If you are thinking of going solar, good for you!
You are awesome. You will create your own energy from sunshine, reduce the strain on the grid, and reduce your carbon footprint.
Going solar ain’t necessarily cheap though it definitely pays for itself quickly over time.
I recently discovered a secret method to save thousands of dollars on a recent solar installation at my house. if you promise not to tell anyone, I can share it with you. LOL!
I used credit card sign-on bonuses to save over $6,000 on the install of solar panels on my house!
If you do this, you are crazy! You run the risk of financial ruin and indebtedness.
So don’t try this at home folks. But sit back and let me tell you how it’s done.
First, I decided I wanted to pay for my own solar array so I could reap the full benefit for myself. There are several ways to get solar… have a company install and lease it back to you or charge you a fixed rate for power, finance it with the installation company, or finance it yourself.
I think it’s better to own your own panels, because they should pay for themselves in anywhere from 5 to 10 years, and after that, all the power is “free” for the next 10+ years (most panels are guaranteed to create at least >80% of rated power out to 20+ years).
AND you get the 30% Federal tax break, instead of it going to a company you lease from. Not to mention that when you own your panels you increase the value of your home.
This was an estimate for my house, which is a typical 3 bedroom suburban house, with good south facing roof exposure. Net cost is after tax rebates of 30%, so an initial cost of about $20k, which seems pretty lowball. Most bids for my house were an average of around $24k before rebates. I paid $28k, which included an electrical panel upgrade. Which reminds me of a great point — any upgrades you need to do to install your system are figured into your rebate.
(Be sure to check with your tax preparer or the IRS before relying on any info here!)
Second, I took out a personal loan from my bank to pay for the installation. This is an important part of my strategy. I wanted to have the cash on hand to pay off the credit cards as soon as I charged them. I never wanted to have a steep credit card finance charge on a large balance!
Solar installation companies are usually paid in phases (see table below). There’s the initial deposit to get them to draw up plans and file with your municipality, then a second payment for them to purchase the solar panels and other doodads that are part of the system. Then a final payment either at completion of the install, or at permission to operate.
Permission to operate is when your municipality has inspected the system and found it to be installed correctly according to local building codes, and the power company allows you to turn on your system and connect to the grid.
| Payment Milestones | Amount |
|---|---|
| Deposit | $7,039 |
| Installation* | $14,078 |
| Permission to Operate | $7,039 |
| 3% Credit Card Fee | $820 |
| Total Solar Install Cost | $28,156 |
I think it’s pretty important to negotiate with your solar installer and have the final payment due at permission to operate, that way they have an incentive to get any problems ironed out and the system producing power. Most reputable companies should be okay with this, but make sure you get it in writing before you sign your contract.
Third, as each phase was completed I used a new credit card to make the payment. And on some of the payments, I used two new cards. Of course, an obvious point is that whatever company you work with, they have to accept credit cards.
I think most do, as it’s in their favor to make it easy for you to pay. They may pass on the credit card transaction fee to you, which I think is reasonable. It’s usually around 3% or less of the total.
The solar company I used (Astrawatt Solar, they were great! More on them in the future.) billed via a Quickbooks portal, which allowed payments to be split between different credit cards. Another common contractor payment portal is Workiz, which also allows splitting payments on different cards. I’m sure there are even more portals out there in use.
So at each payment milestone I paid using brand new credit cards to get the “spend” so I could get the credit card sign-on bonus. Sign-on bonuses come in the form of credit card points, hotel points, or airline miles. Depending on the credit card company, hotel or airline, these points have different values. On paper they are worth about 1 cent per point, but in practice, depending on the company and the way they are redeemed, it can be double that or more.
