How to Earn Points on Your Savings and Investments

Chris Hutchins (0:00)

If you want to earn points, it used to feel like the only way to do it was spending more money. Well, that's not true anymore because you can earn miles and points on money that just sits there, but is it actually worth it? Well, I went through every way I could find to do it. I found one way that costs more than the miles are actually worth. I found another where it actually feels like it's a lot closer to free points. And then there's one where you can earn a lot more than other accounts, but it does come with some different risks that you might need to rethink and really understand before you do it. So my goal is to break down all the options you can have to earn points on your savings, and by points I mean airline or hotel points or transferable points that can be converted to those. If you're new here, I'm Chris Hutchins, and if you enjoyed this episode, leave a comment or share it with a friend. And if you want to keep upgrading your money, points and life, click follow or subscribe.

Okay, first off, we're going to talk a lot about different ways to invest and save your money. And I just want to make it clear that this is not financial advice. I'm not trying to give you personal advice. This is my experience, my understanding, and you should always do your own research before doing anything. And when you think about earning points, you should realize that someone is paying for those points. And sometimes that's you. Sometimes it might be venture capital that startups have raised to give away points at a much lower cost or even for free.

Or it might be that the business model actually supports a way to give those points. In the long run, there has to be a model that works. And if you look at the credit card space, it's pretty easy. The model is that the issuers of those credit cards earn money from the processing fees merchants pay. They earn money from the interest if you don't pay. But today we're not talking about credit cards. We're talking about a few different models. So one of them is mileage bank accounts like Basque. Another is a points earning brokerage like Silo. Both of those options we've covered before, so I'm going to spend a little less time on them. And then there's a third option, which is a new product called Symphony that I've heard a lot of coverage on and I just felt like I needed to go deeper before I really wanted to consider it. And the way those different programs make money to pay for those points is different. For mileage bank accounts like Basque or United's debit card, they are real banks, so your deposits end up getting lended like any bank and the income from that lending is used to buy airline miles instead of paying you cash interest. Silo is a brokerage firm, they charge a membership fee, and at the right balance, it pays out more points than those fees cost. And I'll talk a little bit more about how that business model works and what I learned from asking the founder a few questions. And then Symphony is a new app, where the underlying investments actually earn more than the 5% or 5X points they pay you, but you are taking on more risk than some traditional investment strategies. Now, none of those things mean that the points have to cost you something, sometimes they do, and sometimes you actually come out ahead, and sometimes the welcome offer is so compelling that it might even change the economics for the first year of one of these deals. So if you're wondering why we're talking about this now, why haven't we seen this that much before? Well, mileage bank accounts like Basque have actually been around a while. I think I've had my Basque account for maybe 5, 10 years. But these other two players are new. And the reason why these things exist now is a little bit behind the scenes plumbing. Companies like Ascenda or Odin or even points.com are making it easier for new entrants in the fintech space to be able to directly link up and partner with multiple airlines and hotel groups to be able to offer those programs points. Now, in practice, it's not that easy, right? It might seem easy, but I know Silo and Symphony have been talking about transferable points for a while and it hasn't launched. I have gotten dates from them. They both seem to be very, very confident that in late October, November, these programs will launch. They have names for them. They know what they're going to be. But I just want to flag that that is what's making this possible and easier. But it doesn't mean it's as fast as everyone wants. It's still a lot of behind the scenes work. So first I'm going to start with what you earn. How many miles or points per dollar are you getting plus any bonuses? And is that going to change in the near future? Because in a couple of these cases it is.