Let’s face it: The only reason why we are applying for these credit card offers is to save some money on travel with points or earn cash back. But these bonus offers are not doing us any favors by giving us such a high amount to spend in the first three or so months of account opening.
The best way to spend $4000 in the first 3 months of a credit card account opening is to pay off the statement balance before the due date, spend on fixed and everyday expenses, spend on a planned major purchase and do some advanced preparation. I’ve done some trial and error myself and I want to share the tips and tricks I’ve learned so far.
I remember when I first started learning about travel credit cards. One family member had extra miles that were expiring so they gifted me some of their miles so that I could go to California for the first time. It was then that the curtain had been drawn and I saw a whole new world. The world of points and miles. I had talked to several people I knew and asked them which card they thought was the best. Picking out a card and looking into all the perks and cool ways you could spend your points is very exciting. Except I underestimated the one small catch. I had to spend a hefty amount of money I wasn’t used to spending. I didn’t see how this would really save me money on vacations if I had to buy things I didn’t really need. So for a while I held back from getting a travel credit card. But the more I wanted to travel and the more I traveled the more I thought it would be nice to save some money so I could travel even more. That’s why I have started this blog: to share what I’ve learned about frugal traveling. I think that’s something a lot of millennials resonate with. And if you are here and you are not a millennial, then I welcome you too.
How do you spend money responsibly? How do you not sink yourself into a larger hole of overwhelming debt? How do you get the most of those credit card points and come out a winner and not a loser? Is there a smarter and more SAVVY way?! I’m here to tell you there is.
Pay Off The Statement Balance
ALWAYS, ALWAYS, ALWAYS pay off the statement balance before the due date. Pay off the balance and not just the minimum payment. And why before the due date? Because you want to give yourself some leeway. By that I mean, do you really know what date your payment is due? You know it’s coming up at some point this month. Unless you mark it in your calendar and actually respond to the notification on your phone and pay it right then and there. But most likely you’re busy doing something else at that moment. Believe me, I’ve tried that method and it did not work for me. And here’s the WHY: Credit card companies are counting on you to not pay on time. And it’s a little thing called INTEREST and LATE FEES. That’s one way credit card companies make their money. This is where you lose and now it’s costing you money to have this card. The savvy thing to do is to make a payment on “Pay Day.” – I know, I know, that’s no fun but I said “responsibly”…Trust me.
Fixed Monthly Expenses
Use your new credit card to pay for fixed monthly expenses. These are things you know you will be spending money on each month. Some payments unfortunately cannot be paid with a credit card, like rent, other credit card payments or loans generally speaking. But you can always check it out. I like to include things like car insurance, health insurance, phone, cable/streaming services and memberships (gym or Amazon Prime). With most of these expenses you can login into your account, set up automatic payments and change your payment method to your new card. Every little bit helps!
Planned major purchases
Now I say planned for a reason. We all have wants and we are inundated with curated ads which simply adds fuel to fire. However, planned does not mean a whim purchase. Now everyone is different on how much forethought they need to have before buying. I would say if you’ve been thinking about buying something for months; that qualifies as “planned’. I would even suggest waiting to apply for the credit card until you have a major purchase coming up. Let’s say your washer broke and you need to buy a new one. Of course you didn’t plan on it breaking but now that you know you have to buy an expensive appliance it’s a great time to apply for the credit card you’ve been eyeing. As long as you can wait and go to the laundromat in the meantime before your new card arrives in the mail. Once it arrives go and buy yourself a new washer. Better still, sell your old one for parts!
Everyday expenses
These are things you know you will be buying but the amount varies from month-to-month. This includes things like groceries, dining out, household products, health and beauty products. But this is the area where you have to be extra careful. Because you can quickly overspend and buy things you really do not need. Don’t try to justify the Starbucks addiction now.
Do the math
Divide the total amount you need to spend by the number of months you need to spend it in. For example: You have to spend $4,000 in 3 months. That comes to $1,333.33 per month. Total up your fixed expenses that you can pay for using your new card for one month and subtract that from the $1,333.33. Let’s pretend you came up with $500 in fixed expenses for one month. That leaves you with $833. Now you want to look back on the last few months and figure out how much you average on other essential and nonessential expenses; like groceries, dining out, entertainment. Once you have that amount. Subtract that from the $833. If you have a negative number then great, don’t spend anything else. If you have a positive number, multiply it by three and this is the amount you can budget towards to “planned major purchase.”
Do gift cards or Venmo count towards minimum spend?
There’s no direct answer on this because most of the fine print will say “cash advances” or “cash-like transactions” will not count. So sure Venmo and gift cards are not directly mentioned. But to me “cash-like transactions” include gift cards and Venmo. I know others may disagree with me. But I would not recommend it. Credit card companies have the right to not grant you the points if they deem such charges as “cash-like.” Why would I spend $3800 and do a $200 Venmo to a friend and then not be able to get my introductory offer? It’s just not worth it to me.
What if I bought a bunch of items and then decide to return them, can I still get my points?
Chase says that your return items will be deducted from your point balance. Also, if you have more returns than spending it may result in a negative point balance. Chase also states that they have the right to prohibit you from earning or using any points at any time. So personally given all of this I would not advise about going about it this way. Sure some have found ways around the system. But I do not recommend it. Doing so could ruin your credibility with the credit card company and your potential to be approved for future cards or just to be able to use the points you worked so hard to earn.
My hope is that you are smart about it. It can be quite fun earning points on things you would ordinarily spend money on anyway. Then in no time you can have a dream vacation very inexpensively. Happy spending!