M1 Finance has been teasing their “10% cash back for investors” credit card for a while, and they finally released (nearly?) all of the details. First, know that you need to subscribe to their premium M1 Plus service, which adds a bundle of upgraded services for $125 a year. This card has no annual fee and will initially only be available to apply if you have M1 Plus. I believe that all M1 customers can get their first year of M1 Plus for free.
The M1 Finance Owner’s Rewards card has three boosted cash back tiers: 10% cash back, 5% cash back, and 2.5% cash back. You get 1.5% cash back on everything else. The unique requirement here is that you need to actually “own” at least some partial shares of each company in order to enjoy the cash back from that company.
Must own securities in a qualified M1 investment account as explained in M1’s Owner’s Rewards Terms & Conditions to be eligible for 2.5%, 5%, & 10% categories. Trust and custodial accounts are not eligible investment accounts. These terms will be available once the card application is accessible, and the terms and companies listed are subject to change. Securities shown should not be considered trade recommendations. You should assess your own investment risks prior to purchasing any securities shown.
Here are all of the brands (ticker symbol):
10% Cash Back Brands (16)
Bath & Body Works (BBWI)
Victoria’s Secret (VSCO)
Stitch Fix (SFIX)
Ulta Beauty (ULTA)
5% Cash Back Brands (14)
American Airlines (AAL)
Delta Airlines (DAL)
Dollar General (DG)
Domino’s Pizza (DPZ)
Fedex Kinko’s (FDX)
JetBlue Airways (JBLU)
Southwest Airlines (LUV)
Home Goods (TJX)
TJ Maxx (TJX)
United Airlines (UAL)
2.5% Cash Back Brands (21)
Whole Foods (AMZN)
Best Buy (BBY)
Home Depot (HD)
Burger King (QSR)
Tim Hortons (QSR)
Burger King (QSR)
T-Mobile USA (TMUS)
Uber Eats (UBER)
Verizon Wireless (VZ)
Duane Reade (WBA)
Sam’s Club (WMT)
Pizza Hut (YUM)
Taco Bell (YUM)
At first, I thought this would be kind of cool, but after compiling this long list with only a limited number at the full 10% cash back, it just feels too complicated. My spending habits don’t necessarily align with my investing habits. Is a few dollars in extra credit card rewards worth changing up my entire investment policy? What if I just want to get 2.5% cash back from Costco, 10% cash back from Adobe, and so on without changing a potentially large portfolio? Let’s look at the rules:
You can open up to 5 accounts under one M1 Finance login. This can be any combination of individual taxable accounts, retirement accounts and trust accounts. (Trust accounts are not eligible for this cash back program.)
Each slice in a pie has to be allocated at least 1%.
The target percentages of all the slices add up to 100%.
Any buy order must equal a minimum of $1.00 per security before a trade will be executed.
If you open using a referral link, right now you just need to deposit $100 into an individual taxable account and leave it there for 30 days, and you’ll get a $50 bonus.
Therefore, here is a minimal-hassle strategy to qualify for ALL of these cash back brands:
If you already have an M1 account, but don’t want to alter your existing pie, open a second taxable account under the same login, with the plan to deposit $100 all at once.
Create a new “pie” asset allocation using all of the brands you possibly might purchase from above. Each brand must be at least 1% each, and the total must add up to 100%. This should be easy, as I counted only 51 total stocks.
Deposit $100 all at once, creating one trade with a least $1 for each company. You’ll now be an “owner” of all the companies, and thus get the cash back for each company. Just keep the account open with this small amount. Invest your other funds as you did previously.
If M1 changes up the companies at a later time, you might have to adjust your pie and add some more money to rebalance. In all likelihood, this pie will still grow over time, so it’s still an investment, even if it doesn’t track exactly with an S&P 500 index fund.
If your total purchases at those 10% categories are significant, then it may be worth the effort. I’m sure there are some folks out there are dropping hundreds of dollars when you add up the monthly bills from Chewy, Netflix, Spotify, Peloton, Lululemon, etc. I think the only places that I’ve shopped from on that list recently is Netflix, and I get 6% cash back on all my streaming from my AmEx Blue Cash Preferred.
Another question is if the addition of this card makes all the features of M1 Plus worth the $125 per year. For example, their checking account pays a higher 1% APY with M1 Plus and you get some lower 2% APR margin interest rates. However, I don’t know if the math works out for my personal situation. I already get higher bank interest rates elsewhere, and I can already get an effective 2.6% cash back on everything with my BofA relationship card, so only the 5% and 10% categories would be of additional benefit. That 2.5% cash back from Costco would be nice otherwise.
I have an M1 Finance account and I like their base product a lot as a DIY investor. However, this credit card just seems a bit too gimmicky. Maybe I’m wrong, and gaining access to all of these little boosts will end up adding up to something significant.
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