Hi there, it's Ernest from Trip Astute. In this video, we're discussing some
strategies for meeting minimum spend requirements on your credit card.
(light chiming music)
If you're watching this video, then you've probably discovered how lucrative credit
card points are to earning free travel and other rewards.
However, when applying for these cards, there's often a requirement to spend a
certain amount in order to get the opening bonus. This is called the minimum
spend requirement, and there's no shortage of tactics for overcoming this
hurdle. For example, the Chase Sapphire Reserve currently has a 50,000 point
bonus if you spend four thousand within the first three months of opening your
account. Most of us don't have enough everyday spending to meet this
requirement, so I'll be sharing a couple of tips that I use when working on spend
requirements. Number one: Monthly utility bills. This includes your electricity, gas,
cable, and internet bills. If you're not using credit cards to pay for these
charges, you may want to shift some of your spending onto a specific card. Also,
if you have a bill that is reoccurring and generally the same amount, you can
offer to prepay on the account to create a credit balance. That way, you're just
front-loading future month payments now in order to meet short-term minimum
spend requirements. Number two: Auto insurance. Paying the balance of your
auto insurance bill can be a great way to generate a large purchase. For example,
my auto insurance bill is for a six month term and I'll often pay the entire
balance upon renewal on a card that has a minimum spend requirement. Also, some
insurance companies will give you a small break if you pay upfront rather
than paying the charge monthly. Since we're based in LA, our auto insurance is
fairly high, so it's nice putting the large charge to good use. Number three:
Rent or mortgage. Since most landlords and banks will not accept credit cards
as payments, you can use services like Plastiq or Tio, formerly known as ChargeSmart.
Keep in mind that these services will charge a processing fee, typically
around two to three percent. It's not the best way to meet minimum spend,
but I've used this method in the past and justified paying the fee knowing
that I would be earning a bonus valued at over a thousand dollars. Number four:
Student loans or tuition. If your school or lender doesn't allow for credit card
payments, you can use the same method that we just described earlier using
Plastiq or Tio. Number five: Taxes. You can often pay your income, business, or
property taxes with a credit card. Though keep in mind that there is
usually around a two percent fee to pay with a card, so like Plastiq and Tio, make
sure you calculate the costs to use your card and the benefit you expect to
receive from the bonus. Number six: Down payment on a car. If you're in the market
for a car you can often pay your down payment with a credit card. This is an
awesome way to meet your minimum spend in just one purchase. Just be sure to
verify with the dealership that the card is processed as a purchase and not a
cash advance. Cash advances will not qualify toward your minimum spend and
will generate a lot of fees. Just be sure to ask before handing over your card.
Number seven: Reimbursable business expenses. If you work for a company that
allows you to use your personal card then seek reimbursement, then I would
suggest volunteering to pay for the next happy hour or event. If you can float the
charge until you get reimbursed, this can be a great way to get through your spend
requirement. Number eight: Charity. Donating to a charity is a great way to
meet your minimum spend and potentially earn a tax deduction. Number nine: Kiva.
One of the most unique methods that I have used to meet minimum spend is by
making a micro-finance loan via Kiva. Kiva allows you to directly loan money to an
entrepreneur in a developing country. You can sort by country and business type,
and research the stories before committing to the loan. Once you pick
your borrower, you donate via PayPal fee free, and you can expect be paid back in
full without interest. Keep in mind that there is risk of the loan defaulting so
I wouldn't suggest this method if your cash flow is tight. However, I made a loan
in the past and was repaid within a year. It was a great way to make a difference
in the world while earning points as well.
Lastly, there are other creative ways that people use to generate spend on
their cards. These purchases are often referred to as "manufactured spending". The
concept is that you purchase items that you can then use to pay yourself back.
There have been a ton of ways to do this in the past, from buying coins via the US
Mint then depositing back into your bank
account, to buying prepaid Visa and MasterCards as well as money orders, then
deposited them back into a checking account that allow these funding
sources. These tactics tend to work for a short time until the issuers figure it
out or the rules change. I typically do not recommend engaging in manufactured
spending as you not only put your relationship with a lender at risk, but
also your personal finances. Some of these methods, like buying money orders,
can get you flagged for money laundering by the government, so you definitely want
to avoid the headache. The only type of manufactured spending that I do these
days is buy gift cards every once in a while
from the store and use a card that earns bonus points. If you want more details,
check out our video on the subject called "Earning Points and Cash with Gift
Cards." I definitely do not abuse the practice though. The last thing I would
want is to lose my points because an issuer canceled my card account. In fact,
I'm very grateful for my credit cards as they have allowed me to travel for free
for many years. As always, I recommend that you only spend within your means
and make sure that your finances are in order before getting too deep into this
hobby. If you need help getting organized, please check out our "Before Starting the
Points Hobby" video for more details. Do you have any tips or tricks for meeting
the minimum spend requirements on your new credit cards? If so, please share them
in the comment section below. Also, let us know if you have any questions. If you
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notifications on all our new posts. Until next time, travel safe
and travel smart.