We made $600 on Friday (BOOM) without having to do any work (double BOOM), and it only took about an hour and a half (JACKPOT) and basically anyone else can do it too (it could have taken shorter but we didn’t feel like rushing the banker).
My arbitrage opportunity
When you have a guaranteed return on an investment with no potential for a loss it is called an arbitrage opportunity. In one of my actuarial classes we spend a few weeks studying how to identify arbitrage opportunities in the open market. We looked at how to spot instances where a series of transactions could be arranged so that you were guaranteed to make money no matter what happens in the market.
As a quick and easy example, imagine that you find someone who is willing to buy a certain item for $20 and someone else who happens to have that exact item for sell for $15. Your arbitrage opportunity would be to make the $15 investment to buy the item then turn around and sell it for the $20. You make an instant $5 on your investment. This is a very elementary example but it gets the basics of the principle across.
After being taught how to identify and exploit these opportunities by reading about a series of market circumstances we were taught that in the free enterprise system that we live in arbitrage opportunities don't really exist. There is nothing that would keep the buyer and the seller in the above example from getting together and negotiating on the price of $17.50. Just think of the "item" that we discussed as being a stock of a bond.
But I found an opportunity that, while it might not fit the exact definition of arbitrage, it is close enough for me. Over the weekend we banked a guaranteed $600 for nothing more than moving our money around.
Chase bought our mortgage last year when we bought our house, so for the past year we have periodically gotten incentive offers from the in an attempt to get us to open banking accounts with them.
The offer: $200 for opening a checking account or $200 for opening a savings account or $400 for opening both. But of course the fine print stipulations on them made it a little more difficult than it sounds.
( * I've later found that you can buy these type of coupons for around $15-$20 here.)
We had put it off for the past year because all this opening more bank accounts and transferring funds around was something that I didn't want to deal with. But I finally realized that I was an idiot not to take them up on their offer.
Last week I set down with our financial information in front of me and read through all of the fine print on one of the offers that came in the mail and wrote out a plan of how we can meet all of the requirements.
With my plan in hand it was just a matter of waiting until Friday when I would be able to go in and open the accounts. But on my drive home on Friday a wrench was thrown in my plan, but it was definitely a welcomed wrench. Earlier in the week I had gotten another Chase offer sent to my email for the same set of bonuses. I started thinking of the implications of opening non-joint accounts for both me and my wife and being able to double dip on the bonus offers.
Because of the stipulations in the fine print we opened a checking and savings accounts under my wife’s name and a separate checking account under my name. Both checking accounts will give us $200 each within the first 10 days but the savings account has to have a minimum of $15,000 in it for the first 90 days before they will give us the $200 for that account. (We didn’t bother setting up a savings account in my name since we knew there was no way to put $15,000 in it for 90 days, we had to scrape a few funds together to put 15k in my wife’s account.)
There it is, my free money that I found this week. All of my “investments” are secure (FDIC backed - there is no way that I can lose anything), and I’m guaranteed to make money. That’s the kind of equation that I like to see:
Risk Free + Work Free = Free $$
I’ll take that anyday.
Since I studied up on the fine print rules I was able to set the plan up so that we are going to be avoiding fees on all three accounts and still maximize my income from it. Additionally, the accounts have to be opened for at least 6 months or they will take the bonuses back, but in 6 months from now I am planning on closing all of the accounts, waiting a week or two, and re-opening new accounts for me and my wife. Who, knows maybe I’ll even have the finances set up by that point that I can open accounts for my sons and get then bringing in the bonuses as well.
But Captain, that is great but I don’t get these offers showing up in my mailboxes. That’s alright, go check out Ebay. There are others out there who have similar coupons up for sale on Ebay. If they continue to send them to me with my mortgage statements I’ll be putting them up for sale too. So, it might cost you a few dollars to buy the opportunity to have Chase give you a few hundred dollars. And who knows, maybe you’ll be able to find one out there that will give you even more than the ones that they mailed to me.
If you know of any other banks (or anyone else) that are in the habit of giving money away like this, hook us up! Let us know about it in the comments so that we can look into it as well.
* As an update, one week after we set these up we got another $400 offer in the mail but this one was for $300 on the checking and $100 on the savings. If I had had this one I would have used it to open my checking account and gotten an extra $100. The offer is good for another 2 months so I might try to scrounge up an extra $1,500 and open a checking account for my son. We'll see if I can pull it together.
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