Editorial Policy

Stalking the monster rewards card sign-up bonus

Eva Norlyk Smith Ph.D.

November 15, 2012

You just got approved for a rewards credit card with a 40,000-point sign-up bonus, only to discover that there’s a slight hitch: You have to charge at least $5,000 within the first three months to qualify for that nice fat bonus.

It’s all too easy to get seduced by rewards card bonus offers, but there are strings attached. Card issuers want to see you actually using the card and, increasingly, are adding minimum spending requirements ranging from $1,000 to a whopping $10,000. The deadline for racking up that much in charges ranges from as little as three months to a year, depending on the card.

“Before applying, you really have to think carefully about whether you can meet that minimum spending requirement,” says Daraius Dubash, creator of the rewards card blog MillionMileSecrets.com. “Once you apply, if you don’t meet the requirement, that bonus is gone, and you may not be able to get that rewards card or bonus again.”

Yet that leaves cardholders with a dilemma — spending enough to snag the bonus, but not so much that they cancel it out with interest charges.

“Before applying, you really have to think carefully about whether you can meet that minimum spending requirement.”
— Daraius Dubash,

“It doesn’t make sense to make charges to your card to meet the spending requirement if you end up having to pay interest,” Dubash says. “Accumulating credit card debt to get a rewards bonus is just not worth it.”

Instead, bloggers like Dubash, who have practically made a career of cashing in on rewards card offers, use numerous tricks to meet the minimum spending requirement. Here is a sampling of their strategies:

1. Charge all your everyday expenses.
Many people use a combination of checks, debit cards, cash or online bill pay for regular expenses such as food and recurring bills.

While charging groceries, dining, clothing and gas to your new rewards credit card is a no-brainer, you can also set yourself up to pay monthly recurring expenses with your credit card. Most insurance companies will allow you to pay via credit card, as will many utility companies. Simply go to the company’s website or call to set up automatic monthly payments using your credit card.

Tip: If you have enough money to do so, Dubash recommends paying your bills in advance, such as paying insurance bills on a six-month plan instead of monthly. That creates a larger charge that puts a sizeable dent in your spending requirement — which could prevent you from scrambling for extra, unneeded purchases as the minimum spending deadline approaches. Just make sure you have the money in your budget at the end of the month to repay all that you have charged.

2. Charge mortgage or rent payments.
For most people, mortgage or rent payments are by far the biggest monthly expense. A $1,500 monthly mortgage payment for two months will set you well on the way toward meeting minimum spending requirements for those bonus points.

Dubash recommends using services like ChargeSmart.com, which lets you charge monthly mortgage payments to a credit card. For renters, Williampaid.com offers a similar service. Beware, though — in both cases you pay a fee for the pleasure, typically around 2.5 percent to 3 percent.

“Obviously, you wouldn’t pay those kind of fees to pay your mortgage on an ongoing basis,” Dubash says. “However, for a rewards bonus worth $500 to $700, it makes sense to pay a payment service fee for a couple of months to get the bonus.”

Tip: Consider charging monthly auto loan payments and car registrations via ChargeSmart or similar online services as well.

3. Charge it forward.
If you have the cash at hand, consider stocking up on gift cards to pay for future expenses and charging the gift cards to your rewards card. For example, buying enough gift cards to cover groceries for the next three to six months should easily net you a couple thousand in credit card charges, depending on the size of your family.

Visa, MasterCard and American Express all issue gift cards, which can be used in any store accepting credit cards. Generic gift cards typically come with a $3.95 fee per card, so buy them in high-dollar values to minimize expenses.

For fee-free gift cards, check out gift cards from large vendors such as Wal-Mart or Amazon.com, which offer no-fee, free-shipping gift cards that never expire. Amazon gift cards can be used for your grocery purchases as well via Amazon’s Grocery and Gourmet Food section.

Tip: Look for generic gift cards with a rebate on places such as BigCrumbs.com, which gives a 1.4 percent rebate on American Express gift card purchases. The gift card fee is typically around $3.95, but AmEx does offer promotional codes waiving the fee from time to time, so look around online for promos.

4. Take advantage of high-expense periods.
Time your application for a rewards card with a bonus offer to coincide with high-expense periods, such as holidays, vacations, weddings and anniversaries.

Similarly, if you’re planning a home remodeling or construction project, this can be a great time to take out one or several rewards cards. Just keep in mind that it often takes four to five weeks for a new credit card to arrive in the mail, so plan ahead to give the card enough time to arrive.

Tip: Dubash recommends paying contractors or other people working for you via services such as Amazon Payments, which lets you transfer $1,000 a month to another person free of charge (as long as you select the “Goods and Services” option). PayPal also allows you to transfer money fee-free to another person (not a business) as payment for services.

Final advice: As with all credit card charges, the goal is to never spend beyond what you can afford. For example, if buying up three-month’s worth grocery gift cards or paying big bills in advance will cause you to exceed what you have in your checking account, then don’t do it.