Money is tight for most of us these days. So I know that advocating for people to buy hard assets – fine art, bullion or antiques – can seem a little unrealistic at times. After all, who has extra money for a vintage fountain pen, much less an old mine cut diamond, when food, gas and the mortgage are so expensive?
And yet it is imperative that average, middle class people find a way to buy some hard assets. While the Wall Street casino continues to pay out for the moment, it is only a matter of time before stock market investors roll snake eyes. When that time comes, a few well chosen tangible assets will go a long way toward underpinning both your sanity and financial health.
Therefore, I’m always looking for new, innovative ways to fund fine art and antique purchases. I explored one of these ideas in my article titled “Buying Fine Antiques on the Installment Plan“. But that method has a significant drawback. It assumes you already own a pile of interest or dividend earning assets like stocks, bonds or bank CDs. For a lot of people, that simply isn’t the case.
But then I came up with another idea. What if I said you could accumulate a stash of money that could be used toward a hard asset of your choice without using any of your own money? Does it sound too good to be true? Well it isn’t. I’m talking about using your credit card reward points to buy bullion, fine art or antiques on ecommerce sites like eBay, Etsy or Amazon.
Many people are already familiar with credit card reward points programs. Typically you accrue anywhere from 1% to 3% of the value of the items you purchase with your credit card. These rewards programs vary considerably by issuer and individual card, with some being very restrictive and others offering more flexibility. However, many programs will allow you to redeem your accrued credit card reward points for gift certificates to major e-tailers. Sometimes gift certificates are not available, in which case redeeming points for a statement credit or cash can be used as a proxy.
In any case, using your credit card reward points as a slush fund to buy bullion, fine art or antiques is a no-brainer. In many instances, people have a tendency to dribble these valuable points away on things like airline miles, hotel stays, concerts or other fleeting, intangible benefits. This is less than ideal when these points could be redirected toward enduring hard assets that will appreciate over time. Spending your credit card reward points on tangible assets is a great way to accumulate fine art or antiques with “found” money.
The amount of money that you can accrue with credit card reward points can be substantial. For example, if you charge just over $2,000 a month to your credit card, that will total about $25,000 over the course of a year. If your credit card reward program gives you a baseline 1% back, that translates into $250 every year for your hard asset shopping. And you can easily enhance these numbers significantly by choosing a credit card with a good rewards program.
Maybe a few hundred extra dollars every year doesn’t seem eye-popping to you, but it is also completely free money. So when you do use those points to buy a few one troy ounce American silver eagle bullion coins, it will be completely painless. And if the amount of credit card reward points you earn over the course of a year isn’t enough to buy what you want, you can easily supplement your hard asset purchases with external, non-reward program funds.
To some extent, the best credit card reward points programs for buying fine art and antiques are also the best credit card reward programs, period. Quite a few programs out there pay substantially more than 1% back, which should be thought of as a starting value. In addition, many of these programs offer ancillary benefits such as travel perks or extended warranty protection on purchases.
First on our short list is the Capital One Quicksilver Cash Rewards Card. It earns you 1.5% cash back on all purchases with no restrictions. It also doesn’t have an annual fee or any foreign transaction fees. As an added bonus, new cardholders can earn a one-time $200 cash bonus when they spend $1,000 on purchases within 3 months of opening the account. I like this card because there are no special requirements to earn the hefty 1.5% cash back reward. It applies to all purchases at all times.
Another credit card that works well with a hard asset accumulation plan is the Chase Sapphire Reserve Card. This prestigious credit card earns 1 point per $1 spent on most purchases, but ups that to 3 points on travel and dining. It also provides a massive, one-time, 50,000 point bonus if you spend $4,000 on purchases in the first 3 months after opening the account.
With the Chase Sapphire Reserve rewards program, every 100 points accumulated typically equals $1 in rewards, but that exchange rate is enhanced for certain travel perks. The James Bond villain credentials of this covetable card are cemented by its recurring, $300 annual travel credit and heavy, all metal construction. It is no wonder that many people, especially those who travel a lot, overlook the card’s hefty $450 annual fee (plus $75 for each authorized user).
But my personal favorite credit card reward points program for buying tangible assets has to be the Amazon Rewards Visa Signature Card. This card will earn you a whopping 5% on all Amazon purchases (provided you are a Prime member; 3% if you are not), 2% on restaurant, gas station and drugstore purchases and 1% on all other purchases. There is also no annual fee (beyond the $99 annual Prime membership fee if you want the 5% rewards on Amazon purchases) or foreign transaction fees.
Like the Chase Sapphire Reserve card, the Amazon Rewards Visa Signature Card is crafted from metal, which is a very nice, high-end touch. In addition, points never expire and you’ll instantly receive a $50 Amazon gift card on approval. Points can be easily redeemed on Amazon’s website or through the issuing bank, Chase, for other rewards. If you are a frequent Amazon shopper, the Amazon Rewards Visa Signature Card is perfect for a guerilla fine art and antiques accumulation plan.
Unfortunately, as intriguing as using credit card reward points to fund your art acquisitions might be, it does have some drawbacks. This strategy is only for people who pay off their credit card balance every month. Any balance carried on a card will accrue interest at an unacceptably high rate, typically between 15% and 25%, thus offsetting any possible benefit. Also, if you are already using your credit card reward points for other purchases like travel miles, hotels or dining out, then you might be reluctant to give up these perks. In addition, points and points programs are completely at the discretion of the issuing bank and can be modified or even cancelled at any time.
In spite of these minor disadvantages, I feel that using your credit card reward points is one of the easiest, least intrusive ways to start building your hard asset portfolio. In addition, sometimes you can stack rewards by using programs such as eBay Bucks. In any case, no matter how you find the money, buying bullion, fine art and antiques is a good move right now.
