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When you start out in this hobby, something you have to be extremely picky about is fees. Those can really add up and make your travel anything but free. An annual fee of $89 here, $5 fee on a Visa gift card there, and before you know it, you’ve spent a cool grand and you didn’t even step a foot on a plane. I recommend you write those down, so you can have a rough idea of how much your “free” trips really cost you.
That said, while I try to avoid paying fees as much as I can, they are not deal breakers by any means. I just do the math and make sure my return will almost certainly exceed the investment. Because, that’s what we are doing in this game: We invest our time, energy and money hoping that the payoff is worth it in the end. I’ve also encouraged readers to view miles and points as stocks, and settle for not so spectacular (according to hobby experts) returns if their savings account isn’t very healthy at the moment (see my post for more on this subject).
I’ve mentioned before that all of our spending goes toward new credit card bonuses. Why? It’s how I get the best bang for my buck. I’ve calculated that I conservatively get 20 cents on every dollar, and retail value is closer to 40 cents. That’s 20% return which would be tough to beat via manufactured spending or reselling. I’m not saying it would be impossible, but it would almost certainly involve questionable ethics, huge time commitment etc. Not to mention, any MS strategy that yields this sort of return is probably unsustainable in the long run.
BTW my husband gave up on reselling, said it’s too much trouble. Yes! Of course, we still have all those boxes in the garage and bedroom. I told him he has till the end of the year to get rid of them. Or else. Actually, nothing drastic will happen, I just wanted to gave him extra motivation. Limited time offer! Get rid of the boxes now! My patience will run out soon!
Where was I? Basically, I try to throw my energy at the low-hanging fruit. Of course, I maximize promos, Amex offers and look for decent coupons. But at its core, my hacking strategy primarily involves churning (switching credit cards in order to collect sign-up bonuses).
It doesn’t mean that everyone should follow my lead. But it’s what works for my family. Recently, my husband got approved for Barclaycard Arrival Plus (read about it here). In order to get the sign-up bonus, we have to spend $3,000 in 3 months. Our property tax runs at over $1,200 per year and is due in November. I always pay it in-full in order to get a discount. There are two ways to do it: Pay with a check (no fee) or credit card (2.8% fee).
I chose the latter and here is why. While the fee is significant, Arrival earns 2 points per dollar redeemable for 2.1 cents on travel redemptions when you factor in rebate. Of course, there is that extra 0.7% or a little over $8 in fees that came out of my pocket. True, but it allowed me to get closer to completing my minimum spending and collecting the prize. And it’s all about the prize, folks. As I’ve mentioned earlier, I get around 15%-20% return from churning (haven’t calculated my haul for this year yet). So, the sooner I’m done with Arrival offer, the sooner I can move on to my next credit card.
And that’s why I went ahead and applied for Arrival in my name. I already have two credit cards with Barclays, so wasn’t super confident on my odds of approval. Well, I got it!
On to the next one. And I don’t plan to stop unless the banks stop me. It’s like I told my one of my readers: when I get denied for few cards in a row, there is my answer.
An update: Check out this comment from reader Erik.
“But but…you could have MADE money by paying your property taxes with Plastiq, under their recent (frequent?) 1.5% fee for Mastercard payments promo and using the Barclay Arrival Plus. In this situation, Plastiq will send a paper check to the payee. You just need to schedule the payment in advance with enough time for it to arrive by the due date (i.e. 10 business days). I just paid off a car this way.
I was going to do it via the old fashioned method, but then I remembered “Hey, I’ve got some significant travel charges on the Barclays that I can redeem for statement credits…and Plastiq is running a 1.5% promo…I can make money on this transaction!” It worked fine.
There was only a minor mistake made by the lender. They made an assumption that Plastiq was buying the car, so they sent the lien release letter to Plastiq, but this was easily rectified by a phone call to the lender’s customer service to have the letter re-sent to my home address. No big deal, Plastiq did their part correctly and within the promised timeframe.” Check the comments section to see my response.
This is a good chance to give a reminder on importance of going beyond just minimum spending requirements. Yesterday I got an email from my reader Leticia and wanted to share an excerpt with you: “In the past I remember signing up my daughter for a class and paying with a card that I was working on meeting minimum spending on and then the class got cancelled.
Fortunately, I had made a bit more than the spending but it’s a thing to bear in mind. Think about what you’re charging to your card. Is it something you may need to return, a class that can get cancelled, etc.? It’s probably always good to go beyond minimum spending.”
This is an excellent point which I’ve mentioned before, but it’s worth repeating again and again, especially to those just starting out in the miles and points universe. It’s better to be safe rather than sorry when it comes to big sign-up bonuses. I always put an extra few hundred dollars on my new card for that very reason. Also, keep in mind that annual fees do not count towards minimum spending requirements.
If for some reason you miss out on a bonus due to an oversight or a returned purchase, always contact the issuer and beg them to make a one-time exception. What do you have to lose at that point?
Should you pay fees in order to collect the sign-up bonus?
It honestly depends. If you’ve already signed up for an offer and have a hard time meeting minimum spending requirements, by all means, take a look at your bills. It’s certainly better to pay extra $50 so you don’t miss out on $400. It’s only logical, no? However, if you only get a few new bonuses per year and they happen to have “low barrier to entry,” then you probably don’t need to bother paying extra fees. Take a look at my post that has some ideas on ways you can meet minimum spending requirements
Readers, how often do you pay with a credit card even if there is a fee involved?
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.