I think any good miles blog should have its fair share of what-not-to-do’s. This particular not-to-do really scared the crap out of me.
As you probably know, most credit card bonuses require that you spend $X.XX amount within 90-120 days. Notice the keyword there, “spend”. That could be interpreted to mean different things by different people. At the end-of-the-day, it matters how banks interpret that term, not you or I.
A purchase is not always a purchase
Most banks, including Citi, only count true purchases towards your minimum spend total. I’ll explain.
I’ve bought a lot of gift cards lately, reselling them at small margins to help meet all my minimum spends. In Q1 of 2017, I spent about $14,000 towards credit card minimum spends. For most people, including myself a few years ago, $14,000 spent on credit cards in three months meant trouble.
Fortunately, I now use a mix of eBay reselling and gift card reselling to spend large chunks of money and ultimately I make a slight profit after the merchandise and gift cards are sold. (plus points!)
Here is the catch, every once in a while, gift card purchases can code as “cash advances”. A cash advance, as a bank sees it, is a cash equivalent “purchase” or the withdrawal of cash from an ATM with your credit card. Not all credit cards allow ATM withdrawals, but many do. Last month the eBay gift card reseller SVM was accidentally being coded as a cash advance by PayPal. I purchased $400 in Cabela’s gift cards from SVM while working on my Citi Platinum AAdvantage card spend, $3,000 in 90 days.
Darn you PayPal
My gift card buyer let me know that SVM was being coded as a cash advance, and sure enough Citi did flag it as such. Most credit card companies start charging a higher rate of interest on your credit card balance THE MOMENT a cash advance is made. I was more worried about the $20 fee at the moment rather than thinking of my total minimum spend.
As soon as I saw the $400 SVM purchases on my account, I paid my card off completely just to be safe. Citi still managed to charge me $1.41 in interest for just one day, plus a $20 fee. Imagine if you had $1,000 in cash advances that you did not pay off immediately, it could really add up.
In addition to not counting towards minimum spends and accruing higher interest rates, many banks charge a $20~ fee for cash advances. Fortunately, PayPal did automatically send a $25 credit to my account (10 days later), which many others also reported.
Most banks do not allow you to completely disable cash advances, but you can lower the allowed limit to zero. That effectively makes it impossible to withdrawal money from an ATM with your credit card. Also, by not setting up a PIN on your Chase credit card, that will restrict ATM withdrawals, probably smart for most users. American Express DOES allow you to completely restrict cash advances, just chat or call a customer support agent.
Where are my points?
I waited about three weeks for my 50,000 American Airline points after I ASSumed I met the minimum spend requirements. After three long weeks, I decided to go back through my last two statements and recount my spend, ensuring I had exceeded $3,000.
I had “spent” a total of $3,320 on the card, which should have qualified me to receive the 50,000 points. After scrolling through each statement I noticed the separate section for “cash advances”. Of course, I knew the SVM purchases were cash advances but it didn’t click when I originally added up my two statement totals. I had really only “spent” $2,920, just shy of the $3,000 requirement, in Citi’s eyes.
Here is the scary part
I was only 24 days from the close of my third statement, meaning the 90 day spend window would have closed in 3.5 weeks. This is why it is SO important to check your statements and make sure to ONLY add up your true purchases when calculating minimum spend. If I would not have recounted my statement totals and spent the additional $80, I would have lost out on the 50,000 point bonus. I value AA points at 1.5 cents a piece which makes the bonus worth $750 to me. That would not be good.
Here are some items that DO NOT count towards your minimum spend:
• Cash Advances or Equivalent “Purchases” (some gift card sites/portals categorize as such, so check your statements)
• Annual Fees
• Late Fees
• Cash Advance Fees
• Returned Items (don’t try to return an item after you get the points, things could still get ugly)
Moral of the story, well there are two
- Don’t bite off more than you can chew. Make sure to start slow and keep good records of your spend requirements for each card. Check your statements to see how the purchases are coded when adding up your true spend.
- Don’t assume a purchase, like my gift cards from eBay, will categorize as a standard purchase. I was tipped off and I still neglected to check right-away. Shame on me.