Big Spend for Big Bonuses: Strategies to Meet Minimum Spend Requirements for Credit Card Sign-Up Bonuses
Today, credit card companies are willing to give out big bonuses when you sign up for one of their cards. Right now, you could get 50,000 bonus points from Citi’s Visa Infinite, 100,000 bonus points from an American Express Platinum card, 75,000 points from Citi’s Prestige card and a whole host of other bonuses from other card issuers. Pool those points together, and you could probably cash them in for business, or even first-class, airline tickets to just about anywhere in the world.
But, there’s a catch. Getting the bonus for Citi’s Visa Infinite requires that you spend $5,000 in 90 days, American Express’s Platinum requires another $5,000 spend in 90 days and Citi’s Prestige requires that you spend $7,500 in, you guessed it, 90 days.
If you’re a high roller or own your own business that regularly buys expensive supplies, figuring out how to spend $17,500 in three months might not be too difficult. For the rest of us, meeting the minimum spend requirements to take advantage of credit card offers can be a definite challenge.
Here are some strategies that can get you over the minimum spend hump with ease.
Pay Your Taxes
Did you know that Uncle Sam lets you pay your taxes via credit card? The IRS maintains an official list of payment processors that will accept your tax payments via credit card.
The catch is that they do have a required fee of between 1.87% and 2.00%. Still, if you’re using the payment to cash in miles, it can be well worth paying.
Say you had a $5,000 tax bill, and you want to pay it on your American Express Platinum to earn your 100,000-point bonus. Pay with the lowest-fee processor, and you’ll end up paying an extra $93.50 in fees. Ouch.
But even at their lowest redemption of $0.01 per point, those 100,000 mileage rewards points are worth at least $1,000. Most valuations peg them at closer to $0.019, placing their value at about $1,900.
Yes, $93.50 in fees is a lot, but, if it allows you to meet a minimum spend that gets you $1,900, you’re still coming out $1,806.50 ahead on the entire transaction.
Here’s a tip for those of you with excellent financial discipline. Most people have their federal income tax deducted directly from their paychecks. Even though the average American pays $9,118 in Federal taxes every year, these payroll deductions mean that many Americans get a refund around tax time, or don’t pay much.
It’s because they’ve already paid that amount through payroll deductions.
You do have the option to minimize your federal tax withholdings from your paycheck and make your estimated payments directly throughout the year via credit card to one of the IRS’s payment portals. But there’s a risk. If you don’t make accurate estimated payments throughout the year, you could be on the hook for a big payment next April.
That’s definitely playing the miles and points game on “hard mode,” and we’d recommend you consult with your tax professional before taking that step.
Buy Gift Cards
Gift cards are a great way to accelerate your credit card spending when you need to meet a deadline. Imagine you’re a few days short of your minimum spend deadline, and you still need to spend another $1,500 before time runs out to get your credit card bonus.
Don’t panic and buy something you don’t need; buy $1,500 worth of gift cards that you can use over time for things you buy anyway.
You basically have two options here. You can buy a gift card at a store you normally shop at, like the grocery store, or somewhere like Amazon or Costco that you’re sure to use. Or you can buy a Visa or American Express gift card that you can use anywhere those cards are accepted.
Just be careful here. There are some credit card companies that treat gift card purchases as cash advances, which won’t earn you any miles and are ineligible for minimum spend requirements. This especially true with Visa or American Express gift cards. Your best bet is to stick with store gift cards and to do some research before purchasing card-issuer branded gift cards.
Pay for Rent, Mortgage, Utilities and Other Bills
The other secret to boosting your credit card spend without getting into debt is to use your credit card for everything you can.
Many of the bills you pay every month could be eligible for credit card payment. Cell phone providers, internet service providers and even some utilities allow automatic credit card payments. If you haven’t set this up yet, do it now.
Even if you have a bill that doesn’t allow credit card payments, there are ways to make it work.
A number of services let you pay bills like your rent, mortgage or other bills via credit card. They’ll charge you a fee, and then send an actual check to your payee.
There’s a whole host of these services out there, but Plastiq typically has the lowest fees at 2.5%, and occasionally less with promotions.
Like our example with taxes above, paying the service’s fees for these amenities only makes sense for meeting minimum spend goals tied to sign-up bonuses.
Buy a Car, or an Education
Aside from a house, the two most expensive things many people will buy in their lifetime are a car and an education.
Both can likely provide a good chunk of credit card spending.
Many colleges and universities allow credit cards to be used for tuition payments, so whether you’re in school or helping to send a family member, don’t leave all those credit card points by the wayside by sending a check.
With tuition fees in the United States at private schools averaging over $33,000 per year, a college education could help you reach even the loftiest spending goals.
Things are a bit more complex when it comes to car buying. Most dealerships will only let you charge a portion of the purchase price of your vehicle or down payment to a credit card. Still, it’s a useful negotiating point when you’re buying.
The exception is American Express, which has a car buying service (really Amex-branded TrueCar) that allows you to put the entire purchase price of your new vehicle on an American Express card with select dealerships.
If you’re planning to pay cash for a new car, you might as well get a ton of membership rewards points on top of the deal while you’re at it.
Dive Into the Deep, Dark World of “Manufactured Spend”—Or Better Yet, Don’t
The most dedicated credit card mileage hackers engage in a practice typically called “manufactured spend,” a hobby that looks for ways to make charges to credit cards, and then retrieve the spent money via gift cards, money orders or other means.
First, let us clearly come out by saying we don’t recommend this. The tactics used sometimes violate the terms of service of credit card issuers, and they almost always carry the risk of either losing money or losing points if the credit card issuers catch on.
But, in case your curiosity’s aroused, here’s a straightforward example of how manufactured spending works.
Back in 2005, Congress signed the Presidential One Dollar Coin Act, which was designed to get $1 coins into circulation. But no one really wanted the coins, so, in 2008, the U.S. Mint started a “direct ship” program that allowed residents to order boxes of the coins shipped to them at face value, with no shipping charges, and pay with credit cards. You can see where this is going.
Mileage hackers found the program, and, in one case, ordered over $2.4 million worth of $1 coins from the mint, racking up millions in credit card miles in the meantime.
The mint implemented a range of restrictions to stop abusers and, in 2011, finally ended the program.
Now, as far as manufactured spending schemes go, buying coins from the U.S. government is a pretty safe one. Today, many of the tactics used by manufactured spenders are much more complex, riskier and prone to being quickly shut down as soon as the loophole is discovered.
If you’re still interested in taking the risk, Flyertalk is the place to get started. But frankly, until the mint starts a $2 direct buy program, we wouldn’t recommend it.
Putting It All Together
Meeting minimum spend requirements can be a challenge, but it’s a challenge worth taking on. Play your cards (get it? cards?) right, and you can book a first-class vacation with just a few good sign-up bonuses. And when you do, make sure you share your story with us by messaging us on Twitter @cabeautravel or on Instagram @cabeautravel, and we might send some gear your way to make your trip even more comfortable.