If you have ever opened a travel rewards card, then I bet you have worried at some point about hitting minimum spend requirements. After all, you get a huge amount of value from these cards from these initial signup bonuses and reaching those bonus requirements are essential!
When my wife and I first started down the road of building our travel rewards portfolio six months ago, hitting these minimum spend requirements didn't seem like a big deal. To be honest, I was more terrified about what would happen to my awesome credit score.
My credit score is fine in case you are wondering. It dropped a little in the last six months since opening my first card, but not enough to worry about it.
Anyways, over the past six months, my wife and I have been able to earn over $4,000 in future free travel from four different travel rewards cards. Just last week, we even signed up for cards number five and six.
Without carefully planning how to meet the minimum spend requirements on each of our cards, we would probably only be on our third card right now. Fortunately, we were able to learn early on that paying for big ticket items or large expenses can really help.
From what we have learned so far, optimizing your spending and planning your expenses out can go a long way in building your travel rewards portfolio.
Four Ways to Meet Minimum Spend Requirements on Travel Rewards Cards
In the last six months, we have been able to leverage several big expenses into opening up more cards and earning more points.
I want to mention, we are only interested in using our cards for expenses we would normally buy. We are NOT buying a bunch of stuff we don't need or doing anything odd to reach these spending requirements.
Finally, we always pay off our credit card at the end of every month. Earning travel rewards is pointless if you carry a balance on your cards.
Now on to the list!
1. Pay for Dental & Medical Expenses
Honestly, this is one of my all-time favorite life hacks and it happened just recently. Our dental insurance is setup that when we visit the dentist, we pay all the expenses out of pocket. Then the dentist submits the claim to our insurance provider and we get a check back in the mail within a couple of weeks.
Back in the fall, my three kids had their annual cleaning appointment. We were initially billed for $636 between the three appointments, which we paid on one of our travel rewards cards. A few weeks later we got reimbursed $586 from our insurance provider.
Instead of paying the $50 ($636 – $586) out of pocket expense at the time of the appointment, we were able to put over $600 worth of spending on our card. Then a short time later use the reimbursement to pay for most of the cost.
Prior to travel rewards, it would drive me crazy having to pay these expenses out of pocket. Sure we got reimbursed eventually, but it really bothered me.
Now that we are building up our travel rewards, I absolutely love these opportunities.
Tip #1: Brainstorm any big expenses that you know you will get reimbursed for part of the cost. Try and plan out opening a card right before that big expense.
2. Property Taxes and Homeowners Insurance
If you own a home, then you pay taxes and insurance. I don't know about you, but paying my property taxes is the biggest expense I pay for each year (well except for braces this year–see #3).
Nobody wants to pay taxes, but there may be some good news for anyone earning travel rewards. Paying your property taxes “could” be a great opportunity to knock the minimum spend requirements out on a single card. We did just that earlier this year by charging almost $4,000 to pay for our taxes on a rewards card.
That card had a minimum spend requirement of $5,000 in the first three months. Paying for our taxes took care of 80% of the spending.
The one downside however, is that we were charged a processing fee (around $100) for paying by credit card. After carefully looking at the cards we wanted to open and already had open, my wife and I decided to pay the service fee.
Normally I would never pay a fee like this. However, the bonus points on that card and others we had opened at the time were worth the fee.
We actually have our annual homeowners insurance bill due in a couple weeks. This time, there will be no service fee and we can simply call up our insurance agent and pay with our card. That will be another $1,000 of spending!
Tip #2: Look at optimizing your credit card spending by paying for larger insurance and tax bills. You may want to even consider paying for items with a service fee, if the bonus is too good to pass up.
I added paying for braces using a travel rewards card because we did just that earlier this year. We were told that our middle son would need braces about a year ago after a consultation visit. This wasn't a big surprise as our oldest son needed them too.
Instead of freaking out about the price tag to get braces, my wife and I sat down to figure how to best optimize this expense. We had been eyeing another travel rewards card during that time, but the minimum spending requirement was $5,000 in the first three months. Opening that card would have been difficult at the time to hit the spending limit with the other cards we were working on.
The orthodontist office offered several different payment options. One option was to pay the balance in full (over $6,000) and receive a 5% discount.
In the past, I would have never consider this as a viable option. However, we also have an emergency fund right now that would cover almost 12 months of our expenses and is earning less than 1% interest.
So we optimized our spending as follows:
- pay $6,000 for braces on a travel rewards card
- loan ourselves $6,000 from our emergency fund
- pay off credit card balance with our loan
- setup a 30 month interest free payment plan to repay our loan
These four steps saved us $300+ on the total cost of braces, put our emergency fund to better use than earning 1%, and earned us 80,000 bonus rewards points from one credit card.
Tip #3: Think outside the box! Do you have any situations like this where you could optimize your spending by giving yourself a loan?
4. Non-profit Groups or Organizations
I coach both of my boys travel baseball teams. I have done it for the past six years and absolutely love it, as do they.
Part of the responsibilities of being a coach is ordering uniforms and equipment for the team. While each player pays their share for the season, I often get stuck writing a check to cover jerseys at the beginning of the season. Money comes in all throughout the season, so I eventually get it back.
So instead of writing a check out of my personal account that is withdrawn almost immediately, I now pay these expenses with a travel rewards card. This helps me two different ways.
First, paying for these items on a credit card buys me some time to collect money from the other parents before the bill is due. I am tired of having to come up with the money upfront, so a credit card helps.
Second (and more important), is that we can earn travel rewards on purchases that I will eventually be refunded for.
I have been told by some people this is unethical. Personally, I don't have an issue with it as I am volunteering my time to the team and basically giving the parents a short-term loan.
Tip #4: Do you help run any teams or clubs where you make purchases? You could consider earning some extra travel rewards by making these purchases on a card and then be reimbursed later.
Hitting Minimum Spend Requirements on Travel Rewards Cards
Whether you plan to open one travel reward card this year or 10, leveraging big expenses can help you reach minimum spend requirements.
Maybe you have some large expenses throughout the year that I listed above? Or maybe you don't?
But I am sure that if you think outside the box, you could probably come up with some expense that would help.
What other large expenses have you optimized to pay with a travel rewards card?