on what you earn on investments.
–TDR
New Christian Mutual Fund
I am very thankful for the Eventide family of mutual funds, for the reasons explained in my “God-honoring and Bible-based Christian mutual funds” post. If you do not have strong confidence that whatever you are invested in is not funding abortion, tobacco, alcohol, sexual perversion, and other evils, use the link on this page to get a complementary moral audit of your funds.
Eventide has a new fund called the “Exponential Technologies” fund (ticker: ETNEX, ETIEX, ETAEX, ETCEX. Most people should get ETNEX, if you have a lot of money you can use ETIEX.). It works as: “A concentrated mutual fund representing our ‘best ideas’ for long-term capital appreciation in the information technology and communication services sectors as well as healthcare technology and device industries.”
Consider adding this new Eventide fund to your portfolio, in conjunction with what your financial advisor says (you can get a free consult with an organization like Fidelity.)
–TR
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