Author Topic: Minimum Monthly Debit Card Purchases  (Read 1580 times)

DCW

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Minimum Monthly Debit Card Purchases
« on: July 15, 2017, 11:04:01 AM »
I've recently opened a checking account that has a 3% APY on up to a 15k balance. To earn said 3%, however, requires a minimum of 15 purchases a month on the debit card. (there's no penalty to not meeting the requirements, you just don't get the 3%).

Currently I pay for everything with my Chase Freedom card for the cash back.

I'm looking for a way to have the best of both worlds (earning 1.5% on purchases and 3% on my account balance). I was wondering if anyone knew of any place where I could make very small purchases (e.g. - $0.01)? Both online and brick and mortar?

Thanks,
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Lepetitange3

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Re: Minimum Monthly Debit Card Purchases
« Reply #1 on: July 15, 2017, 01:08:34 PM »
Well...you could always really annoy a grocery clerk and break apart your grocery purchases into small groups.  Same for gas ;)

mad9q

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Re: Minimum Monthly Debit Card Purchases
« Reply #2 on: July 16, 2017, 04:50:19 AM »
I do not know about .01 purchases.  I would love to know the bank if you do not mind sharing. 

kayvent

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Re: Minimum Monthly Debit Card Purchases
« Reply #3 on: July 16, 2017, 05:59:16 AM »
There is a body of evidence to suggest that people have a greater propensity to spend with credit cards compared to debit cards. If the reason you use that card is to get the 1.5% cash back, perhaps you can experiment on not using it for a few months to see if that decreases your spending. (Since you'd not be using it, you'd be using your debit card and crossing the transaction threshold.)

Well...you could always really annoy a grocery clerk and break apart your grocery purchases into small groups.  Same for gas ;)

I have seen people do this. Self-checkout is also an option. Or pay at the pump.
« Last Edit: July 16, 2017, 06:01:11 AM by kayvent »

channtheman

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Re: Minimum Monthly Debit Card Purchases
« Reply #4 on: July 16, 2017, 06:50:37 AM »
I also have a checking account that gives me ~3.59% back on up to $10,000 balance if I make 12 transactions with their credit card per month.  The rewards go up to around 4% on $20,000 if I spend $1000 on the card with the 12 purchases, but I don't feel like juggling cards that much so I resort to making the same exact 12 purchases every month for the easy 3.5%. 

Here's what I do:

I go to Amazon and buy 12 $1 egift cards and email them to myself.  This is the smallest amount you can purchase.  (It used to be 50 cents but Amazon increased it sometime in the last year or so).  I use Amazon frequently enough that I will spend that money eventually (or more likely my wife and I like to just let that money increase and then buy a big ticket item every few years for "free."  For example, we bought a KitchenAid Mixer this year after letting the gift card funds increase to around $250.)

Since my purchases are just transferring the money to a different form that I will use eventually, I'm essentially getting the $26 dividend from my bank account for free as well.  Some might say it's too much hassle, but it literally takes me 5 minutes to make the purchases and redeem the egift cards.

sparkytheop

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Re: Minimum Monthly Debit Card Purchases
« Reply #5 on: July 16, 2017, 08:58:19 AM »
I do the grocery store thing, although my credit union just decreased interest to 1.5% (used to be 2%).  I'm grocery shopping anyway, so I'll just go when it's slow and divide purchases into $4-5 transactions (if I don't have a $10 off $50 purchase coupon).  Cashiers haven't minded (the self checkout is not open at night/early morning).

One of the store gas stations charges extra for a credit card transaction, so I use my debit card there once a month to fill the pickup if I've racked up enough gas rewards to make it worth it.

DCW

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Re: Minimum Monthly Debit Card Purchases
« Reply #6 on: July 16, 2017, 12:58:36 PM »
I also have a checking account that gives me ~3.59% back on up to $10,000 balance if I make 12 transactions with their credit card per month.  The rewards go up to around 4% on $20,000 if I spend $1000 on the card with the 12 purchases, but I don't feel like juggling cards that much so I resort to making the same exact 12 purchases every month for the easy 3.5%. 

