Money Laundering for the US Government

Okay, my headline is a bit sensationalistic, but it’s not far from the truth in my latest profitable personal finance adventure. You see the US Mint has a problem. It wants to replace the paper version of the US dollar with the coin version because the paper version wears out much more quickly and increases costs for the US Mint to replace the currency whereas the coins obviously degrade far more slowly. The only way to take paper money out is to increase the circulation of the coins. This is where I come in. You see you can buy these coins at the US Mint website. Why help the government with this task you ask? Because you can make $ on it. Here’s my process from a recent transaction:

1) 9/5/09 My billing period closes on my Schwab Invest First credit card. Why is this the starting place? Because I’m buying the money with my credit card that pays me 2% on any purchase (including the purchase of coins at the US Mint). And, I want to buy as close as I can to the new billing cycle in order to maximize the amount of time the value of the coins will be deposited in my bank account before I have to pay the credit card bill.

2) 9/9/09 I initiate my purchase at the US Mint website. I buy 2 $500 presidential sets. It’s easy and painless. Note that when you go through the purchasing process, it appears like you have to pay the shipping and handling until the very last page. The shipping is actually FREE, and that’s clear at the end.

3) 9/15/09 I had heard that delays in the initiation of shipment were common. My coins shipped 6 days after my purchase initiation. A UPS tracking number was provided at the website.

4) 9/16/09 Surprisingly, the coins arrived the next day. You must sign for them. I took the coins to the bank at lunchtime still wrapped in their wrappers and encountered no issues with the deposit. It was a completely normal and standard transaction except that I had 1000 $1 coins in my possession.

5) ~11/7/09 This is the likely future date where my Schwab Invest First credit card will autopay for this purchase from my account. That means I’m gaining 2% interest on $1000 for about 50 days in my NC State Employees money market account. I’m estimating the approximate value of this to be $2.75.

$2.75 isn’t much, but let’s not forget the $20 I’ll be getting as cashback bonus on my purchase from Schwab.

So, to summarize, I make $22.75 by initiating a web purchase, taking delivery from the UPS person, and depositing the money in the bank I drive by virtually everyday. If you do this at the beginning of each billing cycle as a routine and you pocket an extra $273 per year. Probably not as profitable as real money laundering, but this one is legal.

As always, feel free to ask questions in the comment section.