This is a guest post from our friend, Derrick Dye, of Travel on Point(s). A while back I had shared the idea of using the sale of your house as a way to manufacture points. Well, Derrick ended up doing it in the real world instead of just thinking about it. And, with the help of PayPal Key, he was able to do better than I ever imagined. This is a good reminder to look for the cracks out there and think outside the box!
When Selling Your House Turns Into A Point Manufacturing Machine
As I shared last week, we recently used points and miles to offset the costs in preparing our home for sale. We cashed out 600,000 Amex Membership Rewards to my Charles Schwab account for $7,500. In part due to the upgrades we completed, our house went under contract in three weeks and we are scheduled to finalize the sale very soon. But for every opportunity to spend points, there’s an opportunity to earn points. After formulating a plan, I realized selling our home was a points manufacturing machine! How? PayPal Key and Plastiq.
What is PayPal Key?
PayPal Key (PPK) is a virtual Mastercard debit card that allows you to pay online or over the phone at any merchant that accepts Mastercard. On the PayPal side of things, you can link your PPK to any form of payment you desire. For all of us points and miles enthusiasts, this means we can use a credit card to pay anywhere Mastercard debit cards are accepted.
What is Plastiq?
Plastiq is an online bill payment service. You can pay with a debit or credit card and Plastiq mails (or electronically transfers) a check to almost any business. Currently, Plastiq charges 2.85% to use a credit card for payment, but only 1% for a debit card. Plastiq accepts American Express (only select merchants), Discover, Mastercard (including mortgage companies), and Visa. If you have not signed up for Plastiq, you can use our referral code:607465. You will earn $1,000 fee-free dollars to pay your mortgage, car payment, student loans, another business, etc.
Once our current home was under contract, we learned our expected closing date. In just 4 short weeks, our house would be sold. As part of the sale, our existing mortgage is paid off and we receive all remaining monies. I quickly decided to aggressively pay off our mortgage using PayPal Key on Plastiq. Since PPK is a debit card, it was only a 1% fee (see below for current status of PPK for Plastiq).
With only 4 weeks to prepare, I had to limited time to execute the plan. I figured payments must arrive at least 5 days in advance of closing (to avoid any delays or miscalculations during closing) and there was a 4 day lead time for the first payment to arrive. Essentially, I had 19 days to pay off as much as possible.
When PPK first arrived earlier this year, the daily limit was $10,000. Sometime in September, the daily limit was quietly scaled back to $3,000 or less, before changing again to approximately $5,000. Users began seeing different transaction limits and experiences. While I was able to make payments of $5,000, only 1 PPK transaction would process per day, regardless of the amount. Therefore, I decided I was paying $95,000 towards our mortgage in 19 days, by paying $5,000 per day.
While almost all credit cards are worthwhile for the 1% fee, I considered these cards to be the best returns (in no particular order):
- American Express Blue Business Plus: earn 2x Membership Rewards on all spend up to $50,000/year, for a cost of 0.5 cents per MR.
- Citi Double Cash: earn 2% cash back (or 2 Thank You Points if you hold a Premier or Prestige), for a 1% profit or 0.5 cents per TYP.
- Chase Freedom Unlimited: earn 1.5x Ultimate Rewards on all spend, for a cost of 0.667 cents per UR.
- Chase Freedom Flex: earn 5x Ultimate Rewards at PayPal, up to $1,500 per card in Q4.
- Capital One Venture: earn 2x miles on all spend, for a 1% profit when redeemed for travel or restaurants through 4/30/21.
- Chase Ink Unlimited: earn 1.5x Ultimate Rewards on all spend, for a cost of 0.667 cents per UR.
Additionally, cards that I don’t have, but others could have utilized in a similar way:
- Alliant Visa Signature: 2.5% cash back, for a 1.5% profit.
- Bank of America Premium Rewards: up to 2.85% cash back (with Platinum Honors status), for up to a 1.85% profit.
Day after day, I made mortgage payments hovering around $5,000 each. I maxed out a Double Cash, converted a Citi AAdvantage Platinum to a second Double Cash and maxed it out, finished maxing out the $50,000 annual spend cap on a Blue Business Plus, and then starting hitting my Venture card. Unfortunately, my plan was never finished. Less than two weeks in, PayPal Key suddenly stopped working for Plastiq. Whomp, whomp, whomp.
While I wish I could have finished the plan, I am quite happy with these returns in less than 2 weeks. Assuming I cash out my Membership Rewards with a Platinum for Charles Schwab, cash out my Thankyou Points as cash, and redeem my Venture miles for restaurants or travel, I earned rewards worth $1,607.09, in just a few days.
Our home remains scheduled for closing very soon and I will not pay a single penny of interest on these charges.
I should note there are potential risks with this play or other ideas like this. If my house doesn’t close on time or if the deal falls through etc. I would need to be able to cover the credit card bills. If you get involved with a plan like this be sure to only go as deep, or hard, as you can afford to. While I don’t plan on any issues arising I was ready and made my decisions based on the chance that there may be problems. As you should with everything that you do.
As always, there are lessons to learn after any loophole closes. Should I have paid off our mortgage while the home was on the market? Probably. This was a massive money-maker, so I should have realized the value and begun paying off the mortgage while our home was listed for sale. Oh well. More importantly, this is a reminder that when valuable play appears, do your research and analysis, but do not wait too long. Very few lucrative plays last long. If it works today, there’s a great chance it is gone tomorrow.
Did you utilize PayPal Key via Plastiq? Let us know in the comments below or come join our Facebook group to discuss.