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The free toaster makes a modern-day reprise

Updated: May 3, 2013 12:14PM

Originally published: October 8, 2001

Remember when banks gave out toasters as rewards for deposits? Well, here’s the 21st century equivalent. Now you can get airline miles for investing in an annuity. And, you can get actual cash deposited into your college savings account by patronizing companies such as General Motors and L.L. Bean.

For savers looking for safety, tax deferral, and relatively high yields, there are a lot more rewards than toasters these days. CNA Life and the American Airlines AAdvantage program have just created a partnership that will give investors airline miles for every dollar they invest in a variable tax-deferred annuity.

You may recall that tax-deferred variable annuities give you a chance to invest an unlimited number of after-tax dollars to grow tax-deferred inside mutual fund accounts.

The CNA annuity offers a broad choice of investments--mutual funds from Fidelity, Janus, MFS, Franklin Templeton and others. So you have plenty of opportunity to make your money grow, or take the risk of loss. But don’t forget the exit restrictions: You must keep your money in this account for at least seven years, although you can take out 10 percent per year without penalty.

The airline annuity program

But the real, pardon the pun, Aadvantage of this program comes when you deposit your money. You’ll receive one American Airlines mile for every dollar you deposit. Suppose you deposit $100,000--money you would have been investing for the long run anyway. The miles you earn could buy you at least four round-trip coach tickets to anywhere in the country.

This kind of deal will appeal to investors who like to travel--or want to give those tickets to family members. For more information call 888-747-1035.

As long as you’re spending money, you might as well do it with merchants who give you cash back--in the form of deposits directly to your child’s Section 529 college savings plan. In fact, you might tell all your friends and relatives to designate your child’s college savings plan as the recipient of rebates or bonuses they get when they shop at the selected companies. That’s the concept developed by Upromise--a frequent-flier concept for college savings.

The list of 80 companies participating in the Upromise plan is impressive. They include Citibank, Exxon Mobil, Toys R Us, J.C. Penney, Staples, Coca-Cola and, soon, McDonald’s, as well as the forenamed General Motors and L.L. Bean. They’ve all agreed to direct a portion of your purchase into a Section 529 state-sponsored college savings plan, where your dollars grow tax-free.

All you have to do is register your credit card, debit card or even mortgage account number with Upromise (YOU-promise). You can sign up at , where you can track your accumulated bonuses and use an online calculator to figure out how much you could eventually earn based on your family spending budget.

Rebates on purchases made using those accounts will be sent directly to your Section 529.

This nest egg can grow fast. If you buy or lease a GM car, you could get a maximum of $150 on that transaction. Or you could get one-half of 1 percent of your home’s sale price when you list with participating Realtors such as Century 21, Coldwell Banker or ERA, each setting its own maximum that ranges up to $3,000.

Customer loyalty can help pay for a college education

The participating companies see this type of marketing as a way to build customer loyalty. Upromise does not charge a fee to individuals, it does charge participating companies. And some participating companies might charge individuals for the service. Upromise itself is in business to make money, and has raised nearly $100 million in capital with the intention of going public. But, since the manufacturer’s rebate is passed directly to the college savings plan, it seems there is little risk for consumers.

Keep in mind, these programs are not meant as an incentive to spend a lot of money that will break your budget. But, as long as you’re going to shop for things like groceries, gasoline, clothing, travel and new cars, you might as well get the Upromise rebate. And as long as you’re looking for tax-deferred savings, and like to travel, you might as well get the airline miles. It’s just another way to stretch your dollars. And that’s The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of directors of McDonald’s Corp. and Pennzoil-Quaker State Co. Send questions via e-mail to She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast.

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