6 ways you are passing up free money

I like free money. It’s my favorite kind. I’m talking about the $20 bill lying on the ground. The birthday check from Great Aunt Millie for $5. The extra 30 minutes someone overpaid on the parking meter that you get to use when you park there. It’s all good.

So why would you pass up free money? The problem is, there are plenty of opportunities, even in this day and age, to get money for nothing. Of course there is a price – you may have to fill out a form, or walk to a bank, or call an 800 number. But in practical terms, we’re talking about nothing. So where do you get this free money? Who is crazy enough to give it away? Your employer, the federal government, banks, credit card companies, airlines, supermarkets? The answer: all of them!

1. Not taking advantage of employer match in your 401(k). This is a biggie. If your employer offers a matching program for your 401(k), what they are telling you is for every $1 you put towards your retirement – up to a certain level – they will give you $1. You don’t have to stay later, or hang with the boss under the mistletoe at the holiday party. They’ll just put it in your 401(k) and walk away. It may take a year or two to vest fully, but it’s your decision to stay or leave. Don’t pass up this unless you feel that you don’t really deserve any more of your company’s money than they graciously give you in salary.

2. Keeping cash in a checking account. I know it’s been a while since most of us did basic decimals in grade school, but let’s review: .5% interest means you will get one half of one penny per $100 capital per year. That is pretty bad, but it’s probably better than you’re getting in your checking account. Shift some of that money into a high yield savings account and you’ll get 4% or more on that money: that’s an extra 800 half-pennies per year! The same money, still lounging around unused in an account, will generate 8 times as much interest – money for nothing.

3. Not using a cash back rewards card. Credit card companies are not our buddies. They are not in business to make our lives more convenient – they are in business to trick us into running up big balances. What easier way than telling you that every time you spend $100 they’ll give you four shiny new quarters? The trick here is to turn the tables on them. Put all of your expenses on a cash-back credit card each month, then pay off the balance in full. They’ll probably be muttering and complaining in their plush credit card executive offices, but they’ll give you the money. I get cash back on my donations to charity because I do this. Think about that – I give money to charity but I use a cash-back card that pays me 1% back. If that isn’t free money, I don’t know what is.

4. Failing to join your supermarket ‘frequent shopper program’. Most big supermarkets have a “card” price on their store brands. If you use your ‘frequent shopper card’ they give you big discounts. All they ask in return is the ability to measure your buying patterns for marketing purposes. That may be a little creepy knowing that all that data’s being compiled about you, but hey! I’m not about to pay $1 for something I could pay $.50 for just by giving out information to Pathmark. I may regret getting a flyer in the mail but most of these supermarkets let you opt-out of mailings.

5. Withholding too much. The federal government is a pesky creditor. Imagine if you went to a nice restaurant and while you were eating the waiter came by every 10 minutes to ask for another 1/6th of your bill. Annoying, isn’t it? Well, Uncle Sam can’t wait until April 15th to get your tax payment – he needs it now and he needs it bad. But he also lets you decide just exactly how much should be withheld from your paycheck every month. Imagine you’re back at the crazy restaurant. The waiter comes by and wants $10 every 10 minutes. Would you give him $15 each time and tell him to give you the change back after dinner? Why would you want him holding your money for you? Why do you want the government holding your money that could be in a high-yield savings account? Reducing your withholding can put some money in your pocket NOW instead of later.

6. Not joining airline/hotel/etc. frequent flyer programs. I know the value of a frequent flyer mile isn’t what it used to be, but if you fly they don’t charge you anything extra to put the miles in an account. I’ve paid for enough flights and hotel rooms over the years using points that I think it’s worth it. I would have paid for those flights and rooms otherwise. Using points is a hassle, I know, but it’s still something for nothing. The “something” is a little bit less every year, but it’s still there.

It’s all free money – who wouldn’t want some of that?

21 Replies to “6 ways you are passing up free money”

  1. This is a nice little list, and all the ideas are great potential money makers.

    I like make sure they don’t become more trouble then they are worth. I always like to do a risk and time versus reward analysis. Often times the return on some activities is just a few dollars, but we go to the ends of the earth to get there. Like driving across town to get a few pennies cheaper in gas.

    One late fee on a credit card ruins months of rewards, plus if things get tough, and sometimes life does, you are stuck with debt.

