This is Tom’s continuation of his series wherein he is pretending he is just starting out in miles and points…
So, I’m back from my Chase in-branch appointment and was approved for the Sapphire Preferred Card! I added Melissa as an authorized user so that we can eventually transfer Chase Ultimate Rewards (UR) to either of our Southwest accounts, or any of the other transfer partners. We now have to spend $4000 in the next 3 months to earn 80K URs, and then spend $2000 more to get 10K extra in the three months after that. So, in this post I will talk about some strategies that can be used to meet minimum spends and some great links to help you think of some more ways to spend. The idea here is to not increase your spending but to be strategic about your existing budget. Obviously, the point is missed if you are signing up for cards and going crazy with your spending just to earn some travel rewards.
Bonuses definitely move the needle the fastest to get points for travel. If you take the example of this card, you can divide the points by the dollars spent (96000/6000) to get at a minimum 16 URs per dollar spent. I say at minimum because you also will be earning the base points as you spend, which can be anything from 1-3 points per dollar depending on the category. URs are generally valued at at least 1.5 cents each if you transfer them to travel partners, and 1 cent each if you get cash back. So, you want to make sure that you get this bonus. The terms of the bonus are that Chase gives you 3 billing periods from the day of approval, or 103 days from approval. I used this Date Calculator and put a remidner for that date in my Calander. Also, in case I return something, or some transaction does not go through. I also shoot for spending 10% more than the bonus requirement to be safe, and not have it clawed back. This can happen – and the bank will not care if you call begging for your points. Now, on to the strategies: as I see it there are 4 main ways to hit a minimum spend to get your bonus.
Shift every-day spending to your credit cards.
The easiest thing and most obvious thing to do is to shift the spending that you already do onto this card. This is easy for things like groceries, shopping, and dining. If racking up a credit card bill is something that worries you, you can pay your bill as often as you like, even every day. Paying bills like utilities and insurance can sometimes be done without any extra fee. I have used PayPal BillPay to pay insurance, water, gas and electric bills with no additional fee. Also, it is easy to switch the card when you are doing a new bonus, and you already have all the bill info entered into that platform – as opposed to having to re-enter the credit card info into multiple billing websites.
Use you cards for anticipated larger purchases
A great time to open a new card is when you know you have a big bill coming: your kids’ braces, your wife’s repeat root canal (we are in a dental purgatory these days), income tax, property tax, a home remodel, daycare or other tuition payments. Some bills will charge a fee to pay with a credit card but when you are trying to meet a bonus where you will end up with a ton of points, that may actually make sense. Some examples are paying federal or property taxes, or paying a contractor or any other bill that has a credit card fee. The fee of 2-3 % can be worth it if you are getting a much greater return in points. You can calculate it out and see if it is worth it to you. For example, a 2% fee on a $2,000 tax bill would be $40. To me, this is worth it if this large chunk of spending is getting me closer to earning what could effectively replace $1500 in our travel budget for the year.
Prepay bills/time shift spending
If you want to, you could overpay your gas or phone bill this month, and the next month you will have that credit on your bill. PayPal BillPay makes this easy for me: I have overpaid Duquesne Light, PHG Water and People’s Gas for various bonuses. With Chase, another way you can shift you spending is by buying gift cards that you will use. An example of this is if you spend $750 at a grocery store each month, you can buy gift cards to use for groceries next month and effectively shift the time of that spending to hit that bonus. One thing to be careful about is Chase does not care about buying gift cards, but other banks (American Express & US BANK) do care and will not count gift card purchases toward the spending minimum. In the worst case, they even may shut down your account.
Manufactured Spending
Manufactured Spending (MS) is the process of using a credit card to purchase items or services that you can convert into cash for a little fee or a small effort. There are entire groups that are dedicated to figuring out how to do this. A word of caution is that there is some risk of account shutdown or of the method you are using not working suddenly. The best example of this is How Frequent Fliers Exploit A Government Program : NPR a story from 2011 the mint let you buy dollar coins for no fee with a credit card and some people bought tens of thousands of dollars worth of them and then deposited them into their bank accounts and payed the bill. This was great while it lasted but does not work anymore. You can do as much or as little MS as you want, and many will decide that this is not for them. Two things that I have been comfortable doing are Buyers Clubs & opening bank accounts.
Buyers’ Clubs source quantity-limited and deeply discounted products from their members. The groups benefit by reselling the merchandise for a profit, and members earn cash back, points, miles, and sometimes even a commission. Last year I bought coins that were limited to 1 set per address and committed to buy them and ship them to PFS Buyer Club. They sent me a check for about $100 more that I paid for the coins with my credit card. I made 10,000 Capital One miles with this transaction and came out $100 ahead. It was easy, though a bit stressful. I would probably do it again. I have also purchased iPads for The Deal Buyer, and it has worked well. The important thing here is to be fully aware that you could lose out on your purchase… but it is more likely that it will work.
Banks will sometimes let you use a credit card to fund a new account and give you a bonus for a certain number of direct deposits or depositing an amount of money. Doctor Of Credit is a good place to start looking for bank bonuses, and they have a list of banks and credit unions that allow you to open a bank account with a credit card with how much the bank will allow you to fund. You need to read the terms of the bonus and keep the account open for > 180 days (about 6 months) before you close the account. Another important step is to call or secure-message the credit card issuing bank and have them decrease your cash-advance amount to the lowest it will allow. If your transaction goes through as a cash-advance you don’t earn any points and immediately start accruing interest. A good place to start is with a referral to Affinity Credit Union. You can open a no-fee account with $1000 from a credit card and pay the card off with the new account in about 10 days. Further, if you do a $100 direct deposit once, they will give you a $100 bonus. I opened this account and did a direct deposit of $101 and got the 100 the next day and a few months later referred Melissa. She opened the account with $1000 in credit card funding, did a direct deposit of $101, and got the $100 bonus. I then got a referral bonus of $100. There we are, $300 ahead and $1000 into a minimum spend. This has been a successful way to help meet a minimum spend about 90% of the time for us, but it is important to note that it sometimes doesn’t work. You won’t lose anything trying if that’s the case, just some of your precious time.
These are some of the strategies that have worked for us. You are only limited by how complicated or simple you want to keep your finances. If keeping things simple is your goal, focus on the everyday spend, and when you meet a bonus start thinking about what your next card will be. One card at a time. If you have the bandwidth for Buyers Clubs and manufactured spending, go for it! Next time, Melissa will be going after a no fee Chase card, and we will be pooling our points so that we can get to the fun part – transferring for “free” travel!