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What do you folks think of the Guest Rewards/Amteritrade offer? It seems to me that if one gets 15K points at a nominal value of 6¢ each for depositing $10K for 9 months that's a very good rate of return - and tax free at that. Of course, it depends upon my actually using the points for travel that i need/want to do. I think they offer some piddling interest on the account as well, .5% or so. Am I missing something here, Mr. Norman? These funds are not generating anything like 10% for me now. If you're embarrassed to expose my naivite publicly, private messages are fine. Thank you all very much.
PullmanCo Member # 1138
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Since GBN hasn't yet answered, here's my first question: What's the fine print?
If something seems too good to be true... it probably is...
Gilbert B Norman Member # 1541
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I checked both the TD Ameritrade and Amtrak Guest Rewards web sites for any information regarding the subject promotion. There is nothing about such at AGR site. The TD Ameritrade site simply notes to "consult a new accounts advisor by phone for more information on any promotions currently being offered'.
Mr. Pullman's comment is certainly well-taken; beyond noting such, I am at a loss to be of assistance regarding this matter.
I had assumed that everyone got this offer. The 'fine print' is light grey and seems to read that you only have to fund the account. Trading does not seem to be required - although I might be tempted if the market turns around. Doubt it though. I got out of the mkt about 2 yrs ago so am relatively unscathed and have the cash to do this if it seems advisable. It did occur to me that Ameritrade would not be FDIC. Is it a healthy company? Are they a candidate to go bust? What is the risk?
Gilbert B Norman Member # 1541
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Lest we note, the "free toaster ain't tax free":
Normally the amount of a bonus given in connection with opening or maintaining an account is considered reportable interest to the IRS. There is an exception to this general role, however. According to an IRS ruling, noncash "de minimis premiums" are not treated as interest, and thus are not included in determining whether the $10 threshold for 1099-INT reporting is met. A de minimis premium "does not have a value in excess of $10 for a deposit of less than $5,000 or $20 for a deposit of $5,000 or more" [IRS Rev. Proc. 2000-30]
Now regarding insurance; the funds you send to a financial institution other than a bank are not FDIC insured. A brokerage house will buy for your account shares in a money Market Mutual Fund. There is no insurance against a decline in market value - something that 'wasn't supposed to happen'; well until the aftermath of 9/15 when several money market funds 'broke the buck' i.e. the Net Asset Value of their shares were less than $1.00. There is however insurance under the SIPC, Securities Investor Protection Corporation for someone "making off' with your property i.e. X # of shares in the Fund. Thus when Bernie "Made Off" with securities represented to be purchased for a customer account, the SIPC could have claims progressed for such. However, there is no assurance they will be paid, as it can be argued that the Madoff customer never held the shares represented, but rather was a victim of a fraud, for which there is no coverage.
City of Miami Member # 2922
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Thank you , Mr. Norman. I didn't understand the part about converting to shares in a money market mutual fund and being subject to market conditions. Hmmmmmm...... That's why asked, i.e., to increase my information from which to make a decision. So, it is taxable, and it IS risky to which we are allergic at this time.
Gilbert B Norman Member # 1541
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Off topic off rails update; looks like "Bernie's in the slammer":
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