Big Bad Bank Lesson #1: It Takes (Someone Else’s) Money to Make Money.
People say it takes money to make money. Not true. Just look at the big bad banks. It takes big banks Nothing to make money. What do I mean?
Theoretically, anyone, without any assets, can make infinite amount of money if he or she is a bank. A bank in the US can borrow money from the tax-payers (federal government) at 0% (currently 0.25%) interest rate, then lend this money out to consumers at rates ranging from 2-30+%. Isn’t that incredible? A penniless bank, borrows money which it in turn lends out at pretty much any rate it chooses. The only risk here is default, but when you have 30% growth off of borrowed money, you can withstand some defaults.
So banks don’t have their own money… they don’t even hold onto the money they borrow. All banks do is to create this money current, making themselves the conduit that the money river flows through, they take interest difference (between the lower rate they borrow at and the higher rate they lend at), transaction fees, loan origination fees, and other fees galores.
So why don’t we every day people also turn ourselves into mini banks?
Learn from the BBB’s, and make ourselves a channel for money river…
So here’s how I did it and made $3,300 by a few mouse click using about 2-3 hours of my time.
Now, there is online sources that states that the Citibank is no longer taking credit card funding for new Citibank bank accounts. Since it is not an official statement from Citibank and you’d still like to try, ahead… but Don’t get mad if it doesn’t pan out.
The point here is learning from BBB and seizing the opportunity to be the bank yourself for once!
Here’s the synopse of what I did to create a money river with me being the conduit that directs the money flow and profits off of it.
- Open Citibank online account
- Fund the Citibank account with my BOA Visa Cash Reward card
- Once money in new Citibank account, pay off BOA credit card
- BOA credit card gives me 1.1% cash reward
- Since I funded $50k, I get $550 cash rewards in my BOA checking account
- Close the Citibank bank account after 30 days (not much longer, I wanted to avoid the monthly fee).
- Open a new Citibank bank account online and then repeat 1-6 steps. Every cycle, I make $550.
So I made $3,300 when I had $0 in my bank accounts. It was just 1.1% cash back, imaging 3% or even better 30% cash back (which is the kind of deal our BBB ‘s are getting.) BBB’s did nothing but moved tax-payer’s money around… the more profitable directions the BBB’s manufacture, the more rewards they make for themselves. (16% interest rate on credit cards, 30% once credit cards defaulted, 5% on student loans, 4% on mortgage, 6% on used car loan, etc.)
In summary, it does not take money to make money. Money can be collected from the money river flowing through your property. Much like all living things on the banks of river thrive from what the river offers as it runs by.
Be the bank, capture what the cash river offers you as it goes by.