Harvesting credit card signup bonuses is one of the quickest ways to accumulate travel miles and points. The bonuses typically require spending some minimum amount–usually $1k to $5k–over some time period–usually 90 days. If you have to increase your spending pattern to achieve a minimum spend requirement, there is a good chance the credit card will actually end up costing you overall. Instead, you need to identify signup bonuses you can achieve with your normal, inevitable spending. The strategies below show how we have hit all of our credit card minimum spend requirements without increasing our overall spending.
1. Use Personal Capital to understand your typical monthly spending
You specifically want to know how much you put on credit cards monthly, as normal monthly spending will make up the bulk of your credit card minimum spend. This is quite easy with Personal Capital’s website. Just select Overview > Transactions > Credit, and then select “x” number of months, where “x” is some representative number of months. Divide the spending in this time period by “x” and then multiply by 3 to estimate your spending over a 3 month period; most credit card signup bonuses have a 90 day (3 month) spending requirement.
2. Have a system to shift recurring expenses onto new credit cards
Taking this step will (1) ensure you make the most of your normal spending and (2) reduce the friction for opening new cards. My system is included in the credit card log of my travel rewards handbook.
3. Coordinate spending with your significant other
Two people spending on the same card will clearly help you hit the minimum spend quicker. The don’ts:
- DON’T add your significant other as an authorized user (AU). Listing them as an AU will take up one of their credit card slots.
- DO plan your expenses and hand the card off depending on who will have more expenses, such as gas and groceries, on a given day.
- DO add the card to Apple Pay (and similar services) so that either of you can pay using the card without physically holding the card.
- DO add the card to LastPass (or other online password/file manager) so that you can securely enter the credit card info for online orders, whether you have the card on hand or not.
4. Open credit cards before large purchases
Of course we would prefer to not spend money on large expenses, but these are an inevitable part of life. When these budget busters strike, you might as well put them toward minimum spend requirements. Examples we have used include: new tires, car insurance bills, veterinarian visits, travel (when not using points), and non-urgent home repairs. And for life’s urgent or unplanned expenses, the more often you have a minimum spend credit card open, the more likely you’ll be able to soften the blow by absorbing the expense as part of your minimum spend.
5. Take home insurance out of escrow and pay with a credit card
If your insurance company doesn’t charge a fee to process credit cards, and the bank managing your escrow is on board, you should strongly consider removing your home owner’s insurance payment from your escrow account. You can then pay it directly to the insurance company with a credit card. This can easily make up a large portion of a minimum spend, and only takes one somewhat awkward call to your mortgage lender.
6. Pay medical expenses out of pocket
If you use a health savings account (HSA) or flexible spending account (FSA) to pay for healthcare costs using pre-tax dollars, you can double down by paying for the expenses with a credit card and then reimbursing yourself from the HSA or FSA account. We prefer to keep our HSA invested, so we just save the receipts and plan to reimburse ourselves down the road once we have realized tax free investment gains. (Note: I am not recommending you use and HSA or FSA. That decision is entirely up to you and should weigh your expected needs, expenses, and coverage.)
7. Prepay several months worth of bills
Many recurring bills can be prepaid for several months in advance. Normally prepaying wouldn’t make sense, but if you need some “extra” spending to hit a credit card minimum spend, this is a solid option. We have prepaid for internet, cell phone service, insurance, Uber credits, and road tolls. If you go this route, just remember that the for the months you have prepaid, your typical credit card spend will be that much lower, and you may need to pump the brakes on opening cards.
8. Gift cards – proceed with caution (we have stayed away from this)
Many people recommend using gift cards to hit a minimum spend. One thing is clear: you shouldn’t purchase re-loadable cash equivalent gift cards, such as generic Visa prepaid credit cards, for this purpose. Gift cards for specific store use–such as a specific grocery or retail store– are probably OK in many scenarios, although it is up the credit card company as to whether or not gift card purchases count towards the minimum spend requirement. For example, one of our American Express card agreements explicitly says:
“Eligible purchases do NOT include fees or interest charges, cash advances, purchases of travelers checks, purchases or reloading of prepaid cards, purchases of gift cards, person-to-person payments, or purchases of other cash equivalents.”
If you plan to use gift cards to hit a minimum spend, make sure you understand the terms of the signup bonus.