Here's what I do:

I go to Amazon and buy 12 $1 egift cards and email them to myself.  This is the smallest amount you can purchase.  (It used to be 50 cents but Amazon increased it sometime in the last year or so).  I use Amazon frequently enough that I will spend that money eventually (or more likely my wife and I like to just let that money increase and then buy a big ticket item every few years for "free."  For example, we bought a KitchenAid Mixer this year after letting the gift card funds increase to around $250.)

Since my purchases are just transferring the money to a different form that I will use eventually, I'm essentially getting the $26 dividend from my bank account for free as well.  Some might say it's too much hassle, but it literally takes me 5 minutes to make the purchases and redeem the egift cards.

channtheman....I had read this elsewhere, and was leaning that way. I too use Amazon frequently. Thank you!

There is a body of evidence to suggest that people have a greater propensity to spend with credit cards compared to debit cards. If the reason you use that card is to get the 1.5% cash back, perhaps you can experiment on not using it for a few months to see if that decreases your spending. (Since you'd not be using it, you'd be using your debit card and crossing the transaction threshold.)

kayvent....i track my spending meticulously and only spend where i find value (as the vast majority of us do), so the benefit of this to me would be negligible. However, I do agree that this could be useful for a lot of people. Thanks!

--

Thanks everyone! At the end of the day 3% on the much larger amount of money sitting in reserves compared to 1.5% on the smaller amount of money in purchases is an easy decision when considering "either/or", but "both" is always better. I will probably go with the Amazon approach. I just wanted to reach out to see if anyone knew of a even more effective method.

On a similar note, it might be a useful service for Mustachians for someone to create a business model that reflected this. For example, I create an online service that charges customer's debit cards at very small transactions monthly and donate the money to a well run charity. Everyone wins, and on a macro scale (we are a growing group, after all) could put forward a non-trivial money to charity. However, the cost to operate such a venture would probably make it unsustainable and definitely not profitable. I know very little about such things.
All gave some...Some gave all.

kayvent

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Re: Minimum Monthly Debit Card Purchases
« Reply #7 on: July 16, 2017, 06:55:04 PM »
There is a body of evidence to suggest that people have a greater propensity to spend with credit cards compared to debit cards. If the reason you use that card is to get the 1.5% cash back, perhaps you can experiment on not using it for a few months to see if that decreases your spending. (Since you'd not be using it, you'd be using your debit card and crossing the transaction threshold.)

kayvent....i track my spending meticulously and only spend where i find value (as the vast majority of us do), so the benefit of this to me would be negligible. However, I do agree that this could be useful for a lot of people. Thanks!

I think even "we" can be caught up in the propensity to spend. My card is 2% cash back. I've personally found that I do spend more than 2% more when using my credit card versus debit. (On a grocery order of 100$, this is an indulgence of a toonie or more.) As a result, I try to only use the card for fixed expenses (monthly bills, doctor bills that insurance will reimburse, etc..).

I can admire those whose willingness to spend isn't raised with credit cards.

Rubic

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Re: Minimum Monthly Debit Card Purchases
« Reply #8 on: July 17, 2017, 08:03:50 AM »
I've recently opened a checking account that has a 3% APY on up to a 15k balance. To earn said 3%, however, requires a minimum of 15 purchases a month on the debit card. (there's no penalty to not meeting the requirements, you just don't get the 3%).

See my post here: https://forum.mrmoneymustache.com/welcome-to-the-forum/ally-bank-online-savings-rate-went-up!/msg1625818/#msg1625818.

It takes me less than 5 minutes to reload my Amazon account with ten $0.50 debit purchases each month.

frugaliknowit

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Re: Minimum Monthly Debit Card Purchases
« Reply #9 on: July 17, 2017, 11:58:53 AM »
Similarly, I need to make 10 debit card transactions per cycle.  It's well worth it.  I do a combination of the following:

I use the debit card for small purchases (generally under $10).
When I buy groceries (and need more debit card purchases), I separate 1 small item and pay for it with the debit card.  I pay for the rest of the order with Citi Double.
When I am really desperate, I separate items at the self checkout so that I make 2 or 3 purchases.
I can also change my netflix auto bill card, if I am really under the gun (a good one because it's pretty small).

