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Andrew Tobias

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Andrew Tobias
Andrew Tobias

Money and Other Subjects

Getting AOL to Pay YOU

October 24, 1997February 3, 2017

I actually have nothing against America Online. On balance, I think it’s pretty great. But there are those who do have a nit or two to pick. Well, revenge is at hand. Not that AOL is likely to leave this loophole open long after reading this (which you will also find I’ve used as my November column in WORTH). But “if you or anyone you know” has ever been annoyed by AOL, “I urge you to get pencil and paper ready,” as they say.

Here’s the deal. When you boot up AOL and get hit with that ad for AOL’s Visa card — which you have to click “OK” to get past — fake ’em out. Accept the offer. At least that’s what one rich friend of mine did.

When his no-annual-fee card came, he signed up for the “automatic pay” feature, which automatically debits his checking account at Chase at the last possible moment and pays off his balance. Then he took one of the “convenience checks” they sent — a convenient way to get yourself deeper in debt at the introductory rate of 5.9% for six months and 17.9% thereafter — and wrote it to himself for his $20,000 limit, depositing it to his interest-bearing checking account at Chase.

He’s got it down to a science by now. He deposits the check the day after the billing cycle ends, so it takes a month even to show up on his Visa bill, and then another month or so before, at the last moment, Chase automatically zaps the $20,000 back to Visa, paying his balance in full before any interest begins to accrue. (With most cash advances and convenience checks, interest begins to accrue right away. Not so, as of this writing, with the AOL Visa card.) Then he writes himself another check for $20,000 and starts all over again.

As a result, at no cost whatever, he gets:

  • The interest on $20,000 that he keeps in his Chase account more or less all year — about $1,000 worth.
  • A waiver on the $25 a month Chase would charge for his account if he didn’t maintain a high average balance — worth another $300 a year.
  • Some 20,000 “points” every two months redeemable for time on AOL at a penny a point — 10 free months (unless they hunt him down like a dog and find some excuse for canceling his account, but I’d hate to see their legal bills if they did).

I must tell you I sympathize with AOL in this. Whatever they’ve done wrong, they’ve done a lot right for $20 a month. But in my friend’s case, they’re more or less paying him $1,300 a year to use the service — and giving it to him free for what should soon amount to the end of time.

 

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