An example would be getting a 75,000 Chase point bonus, which are worth around 2 cents per point — so 75,000 points equates to a $1500 sign on bonus. Pretty sweet! 🙂
So here’s a table summarizing what cards I opened, my sign on bonuses and total value I received…
| Card | Required Spend to get the bonus –> | SignUp Bonus | Base Point Value (cents) | True Point Value* (cents) | 3% Fee (subtract) | Net Base Value | Net True Value | Required Spend Value | Annual Fee | Note |
|---|---|---|---|---|---|---|---|---|---|---|
| CapitalOne VentureX | $4,000 | 75,000 | 1 | 1.85 | $120 | $630 | $1,268 | $74 | $395 | Points useful for any kind of travel expense |
| Citi Strata | $4,000 | 75,000 | 1 | 1.8 | $120 | $630 | $1,230 | $72 | $95 | Useful for many things, but great for gift cards |
| Chase Ink Business Unlimited ** | $6,000 | 75,000 | 1 | 2.05 | $180 | $570 | $1,358 | $123 | $0 | Chase points are the bomb! |
| Chase Southwest Business ** | $5,000 | 80,000 | 1 | 1.4 | $150 | $650 | $970 | $70 | $0 | I fly SW all the time! |
| Citi Advantage Platinum Select | $3,500 | 75,000 | 1 | 1.55 | $105 | $645 | $1,058 | $54 | $99 | Fee waived first year. I fly American Airlines frequently. |
| Rewards Total Range | $3,125 | $5,883 | $6,416*** |
** You can get a business credit card if you have a EIN number. Again, only do this if you have a business and you are a CrAZy SOB!
*** This is the final amount earned in credit card rewards, including all spending (Net True Value + Required Spend Value) for all cards.
Here are the key points to this strategy…
- It helps if you have great credit, with a credit score well above 700
- You need to get a home improvement loan with the intent of paying for your solar install
- Your solar installer has to accept credit cards
- It would also be helpful if you can split payments among 2 or 3 cards
- Research and apply for your cards in advance so you get them before the payments are due
- Once approved (which is usually instant) it takes a week or more to get your card
- Also, you usually have 3 months to get the required spend in to get the bonus, so you have to time it right
- Payoff the card immediately using your loan money
- My loan money was deposited in my checking account, and I transferred it to a savings account in my same bank, just to keep it separate, and I made credit card payments from that savings account using my bank’s bill payment feature.
- You also have to consider card fees, like annual card fees, any transaction costs passed on to you, etc.
- Use a spreadsheet to keep track of everything! This is super important. Any errors will reduce the value.
- After the card bonus requirements have been met, and you have paid off your bill — enjoy your rewards!
It is also VERY important to consider what kind of credit card you’re getting. Even if it’s an incredible offer, if you aren’t inclined to actually use the points then you are losing out. For example, if you get a credit card with a huge sign-on bonus to a hotel chain you don’t like, then what’s the point of that. Get a card(s) with a company/hotel/airline that you actually like and use!
Credit card bonuses also lose value over time, often due to changes in loyalty programs where by it costs more and more points to get a free hotel stay or airline ticket. These rewards are meant to be used sooner rather than later.
On a closely related topic, I didn’t account for the interest from my bank loan in my calculations, because that’s a separate fixed cost that comes with borrowing money. However… I planned to pay off the loan in less than a year by throwing all my free cash at the loan. Doing that, I was able to pay it off in 6 months.
So that leads to another important point… you can’t have a lot of debt to begin with, and you have to have a positive cash flow (more money coming in than going out), otherwise you are screwing yourself by amassing more debt. I also had several thousand bucks saved up in advance, so that helped buffer things and allowed me to accelerate my loan payments. This is fundamental and goes beyond the credit card strategy. You have to be ready to get solar, financially and otherwise.
And as far as the credit card strategy goes, one last idea. If your credit score is not great, or you are reluctant to keep track of all the cards, or to even have that many cards to begin with… a less crazy option would be to consider getting a sweet deal on a single card… and getting a free plane trip somewhere, or some free hotel nights, or whatever. And thereby minimize your risk and still enjoy a little reward.
If you’re cRaZY like me… you can take out 5 new credit cards and reap big rewards!
Leave a comment below and tell me what you think of this CRAZY strategy. Is it something you would do? Is it too risky? Let me know. 👍
Here’s some links to credit cards that I have.
If you click a link and get a card, I get bonus points at no cost to you *and* I am motivated to write more crazy articles! Thank you!
- Southwest Airlines – for folks who fly Southwest Airlines. Get any regular or business card at that link.
- Marriott Hotels – for people that stay at Marriott affiliated hotels
- CapitolOne Venture X – great all around travel card.
- Chase Sapphire Preferred or Reserve – best of the best, IMO. 😉
- Chase Ink Business – an excellent card for business owners. Get the Ink Preferred for the best card benefits. Also, Ink points earned can be transferred to a Chase Sapphire Reserve card, which has the highest point value.