Make sure you are mindful of the statement cycles.  They are not necessarily "from the 1st to the 31st"....

Heroes821

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Re: Minimum Monthly Debit Card Purchases
« Reply #10 on: July 17, 2017, 02:18:03 PM »
Working in the incident response field of IT Security, it is generally recommended to avoid utilizing a debit card as much as possible.  If you swipe at a compromised terminal in a checkout or gas station it is much harder to get money back from your checking account and bank than from the credit card companies.  A stolen CC is a quick phone call as long as you notice the transactions fairly early.  Money pulled from an ATM with a cloned debit card are much more work to get back.

I'm all for churning things for points, but I would not want to generate purchases on a debit card for it.  That  being said the $1 amazon purchases look pretty good.

kayvent

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Re: Minimum Monthly Debit Card Purchases
« Reply #11 on: July 17, 2017, 04:09:02 PM »
Working in the incident response field of IT Security, it is generally recommended to avoid utilizing a debit card as much as possible.  If you swipe at a compromised terminal in a checkout or gas station it is much harder to get money back from your checking account and bank than from the credit card companies.  A stolen CC is a quick phone call as long as you notice the transactions fairly early.  Money pulled from an ATM with a cloned debit card are much more work to get back.

I'm all for churning things for points, but I would not want to generate purchases on a debit card for it.  That  being said the $1 amazon purchases look pretty good.

Software developer here with background and a patent in fraud detection. I used to worry about such things but don't for the following reasons now:
  • I live in Canada. Debit issuers have similar requirements to reimburse victims of fraud as credit card issuers.
  • The risk of card fraud is low and ever shrinking. The yearly rate of compromise is 0.1%. Assuming constant risk, that is only a 5% chance of being defrauded over 50 years. Because of advances in automatic fraud detection, even if I fall victim, the bank may detect and revert the charge before I even notice.
  • I spend a lot more on credit than with cash or debit.


secondcor521

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Re: Minimum Monthly Debit Card Purchases
« Reply #12 on: July 17, 2017, 06:05:18 PM »
On a similar note, it might be a useful service for Mustachians for someone to create a business model that reflected this. For example, I create an online service that charges customer's debit cards at very small transactions monthly and donate the money to a well run charity. Everyone wins, and on a macro scale (we are a growing group, after all) could put forward a non-trivial money to charity. However, the cost to operate such a venture would probably make it unsustainable and definitely not profitable. I know very little about such things.

No need.  Many charities are happy to process $1 donations.  Just call and ask or do a Google search.  This is how some people meet the minimum transaction rules.  You can even set up automatic-$1-a-month donations I believe.
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frugaliknowit

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Re: Minimum Monthly Debit Card Purchases
« Reply #13 on: July 18, 2017, 08:35:43 AM »
Working in the incident response field of IT Security, it is generally recommended to avoid utilizing a debit card as much as possible.  If you swipe at a compromised terminal in a checkout or gas station it is much harder to get money back from your checking account and bank than from the credit card companies.  A stolen CC is a quick phone call as long as you notice the transactions fairly early.  Money pulled from an ATM with a cloned debit card are much more work to get back.

I'm all for churning things for points, but I would not want to generate purchases on a debit card for it.  That  being said the $1 amazon purchases look pretty good.



Software developer here with background and a patent in fraud detection. I used to worry about such things but don't for the following reasons now:
  • I live in Canada. Debit issuers have similar requirements to reimburse victims of fraud as credit card issuers.
  • The risk of card fraud is low and ever shrinking. The yearly rate of compromise is 0.1%. Assuming constant risk, that is only a 5% chance of being defrauded over 50 years. Because of advances in automatic fraud detection, even if I fall victim, the bank may detect and revert the charge before I even notice.
  • I spend a lot more on credit than with cash or debit.

Also:  In my case I was able to call my bank and request a maximum amount on purchases on the card of $50.  This seriously limits any potential fraud.

