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The Day I Bought $15,000 - (Archived)

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Late last year, my computer was dying and I was upset. Sure, it was 7 years old and heavily worn, but at the time I was trying to save enough money to quit my job and the thought of shelling out more of my hard earned cash to buy a new one was making me grumpy.

At the same time, I was remembering a little trick I’d been reading about on some internet forums where travelers were buying coins from the US Mint in order to rack up airline miles. Here’s how the scheme worked:

  • Buy a bunch of coins from the US Mint on your credit card.
  • Deposit the coins into your checking account.
  • Wait for the deposit to clear and use the funds to pay off the credit card purchase.
  • Use the airline miles gained from the transaction to go somewhere exotic and have a lot of fun.
  • Repeat until you’re tired of traveling/carrying really heavy coins.

Bingo. I wasn’t planning to go anywhere, but I did have a credit card with a high limit and a cash back rewards program. All it took was some quick math to realize I could make $300 to help pay for my new computer for what seemed like very little work. I’d have to cross my fingers a little and try something new, but I liked the idea.

***

I started floating the plan around to some of my friends and co-workers, excited to hear what they thought of this great scheme, but everyone gave me one of two responses:

  • They thought it was a scam.
  • They thought it was too risky.

How disappointing!

I thought everyone would be excited about this amazing trick I’d discovered. That was about the time I started to realize just how important it is to think for yourself when it comes to decisions like this. When you choose to accept more risk in your life, you’re going to have more and more people telling you you’re foolish.

Learning to ignore that is something I recommend working on sooner rather than later.

***

Assuming the US Mint and my bank weren’t trying to scam me, that only left myself as the scam artist and I knew I wasn’t trying to cheat anyone, so that took care of that concern. And, there wasn’t really any way around the fact that things might not go according to plan, so I just had to accept that.

I took a deep breath, crossed my fingers, and hit that “confirm order” button. I’d just bought $15,000 worth of $1 coins. Here’s how it all went down:

I called my bank.

I knew this was going to be an unusual transaction, so before I made my order, I called ahead to make sure everything would work out.

They said to call the day before I came in and everything would be all set. No problem.

I waited till the beginning of the month to place my order.

Most credit cards come with a 25-30 day grace period – the time between when you purchase something and when you have to pay for it without paying interest.

By waiting till the beginning of a new billing cycle, I gave myself 50 days to get things figured out if the **** hit the fan. That was important because even though I had access to the $15,000 in credit I needed to make my order, I didn’t actually have that much sitting in my bank account to make a disaster disappear.

That’s called leverage and it’s bitten many people that got careless with it.

The coins were delivered.

It took about 2 weeks for the mint to fill my order and deliver the coins. During this time, I didn’t have to do anything except log in and track my order every few days.

They arrived on a Tuesday afternoon via UPS in unmarked boxes. There were 6 of them and they must have weighed around  300 lbs in total. I had to borrow a hand truck just to move them around. I loaded them up and headed to the bank.

I deposited the coins.

Despite the pre-work I’d done with my bank, this is where the process broke down a little bit. In my phone calls to the branch before ordering the coins, I’d failed to ask to speak with a manager. I didn’t think it would be necessary.

Well, any time you deposit more than a few hundred dollars in coins at a bank, the manager almost always has to approve the transaction. Lesson learned. The teller I’d spoken with assured me there’d be no problem, but when I showed up with a hand truck loaded with coins, her manager assured me of the opposite.

She explained it was too late in the day to process the transaction, and my deposit was too big to fit in their safe overnight. I tried to do a little sweet talking, but she wasn’t having any of it. I was plain out of luck. I’d have to wait until the morning. The manager at my bank was making a big stink, so I called another nearby branch, explained my situation, and scheduled my deposit with the manager for the next morning.

Begrudgingly, I lugged the coins home, hid them under my bed for the night and headed out in the morning where things went off without a hitch (for the most part). Ty, the new manager, wasn’t thrilled to be dealing with a hand truck full of coins, but he honored his word and I was able to make my deposit.

There was only 1 hiccup here: due to the bank’s policy on how they must accept coins and prepare them for transfer and counting, I had to accept a a hand written deposit slip from Ty that stated, “$15,000 in coins, subject to count.” That made me a little nervous, but that’s how it goes when you’re carting around thousands of $1 coins. My deposit was safe and in the bank.

My rewards posted.

As as soon as my deposit cleared and was available in my checking account, I scheduled a transfer to pay the balance on my credit card. I was pretty relieved that I didn’t have to use many of those 50 days I’d allotted.

Just like clockwork, there was an additional $300 in my rewards account on my next credit card statement. I withdrew it, bought my computer, and life was good.

Was it a bit of a headache? Sure. But even though the story makes it sound longer, the total time I invested in the process was only about an hour. Lots of people put up with much bigger headaches every day for a lot less in return.

What could have gone wrong?

Lots of things could have gone wrong in this deal, but I think the most important thing to note is that none of them did.

Here’s a list of things that could have screwed up my plan:

  • My packages with $15,000 in them could have been lost by UPS.
  • I could have been robbed on my way to the bank.
  • The bank could have refused to take my coins.

Any one of those things could have happened, but they didn’t. The likelihood of any of those scenarios is minuscule and not really worth fretting over. Even if they did occur, it wouldn’t have been the end of the world.

  • If UPS had lost my package, it was insured for the full amount and I had 50 days to figure it out.
  • If someone had robbed me on the way to the bank, that would have been awful but also highly unlikely and the thief would have had a hell of a time making off with 300 pounds in coins.
  • If the bank had refused my deposit, I would have had to just make smaller deposits of $2,000 at a time for 8 days so that they could handle the volume.

People often dismiss an idea as too risky long before they give themselves the chance to figure out how they could actually make it work. I think it’s really too bad that so many great plans get pushed aside because someone is afraid that something could go wrong.

In the end though, what tends to happen is what you allow yourself to believe will happen. If you think everything will go wrong, it probably will. More importantly though, if you believe that things will go right, it probably will, also, because you’ll be willing to work hard enough to make sure it does.

You usually get what you expect out of life.

So when you’re evaluating a risk, take a second to plan for the potential hiccups that could occur, but spend more time planning how to make things go right. You might be surprised by the results.

By the way, this coin program through the US Mint is still open and available to anyone that’s interested in doing it themselves. However, if you’re a Chase customer on the west coast, I’ll have to apologize for spoiling some of the fun. A branch manager called the day after my deposit to say their new policy is to not accept more than $2,000 per day.

Update: The US Mint now limits transactions to $1,000 every 10 days. I still do this on a regular basis, but no more $15,000 coin runs for me. If you want more, you’ll have to call and explain why.

Update: After reading Chris Guillebeau’s Frequent Flyer Master guide, I now use coin transactions to gain frequent flyer miles instead of cash rewards as they work out to be considerably more valuable if you’re a frequent traveler.

~~~~~

Image by: Mahdi Ayat

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