I occasionally peruse the Fatwallet.com Finance forum and have stumbled across some interesting ideas. In addition to providing me about $1,000 in "free cash" over the last year by highlighting sign-up bonuses for checking accounts, it provides some interesting and clever ways of making successful use of unintended consequences.
One I have taken advantage of is the US Mint $1 Presidential Coin Direct Shipment program.
History/Motivation for Dollar Coins
The US Treasury has been trying to encourage the circulation of $1 coins, which, in addition to providing a useful tool for public transit and vending services, has the advantage of being far more durable (and therefore, long-run more profitable) for the US Treasury.
According to 1995 CBO testimony by Deputy Director James Blum, the average $1 bill lasts about 18 months. $1 coins, on the other hand, are anticipated to have an average circulation life of 30 years. A $1 bill costs 3.8 cents to produce, while a $1 coin costs about 8 cents to produce. So, per unit cost and weighted by circulation lifetime, a $1 bill is 9.5 times as expensive as a $1 coin.
There have also been some anecdotes indicating that banks have been less than willing to accept Treasury's new dollar coins. The dollar coins aren't quite as convenient or familiar as dollar bills to average consumers, meaning that banks typically have to find "buyers" (e.g. US Post Office, toll operators) that have a use for the currency. I'm not completely sure how it affects the banks' bottom line, but having cash that is (1) less liquid than paper currency and (2) likely more expensive to store can't be good.
For both of these reasons, the US Treasury has started a direct ship program of $1 coin rolls, with the goal of increasing their circulation and adoption.
Details of program
A description of the program is on the US Mint website.
Briefly, Treasury will ship, for free, orders of one or two boxes of $1 Presidential/Native American coins. Each box contains 250 coins. You can sign up for an account here.
Note that these aren't numismatic grade - they are probably MS-60 to MS-63, or "Brilliant Uncirculated", and aren't as likely to carry a numismatic premium as, say, proof coins.
An interesting aside: they appear to use UPS to ship the coins. I have no idea why they don't use USPS - perhaps it has something to do with contracting for air shipping. (Most of these coins are minted in Denver and Philadelphia.)
Fatwallet has a long (131 page) thread on the direct ship program. Most of the excitement comes from using a rewards credit card to purchase the currency, then depositing the coins in a local bank. All in all, it's a crappy way of earning $10-20 dollars (assuming you have a 1% or 2% cash back rewards card). The coins don't always ship in a timely manner (one order took over a month).
Key point: They only take Visa and Mastercard.
Other advantages/benefits
There are other advantages that I believe the Fatwallet thread neglected.
(1) Float
If you order in small amounts (1-2 boxes), the time between ordering and shipping seems to fall to around a week or so. Assuming your credit card company uses two-cycle billing, and assuming you time the purchase to fall just after you've received a new statement, you would get nearly two cycles of float (60 days, less time between order and depositing funds) on the amount of currency ordered. In this interest rate enviroment, the rate arbitrage isn't great. (For example, using the HSBC Online Savings APR of 1.55%, you'd bank a whole 0.169%, or $1.69 in interest, assuming a somewhat optimistic 40-day float period.
(2) Cash advance
The real advantage, especially for the temporarily* cash-strapped, is a cheap cash advance. Cash advances on credit cards have a couple negative effects.
First, cash advances may come with fees above and beyond the interest rate charged on the amount advanced. (This is going to be increasingly common as banks seek to earn their way out of TARP.)
Second, they incur interest from the day of the advance, eliminating the benefit of float.
Third, the interest rates are usually considerably higher (5-15% higher) for cash advances than point-of-sale purchases.
Fourth, many cards cap the cash advance amount at a level significantly lower than the overall credit balance. (I've seen it range from about 1:100, in the case of my Goodyear Card, to 1:4 to 1:3 for my Citi Dividend World Mastercard and Starwood Amex.) If you really need the cash, you might be out of luck, even if you have a high credit limit.
(3) 0% Promotional offers
If you can take advantage of a 0% promotional offer, I would consider making use of the Direct Ship program to have access to float for the duration of your promotion (6-12 months is typical). Again, the interest rate arbitrage isn't great, but it is better than nothing. And if you're a small business owner with a ROC significantly above 3%, then this is a decent way of acquiring short-term financing. Just don't get screwed - you will have to pay it back eventually. Also, do watch your credit utilization - there is some evidence that adverse action against your credit score is taken once you exceed 10%, 30%, 50%, 70%, and 90% of your credit limit.
* Note: I'm not advocating using this approach for cash advances for discretionary purchases. Ideally, you would also be able to pay it off by the end of your next statement billing cycle (i.e., before your float period ends). That said, this is a much more cost effective, if less immediate, approach than a direct cash advance.
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