DCW

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Re: Minimum Monthly Debit Card Purchases
« Reply #14 on: July 20, 2017, 09:48:37 AM »
Thank you all!
All gave some...Some gave all.

DCW

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Re: Minimum Monthly Debit Card Purchases
« Reply #15 on: July 20, 2017, 09:59:50 AM »
Just spent all of about three minutes making fifteen $0.50 "reloads" to my gift card balance on Amazon. I'd say that is about as easy as it gets.

I love this community! :)
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Rubic

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Re: Minimum Monthly Debit Card Purchases
« Reply #16 on: July 20, 2017, 01:12:11 PM »
Just spent all of about three minutes making fifteen $0.50 "reloads" to my gift card balance on Amazon. I'd say that is about as easy as it gets.

If you're not using Lake Michigan for your 3% rate, which bank or credit union
are you with?  Just curious.

tj

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Re: Minimum Monthly Debit Card Purchases
« Reply #17 on: July 21, 2017, 02:59:05 PM »
Just use it for fifteen normal purchases, like lunch if you go out to eat.


If you spent $5 on lunch fifteen times, that's $75 per month. You're missing out on $1.13 per month of cashback to gain $37.50 per month of interest. It's a no brainer.

A bunch of $0.01 purchases is a great way to kill these types of programs.

Rubic

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Re: Minimum Monthly Debit Card Purchases
« Reply #18 on: July 21, 2017, 03:45:54 PM »
If you spent $5 on lunch fifteen times, that's $75 per month.

I don't spend money on lunch.  I make one trip to the grocery each
week, and fill up the gas tank about every other week.  That's about it,
on a routine basis.

My native spend frequency isn't enough to cover the debit minimums
and regardless, tracking it each month would be tedious compared to
reloading my Amazon account which takes about 5 minutes.


Elle 8

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Re: Minimum Monthly Debit Card Purchases
« Reply #19 on: July 22, 2017, 07:04:01 AM »
I hope your bank is not like mine.  I need 15 debit purchases to get 5% on up to $10,000.  Here's a portion of an email I recently got from them:

"..Small debit card transactions conducted on the same day at a single merchant and/or multiple transactions made during a condensed period of time, particularly near the end of a statement cycle are not considered normal, day-to-day spending behavior.  These types of behaviors appear to be conducted with the sole purposes of qualifying for the account’s rewards, and thus will be deemed inappropriate transactions and will not count towards earning the account’s rewards...."

Luckily my SO shops at several different grocery stores each week.  Between those, the liquor store, and gas station I don't think we'll have a problem meeting the 15.

tj

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Re: Minimum Monthly Debit Card Purchases
« Reply #20 on: July 22, 2017, 11:28:53 AM »
If you spent $5 on lunch fifteen times, that's $75 per month.

I don't spend money on lunch.  I make one trip to the grocery each
week, and fill up the gas tank about every other week.  That's about it,
on a routine basis.

My native spend frequency isn't enough to cover the debit minimums
and regardless, tracking it each month would be tedious compared to
reloading my Amazon account which takes about 5 minutes.

OK, then set up 15 recurring $5 monthly donations. Nothing to track. 15 sub-$1 Amazon purchases is a great way to get the interest rate lowered or the thing shut down entirely.

DCW

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Re: Minimum Monthly Debit Card Purchases
« Reply #21 on: July 22, 2017, 12:39:42 PM »

OK, then set up 15 recurring $5 monthly donations. Nothing to track. 15 sub-$1 Amazon purchases is a great way to get the interest rate lowered or the thing shut down entirely.

I appreciate your train of thought and concern, but where's the line? If 15 sub $1 purchases are "bad", then why would 15 $5 purchases be ok? The bank could deem them "inappropriate" as well. So should it be $10? $20? Or is it not determined by dollar amount but rather location? If we look at your "15 meals for $5 each suggestion", then it might cause an issue if I like to eat lunch at the same restaurant everyday (we are creatures of habit, after all). The bank could deem that inappropriate as well. Do I need to create an algorithm that will provide me with a random frequency of locations to spend money with an equally random purchase amount to ensure I'm not putting the program at risk? All of this is speculation.

