The most daunting part of a new travel credit card.. the minimum spend. I totally understand if you are hesitant with not wanting to over extend your credit, that is noble. But at the end of the day, you will have to meet the minimum spend on some credit cards if you ever want to earn ~serious~ free travel. So how do you make meeting your minimum spend less of a hurdle, let’s dive in and discuss how to make this process much easier for you.
Most travel credit cards offset their generous sign-up bonuses by requiring you spend a couple thousand dollars within 90 days. Don’t let this scare you.
The first way to help reduce the stress of meeting your minimum spend is by changing the way you think about credit cards. For reasons I cannot explain, many people are convinced that you should only use your credit card to put gas in your car and nothing more. I am guessing this was advice given to young twenty-somethings when parents were discussing their first credit cards with them. Fast forward, credit cards are not ALL BAD.
As soon as you receive your credit card in the mail, activate it [duh], and set up an online account login to manage your credit card account. Go to the payment section and enroll in “auto” or “recurring” payments. When setting up the auto-payments you will want to choose the option “pay total new balance“. By turning that setting on, you will ensure that every time you have a new statement, it will pay the full amount directly from your bank account. This should change your mindset on credit card spending since it will deduct every purchase from your bank account as the bill becomes due. (every 30 days)
By paying each new statement balance in full every month you will pay NO INTEREST. You are only charged interest if you do not payoff, in full, the new charges within 21 days (typically) of the statement closing. Your first statement will typically close 30 days from the day your credit card was approved, and then it continues from that date every 30 days.
Now that you acknowledge that everything you put on your credit card will be auto-deducted from your bank account as the bills become due, let’s talk spending. There are a number of online bill pay services that will allow you to use your credit card to pay any bill such as a mortgage, student loan, rent, car payment, utilities, etc. I like RadPad for rent payments since they only charge a 1.99% percent fee on MasterCards. For all other bills, I like Plastiq for their ease of use. Don’t forget to pay things like cell phone, car insurance, and donations/tithes to non profits. Another thing you can do is buy a large ticket item for a friend using your card. If you know of a friend who is going to make a large purchase, offer to use your credit card and have them pay you by check. Did you know many car dealerships will allow you to make a down payment on a car using a credit card?
The Citi American Airlines MasterCard offers 50,000 American Airline points after you spend $3,000 within 90 days. You can see some great ways to use American Airline points here. Let’s say you were able to spend $1,000 on little things like cell phone, car insurance, groceries and gas. That would leave you $2,000 remaining to meet your minimum spend, just pay two rent payments using RadPad. Since this is a MasterCard you only pay a 1.99%, or about $40 in fees to meet the rest of your minimum fees. It is best to not incur fees to meet your minimum spend, but if it means not meeting the spend requirement otherwise, $40 or so in fees is worth earning the $500 in free airfare.
Another option you have to help meet your minimum spend is to buy Visa or MasterCard gift cards in Walmart, Target, or your local grocery store. These cards have a $6 activation fee when you buy a $500 gift card. If you were coming up short on time to meet your minimum spend, just head over to your grocery store and purchase a $500 “pin enabled” gift card, it will say ‘debit’ on the package. Your credit card will immediately be charged $506 ($6 fee) so you will hit your min spend quicker. Now that you have $500 on a debit card, just use that card over the next few weeks or months as you need. There will be a pin number included in the packaging so make sure to treat the gift card like cash. It will be accepted pretty much anywhere a debit card can be used.
Meeting a credit card minimum spend does not have to be scary if you know some easy ways to spend money on bills or purchases you would have to make otherwise. Remember, cash advances, annual fees, and returned purchases do not count towards your minimum spend. Additionally, your 90 day minimum spend clock generally starts the day you were approved and charges must post before the close of 90 days (pending charges don’t count). If you owe taxes this year, you can even pay your taxes with credit or debit cards, for a fee.