Every Bit Helps

Adam M. Grossman

IN NEW ORLEANS, a lagniappe refers to a small gift or bonus—like receiving 13 items for the price of 12, or a so-called baker’s dozen. Today, credit card points are a popular form of lagniappe, delivering a modest bonus every time you spend. But many other lagniappes are also readily available:

Banking. If you’ve ever paid a fee to use an ATM, Charles Schwab Bank’s checking account is worth a look. You can use any bank’s ATMs and, when other banks impose fees, Schwab will rebate them—without limitation. Another benefit: Use this ATM card overseas and, unlike most other cards, Schwab won’t charge any foreign transaction fees. 

Borrowing. Mortgage rates have doubled over the past few years, so this might not seem like the ideal time to refinance. But there are two ways to potentially cut your interest costs.

First, while rates are still high, they’ve come down from their peak last fall. Depending on when you purchased, a better rate might be available now. Another way to lower your rate: If there’s extra cash flow in your budget, you could refinance to a mortgage with a shorter term. Rates on 10-, 15- and 20-year loans can be much lower than those on 30-year mortgages.

Saving. Just a few years back, bank savings rates were near zero. But today, it’s easy for savers to earn as much as 5%. The challenge, though, is that rates are far from uniform, with some banks still paying very little. If your bank is among those offering a meager rate, it’s worth considering online banks such as Barclays (advertising 4.35%), Capital One (4.35%), CIT (5.05%), Marcus (4.5%) and Synchrony (4.75%). 

If your savings exceed the FDIC insurance limit, you could split the balance up among multiple banks, but that can be cumbersome. An alternative: Open a brokerage account and buy a money market fund that holds only Treasury bills. Because Treasurys are backed by the same entity as the FDIC—the federal government—your money is effectively protected the same way, but with no limit on coverage. This approach is slightly more inconvenient than holding cash in the bank, but it’s the easiest way to protect a large balance.

Paying bills. Most insurance companies offer a discount for paying the entire annual premium all at once. But with savings rates so much higher today, it might make sense to opt for monthly or quarterly payments. By stretching out the payments, you can keep your cash in the bank for longer earning interest.

Cellular service. These days, most cellular customers opt for one of the big three carriers: Verizon, AT&T or T-Mobile. But there’s an alternative called Mint Mobile that offers substantially cheaper plans. Until last year, Mint was an independent company. It’s now owned by T-Mobile and runs on its network. A potential downside: Data speeds for Mint customers are sometimes throttled, so it’s not for everyone. But it might be worth a look.

Investing. When the research firm Morningstar surveyed mutual funds, it reached this conclusion, “In every single time period and data point tested, low-cost funds beat high-cost funds.” Textbook economics dictates that “there’s no such thing as a free lunch.” But when it comes to investing, index funds offer investors just that. Jack Bogle, the late founder of Vanguard Group, said it best: “In investing, you get what you don’t pay for.”

E-commerce. Shopping online? Three services are worth your attention. Ibotta and Rakuten offer cash back on purchases, while Honey searches for coupons and applies them automatically. What’s the catch? I assume these services are all collecting—and presumably selling—data on your shopping habits. That’s not great, but I’m not sure it’s any worse than what search engines and social networks are already doing. 

Birthdays. When I was a kid, a local ice cream shop offered customers a free cone on their birthday. Many merchants now offer an online equivalent. Here are links to just a few: Starbucks, Dunkin’, J. Crew, Kohl’s and Sephora. The Krazy Coupon Lady website offers dozens more, and this site lists others.

Lottery tickets. I don’t advocate playing the lottery. But sometimes an investment opportunity might look a bit like a lottery ticket. Consider bitcoin. I’ve never liked it and still don’t. I see it as too speculative. At the same time, if you’d purchased even a small amount 10 years ago, you would have seen an approximately 80-fold increase in the price.

That’s why I sometimes make this recommendation: If you see something that looks crazy, but also wonder if it might work out, invest a small amount. If it turns into the next bitcoin, even a small investment will deliver a meaningful gain—and, perhaps just as important, it can help to minimize regret. On the other hand, if it goes to zero, you won’t have lost much.

Everywhere else. California’s In-N-Out Burger is famous for its off-menu items, which are readily available but not advertised. This type of thing isn’t limited to In-N-Out, though, and it gets at a final strategy for uncovering lagniappes: simply asking. To be clear, you aren’t asking for special treatment.

Rather, you’re looking for benefits that are available but not necessarily advertised. Because they aren’t the merchant’s first choice, you might have to ask a few different ways to uncover them. What’s an example? Some golf courses allow kids to play for free at certain hours. It’s surprising sometimes what a simple inquiry can uncover.

Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam’s Daily Ideas email, follow him on X (Twitter) @AdamMGrossman and check out his earlier articles.

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