This is what I know: The current method I've decided to use is the most efficient method possible within the "rules" I'm currently operating under. Isn't being financially efficient something we all strive for? I'm not going to try and speculate what the bank is "thinking" and use a less efficient method under the assumption that I'm not putting the program at risk, because I have precisely zero evidence of that being the case (or not the case).

Now, if the bank sends me a message like Elle8, then that's fine. At that point in time I'll change my strategy to find the most efficient method under the those newly defined rules.

At the extreme end, if this very rare [here's me speculating now ;)] strategy that a select few of us use at different banks in different locations with different sets of operational guidelines somehow causes the complete breakdown of these programs, then I'll eat my crow with a huge side helping of humble pie. But until then, I'm going to keep on keeping on.
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tj

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Re: Minimum Monthly Debit Card Purchases
« Reply #22 on: July 22, 2017, 03:43:52 PM »
Quote
If we look at your "15 meals for $5 each suggestion", then it might cause an issue if I like to eat lunch at the same restaurant everyday (we are creatures of habit, after all). The bank could deem that inappropriate as well.

I wouldn't expect that because it is actual usage, but it's also not realistic. Unless you are eating at a work cafeteria, ti's doubtful you're going to have lunch at the same merchant every day. But even if you did, you're less li9ekly to get shut down than spedning $7.50 per month at Amazon.

People used to do this with utility payments and the utility providers shut them down. It's also a blatant abuse of the program.

There's a reason these accounts pay much lower interest rates than they used to and have lower caps on the savings amount. I don't even bother with rewards checking anymore.

DCW

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Re: Minimum Monthly Debit Card Purchases
« Reply #23 on: July 22, 2017, 11:28:14 PM »
Quote
If we look at your "15 meals for $5 each suggestion", then it might cause an issue if I like to eat lunch at the same restaurant everyday (we are creatures of habit, after all). The bank could deem that inappropriate as well.

I wouldn't expect that because it is actual usage(Do purchases with the largest online retailer not count as "actual usage"?), but it's also not realistic (Not realistic? How many people do you think go to the same coffee shop every morning for the same cup of coffee?). Unless you are eating at a work cafeteria, ti's doubtful you're going to have lunch at the same merchant every day(Go to your local McDonald's and ask them if they have "regulars"). But even if you did, you're less li9ekly to get shut down than spedning $7.50 per month at Amazon(Do you have any evidence to support this?).

People used to do this with utility payments and the utility providers shut them down.(Source? Genuinely curious) It's also a blatant abuse of the program(Can you define "blatant abuse" in this context? The requirements from the bank are "15 Debit Card Purchases"; there are no other qualifiers such as purchase amount/location/frequency. I'm within their required guidelines and not in any violation of a stated account policy. They've allowed for the opportunity to be taken.).

There's a reason these accounts pay much lower interest rates than they used to and have lower caps on the savings amount.(What's the reason?) I don't even bother with rewards checking anymore.(You should, because as myself and others have pointed out, it's really no bother at all ;) )

I should note that this account also has other requirements to get the 3% (direct deposit, mobile banking, and online statements), and my mortgage is through them as well, so I'm not completely robbing them blind.

Also interesting is that since the bank (well, credit union) started offering this particular product three years ago, their membership increased, on average, 30% per year. The year prior to these showed an increase of about 17% (couldn't find data on more previous years to check for this being an outlier). In addition, in 2016, of the $2M they paid out in checking benefits, only about 35% of that was through this particular account. The vast majority was through rewards points of another checking product they have, which, as it turns out, has the exact same requirements as this account. The bank is also in the top 0.5% of credit unions nationally in performance, and they just finished building an 82,500 square foot facility. (source: www.etfcu.org). It appears that they know what they are doing, despite abusive thieves like myself. 
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tj

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Re: Minimum Monthly Debit Card Purchases
« Reply #24 on: July 23, 2017, 02:15:51 PM »
Quote
(Source? Genuinely curious)


Go read the 73 pages @ Fatwallet.

https://www.fatwallet.com/forums/finance/775437