None of the information in this post is earth-shattering, but I thought it will be a good reminder for some. As I’ve mentioned many times, I don’t do manufactured spending. To new readers: I’m talking about using credit cards to buy cash equivalents (such as Visa gift cards) and then liquidating them via various means, like buying money orders. There are many reasons why I don’t do MS, but the post isn’t about that.
That said, I do occasionally buy Visa or MasterCard gift cards and just use them for everyday spending. Why? Occasionally, I have a hard time meeting minimum spending threshold in order to receive a lucrative sign-up bonus (see my post for more on this topic). Warning! Don’t do this with any American Express credit cards because there is a good chance they will claw back your points/ miles. The danger is very real, so it’s simply not worth the risk.
In fact, I would not buy Visa gift cards for any sign-up bonus you can’t afford to lose. For example, I accidentally used my CSR card to purchase a gift card at CVS. I meant to pull out my Chase Freedom and had a temporary brain freeze. Anyway, I made sure to put extra $500 on my Chase Sapphire Reserve because I’m not comfortable taking chances with such a lucrative offer.
Chase has a clause in the “T and C” of the card that only qualifying purchases will earn points. They could choose to enforce those terms, and there goes my 100K points’ windfall. I can’t afford to lose another 100K points! I will go into severe depression, for sure.
Speaking of CVS, the reason I planned to use my Chase Freedom was due to the fact that it currently earns 5 points per dollar at drugstores. I can combine them with my points from CSR and redeem them at a rate of 1.5 cents apiece toward travel purchases. It’s a very lucrative scenario because for $5 I’m getting $37.50 in value. A no-brainer.
Obviously, if I started coming to our tiny CVS store on a daily basis, it would probably draw unnecessary attention. But you can only earn 5 points per dollar on a maximum of $1,500 in drugstore purchases, which translates to only three separate trips. I made sure to combine them with other errands in order to save time, the most precious commodity in my life.
Side note: I always make sure to spend my Visa gift cards within few days of buying them. Perhaps, it’s paranoia in me, but I’ve heard of too many accounts of hackers wiping out value of the cards. So why take a chance? I think keeping them for more than few weeks is just asking for trouble. Not to mention, if you are a disorganized person like me, you risk losing them yourself. There are many ways to “spend” the cards quickly, such as prepaying your power or telephone bill. Or you can do what I did.
Paying taxes on earnings from this blog (finally)
While I’m not making six figures from this site, it does bring in some money on a monthly basis. And obviously, IRS wants a cut of these earnings. An organized person would make sure to pay quarterly payments. But I’m no organized person! So, with three months to go, I finally decided I need to do something about my self-employment taxes. After all, if we owe more than $1,000, we will have to pay penalty, something I want to avoid.
You see, I’ve always made sure to adjust my husband’s withholding so we would break even on our tax bill. Why should we give an interest-free loan to Uncle Sam? I never understood the excitement over a huge tax refund, but that’s a rant for another day. Obviously, the easiest way to make sure we are covered is to adjust my husband’s withholding rate. But it’s too little too late for that. So, I decided to use my Chase Freedom instead and kill two birds with one stone.
Choosing the right middle-man
At the moment, the most popular payment option is Plastiq (my referral link). And it is great for mortgage, car payments etc. I’ve had good experience so far and have no problem recommending it. Plastiq charges 2.5% fee on credit card payments (sometimes less), and 1% fee when you use debit card. It definitely makes sense to use this service in order to meet minimum spending requirements on a lucrative sign-up bonus.
For tax payments, however, it’s not the best choice. If you are using a $500 Visa or Mastercard gift card, you will be better off with PayUSATax Here is why:
Obviously, even using your credit card to pay taxes will be cheaper compared to what Plastiq charges. But debit card is definitely a better option, and Visa/MasterCard gift cards process as debit cards. Make sure you allow for convenience fee when making your payment, and print confirmation, just in case. I did it with several One Vanilla Visa gift cards purchased at CVS and had no issues whatsoever. At no point was I asked to input PIN.
To recap, I paid close to $8 factoring in PayUSA fee in order to use up my $500 gift card. In exchange, I’ll be able to redeem the earned points towards $37.50 in travel. Even if I cashed out the rewards, I would get $25, a profit of $17. While not spectacular, it’s not bad for simply stopping at CVS for 5 minutes on my way to a grocery store.
In fact, it could make sense to do it even if you are not earning 5% cash back or an equivalent in points. Few possible reasons:
1) You need to meet minimum spending requirements on a new card. Once again, tread carefully, especially with American Express.
2) You got a lucrative retention offer, like the one I wrote about in my post on renewing Aviator Barclaycard.
3) You are trying to top up an account for a specific award.
4) You are close to re-qualifying for a top-tier status or getting a perk in exchange for certain amount in spending. Most obvious example is Citi Hilton Reserve card and its annual free weekend night certificate after spending $10K annually.
Pay attention to low-hanging fruit (but don’t go crazy!)
I’ve said many times that I’m very picky when it comes to choosing which type of deals to pursue. Especially when they involve physically leaving the house. I have a lot going on in my life, and don’t have the patience or energy to pursue every puny promotion. Free donut just isn’t enough of an incentive, plus, I’ve put on a few extra pounds recently. I don’t need no donuts!!!
Reluctant thumbs down since I love donuts…
That said, some deals are just too good to pass up. I had to pay self-employment taxes anyway, so why not pick up few rewards points while I’m at it?
Some other “low-hanging fruit” you may want to take advantage of before the end of the year:
1) If you do a lot of shopping on Amazon (my affiliate link), buy a gift card with your Discover card, then load it to your account. Through the end of December you’ll get 5% cash back on Amazon, Sam’s Club and department stores when paying with Discover. But make sure to activate 5% cash back first.
2) Have Sam’s Club membership? Consider buying few Walmart gift cards with Discover or/and Chase Freedom. The latter earns 5 points per dollar. It’s rare to find a significant discount on Walmart gift cards, so this is a good option.
3) If you have “$10 off $200 purchase of American Express gift cards” in your Amex profile, read this DoC post on how you can turn a profit if you purchase them by December 4th. Then just spend them on regular bills.
4) Make sure to take advantage of your saved Amex offers before they expire at the end of December, but don’t buy something just because. Gift cards to places where you shop often are usually best, but do compare prices to those you can find on reselling sites like Giftcardgranny
5) Follow sites like Doctorofcredit, Milestomemories and Dannythedealguru (you can pick one if you wish). The do a nice job at rounding up deals on gift cards sold via Ebay. There have been a lot of good deals recently on gas gift cards, Southwest Airlines etc.
And the list goes on. Of course, do the math first and make sure you’ll be able to meet minimum spending requirements on your new cards. Still, getting 5% cash back (or an equivalent in points) is enough of an incentive that I’m willing to adjust my spending in order to take advantage of various low-hanging fruit(s).
Readers, what deals do you plan to take advantage of?
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Leana is the owner and 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.