Loyal3 Ending Stock Purchases with a Credit Card

Got an email today from Loyal3. Bad news! The website will be terminating credit card purchases of stocks on Loyal3. The email states that as of 11/18/2014 you will no longer be able to use a credit card to purchase stocks. The email continues to say that monthly purchase plans using a credit card will be available until 12/11/2014.

I found it very interesting the wording in the email from Loyal3  "In order to put an end to the "gaming" of LOYAL3, and to maintain fee-free investing, on Tuesday, 11/18/2014, we will be removing credit and debit cards from the LOYAL3 platform. Automatic Monthly Plans (monthly recurring investments) using credit and debit cards will continue to be active until Thursday, 12/11/2014, to allow time to switch over to ACH (checking account transfers)."  Apparently, I'm one of those people "gaming"  Loyal3.

This is a big disappointment for me as I have been doing a significant amount of manufactured spending with Loyal3 over the past 4 months. So far I have purchased and sold more than $40,000 worth of stocks on Loyal3. All of the purchases were made using my Barclays Arrival Plus Mastercard which gives 2.22% back in points to be redeemed for travel related purchases. All together I have earned more than $888 in points from Loyal3 as well as very modest amount of capital gains totaling $177.

Through the process I had the Loyal3 account in my name shutdown because of my selling off the stocks too frequently. I am currently using an account under my partners name with a Barclays Arrival Plus Mastercard authorized user card.

Although the email from Loyal3 says that credit and debit cards will be removed from the Loyal3 platform on 11/18/2014, my understanding is that you will still be able to use a credit card to purchase stocks on Loyal3 until 12/11/2014 when automatic investment plans are also unable to use credit cards. You can do this by simply setting up an automatic investment plan to buy $50 worth of stock for today. Then go in a few days later and change the automatic investment plan to that day which will initiate another purchase. You can continue doing this with as many stocks as you want. 

The limitation is that you will only be able to make one $50 purchase of a single stock per day. That means only $50 of Google, $50 of Amazon, $50 of Walmart… I frequently purchase $200 of an individual stock per day by doing 4 different $50 purchases. I guess I will just have to branch out from the 10 stocks that I am currently purchasing.

I have found Loyal3 to be the easiest method of manufactured spending that is currently available. This method also comes with a certain amount of risk, but also reward. In my case I have made $177 in capital gains. I also could have lost $177. Last month when the stock market was experiencing a lot of volatility my portfolio dropped by about 4%. I was forced to hold onto stocks longer that I normally do at the same time I was purchasing more stocks. At one points I had more than $13,000 tide up in Loyal3. This is a lot of money to float. I held of selling any stocks until the values climbed back up.

The only stock that I have that is still down significantly is Discovery. My original $800 investment in Discovery is down more than $100. My total capital gains of $177 includes the cost basis loss of $100 in discovery. If it wasn’t for the Discovery stock my capital gains would be $277.

Deals come and go. The use of credit cards on Loyal3 is coming to an end in a little more than a month. If you need to make some minimum spending with Loyal3, get started soon!

The BEST Site for Organizing All of Your Miles and Points Accounts

One you really dive into the game of collecting miles and points you find yourself having to keep track of a large number of different miles and points accounts. Without question in my opinion the best site for organizing all of your miles and points accounts is Award Wallet. Award Wallet lets you add all of your frequent flier accounts as well as hotel points accounts in one spot. The site will securely store your passwords for retrieval just in case you forget them (which does happen on occasion). You can even add lesser known award programs to the site including many cash back portals. Pretty much every popular award program is supported. All the airlines, all the hotels, all the credit card points programs, etc...

Award Wallet even lets you track separately the miles and points program of your family or friends. I manage the frequent flier accounts for my family so I can see everyone's balances in one place.

There are a few airlines that will not allow their miles to be tracked on Award Wallet which include United Airlines and Southwest Airlines. This is only a minor hiccup and you can still add the balance manually so that you can still track your balance.

Sign up with my link and use promo code:  free-qjlgm   to get a free upgrade that adds more functionality to the site. Award Wallet is a must have for any miles and points collector.

If you have any topics you would like me to cover in the blog or other suggestions, please feel free to comment. I really enjoy getting feedback!

How Does Applying for Credit Cards Affect Your Credit Score?

When I tell people about applying for credit cards to reap the rewards to travel for almost free, one of the first questions I am asked is, "doesn't applying for credit cards hurt your credit score?" The answer is yes and no. Our credit score is derived from a number of different factors, some of which are proprietary. What you should know is that applying for a credit card results in a hard credit inquiry. Hard credit inquiries show lenders that a person has been looking for new credit. A single hard credit inquiry can reduce your score from 2 - 7 points depending on the make up of your credit report. The impact of individual credit inquiries to your credit report diminishes after 90 days. The hard credit inquiries will still be recorded on your credit report, but they will no have much impact on your credit score after 90 days. Credit inquiries stay on your credit report for two years. So 90 days after a hard credit inquiry your credit will likely go up all other factors held constant. This is how applying for credit cards can decrease your credit score.

You credit score is made up of five main factors: payment history, amounts owed, length of credit history, new credit, and types of credit used. The hard credit inquiries fall into the new credit category which makes up 10% of your overall score.

On the other side, getting new credit cards can actually increase your credit score in the long run. This is because another important make up of your credit score is the credit utilization or amounts owed. Credit utilization is the ratio of total credit being used compared to total credit you have available. In other words if you have one credit card with a $5,000 credit limit and during the month you spend $2,000 on your credit card this would be a 40% credit utilization. The lower the credit utilization the better. Generally anything over 20% utilization is a negative factor. When you apply for a new credit card your total available credit increases therefore your credit utilization decrease which is a good thing. Amounts owed makes up 30% of your overall credit score.

There are many strategies for how, when, which, and how many credit cards to sign up for at one time which I will discuss in more detail in a future post. Be aware that in the short run your credit score will go down as a result of applying for credit cards. Also, you are at risk of being declined new credit if you have too many credit inquiries in a short period of time. Proceed with caution!

When starting out in the miles and points game begin with just one or two credit cards for the first 3 months. Make sure you can meet the minimum spend requirements, pay off your credit cards in full, and pay credit cards on time before getting too zealous and damaging your credit. Keep following future posts, I and will discuss in detail best strategies for applying for new credit cards.

How to Earn the Most Miles and Points

The fastest way to earn free travel is through generous credit card sign up bonuses. This is the primary tool for earning travel rewards. Rewards credit cards offer generous bonus for spending certain amount of money in a limited period of time often 90 days for account opening.

Credit card bonuses are not the only way to earn bunches of reward points. Manufactured spending is another way. Manufactured spending is when you artificially create credit card spending that you would not normally make. Usually this means turning credit card purchases back into cash through the use of prepaid debit cards for example. If you are able to do this with bonus categories for example 5x points for purchases at office supply stores with the Chase Ink Bold and Chase Ink Plus credit cards than you can quickly rack up a substantial number of points. I will discuss in detail methods of manufactured spending in future posts.

One of the more obvious methods for earning miles is actually paying for airline tickets and receiving miles for the distance flown. I earn virtually 0 miles using this approach because it is my goal and mile habit to never actually pay for an airline ticket with money. My goal is to earn enough miles to pay for all my airline tickets with miles that I acquired for almost free.