    If you are constantly switching money between checking and savings, it is probably not worth the time and stress, or even a possible bounced check. Leave enough in your checking to not worry about having too little in there.

  2. I am guilty of leaving too much money in my checking account, so I switched to a checking account with over 4% interest (Charles Schwab). I make a few dollars a month doing nothing…

    I’m guilty of not signing up for rewards programs…but I don’t travel that much…so…maybe not a valid excuse.

  3. I fly with too many different airlines, even if I joined a program, the points expired before I can accumulate more by flying with them again.

    I am not loyal to any one or two airlines. Accumulating points is really not worth it for me.

  4. Those are some great tips. Unfortunately I don’t have the 401K option. I’ve had the high yield savings forever. I’m considering moving all my monthly expenses to a credit card now. That’s a good idea.

  5. “Not joining airline/hotel/etc. frequent flyer programs”

    I feel there are not worth it. Because you have to spend a lot money just to get the points

  6. I hate grocery store programs. The company artificially raises prices a small % across the board in order to offer “deals” to the customers. From there, they gather info about you and your shopping habits. Then they send you coupons and other “goodies” geared toward trying to get you to spend more money at their store. On top of that, you have yet another card, number, or account to keep track of. I admit it is nice to see that I saved $20 on a total grocery store purchase, but I can’t help but wonder if I really saved it, or if the grocery store company is laughing at me as soon as I walk out the door. “Ha-ha, sucker!”

  7. “Credit card companies are not our buddies.”

    This may win the understatement of the year contest.

    I’m guilty of being too lazy to get my loyalty card out to swipe the stupid thing at the supermarket.

  8. About the frequent flyer programs – I guess my point is that almost everyone flys or stays at a hotel eventually – and if you do and you’re not signed up for their program you’re wasting money. It doesn’t HAVE to be redeemed for the hotel/airline. I had four magazine subscriptions last year from points, for example.

    I think my big takeaway from the comments is that people don’t even agree on whether “free” stuff is good, or even whether it’s truly free – meaning that free is a relative concept, isn’t it? There’s always some sort of a cost…

  9. Good list! We use all of these (and in our case, we also get discounted ESPP – another case of free money).

    The only grocery store with a discount card program that is near us is by far the most overpriced store. We only use them for loss leaders and you have to have that card to get the best deal.

  10. Great list! Here are a few more that have worked for me –

    1) Credit card arbitrage (I know you are not very fond of this based on your recent comment on Cash Money Life, but for me it has worked out quite well).
    2) Employee stock purchase plan which lets me purchase stock of my company at 15% discount.
    3) Choosing a Realtor who gave me back ~1% of the home price

  11. Correction: “.5% interest means you will get one half of one penny per $100 capital per year” – actually, .5% interest on $100 would bring you $.50. If all you get is half a penny, then your interest rate is .005%. 😛

  12. Great advice! Re tip #2: set up an Electric Orange account through ING. It’s free, checkless, easy to set up, and pays about 4%!

  13. Great list. The 401k, withholding, and frequent flyer points don’t really apply in my case but they’re great tips.

    Just last night I transferred most of my checking account balance into a new WAMU savings account. It’s tied to my checking account so I can easily transfer funds back and forth and will earn me 4.99% with no minimum balance. It was silly to carry that kind of balance in a non-interest bearing checking account.

    I also love my cash rewards credit card which pays up to $300 in cash-back dividends per year.

    And earlier this year we went one step further than the supermarket’s frequent shopper card — we got a Kroger 1-2-3 Rewards card which is a credit card combined with my frequent buyer membership. In addition to the special in-store prices, we regularly receive special coupons and “cash checks” in response to my shopping history. It’s convenient and it saves me money — what’s not to like?

    I’m not a Safeway shopper but I carry a Safeway card because it qualifies me for a $0.03/gallon discount at their gas pumps.

  14. I have money in Paypal but it costs some transaction fees to withdraw it in Malaysia, my home country. I wonder what I can do with the money in Paypal beside spending it. There are free money passing by every minute. Furthermore, US dollar depreciates.

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  17. I kept too much cash in my old BofA checking and lost some cash. Now I use ING Direct savings with my Wachovia checking and I see a great difference. More money and better customer service.

  18. I kept too much cash in my old BofA checking and lost some cash. Now I use ING Direct savings with my Wachovia checking and I see a great difference. More money and better customer service.

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