Thursday 2 November 2017

Low Minimum Spend Cards with Big Bonuses

I have been thinking about which credit cards to sign up for next, but I don't want to worry about meeting a big minimum spend right now.

I love how easy it is to get the bonus on a card with only $500 or $1000 minimum spend. While not as huge of a bonus, the reward for how much you are spending is usually much better.

It can be hard to meet the minimum spends on some cards, especially ones that come with big bonuses. The Chase Saphire Preferred requires $4,000 US to get the 50k bonus points. The reward to spend ration only $500/$4000 =  .125 if you are using it for cash back instead of more rewarding flight rewards. You can think of this as a 12.5% cashback discount on what you spent. There are tricks, like paying your taxes on a credit card for a small fee (about 2%). Or some people buy PIN enabled debit cards, buy money orders with them, then use them to pay off the card, to earn rewards or meet minimum spend, but I want to focus on some cards that are easier to get the bonus on. It should be noted that buying gift cards may not count toward some  cards minimum spend.

I was approved for the BankAmericard Cash Back Rewards Card which has a low minimum spend of $500.00 and a bonus of $150 as a statement credit. It also has no annual fee.
Here are the rewards for spending:
1% cash back on every purchase, 2% at grocery stores and wholesale clubs and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.

To me this seems like a no brainer. You get 30% back on spending $500 you would have spent anyways, and then you can continue to use the card for 3% off of gas. I think everyone has to spend $500 in a three month period anyways. The reward to spend ration is $150/$500 = .300

I also have mentioned I also have BOA's Travel Rewards card, which also has a minimum spend of $1000 and no annual fee or foreign transaction fee. You get $250 towards travel purchases and earn 1.5% on all spending. With these two cards you would always get at least 1.5% back, and up to 3% on daily spending. One thing to remember when comparing rewards points verse cash back is that reward points may be called higher than a cash back percentage. Chase Ultimate Rewards points are valued at 1.5 cents by some travel hackers as they can purchase premium travel experiences at a better price than cash. So two points/dollar back on the Chase Sapphire Preferred may be worth more like 3-4% to some.

Two Chase cards that have a minimum spend of $500 for their bonus of $200 in points or cash back are the Chase Freedom and Freedom Unlimited. No annual fees on either. You will also get $25
 back for adding an additional card holder after they use the card. $350 in your pocket for spending $1000 you would have spent anyways. Thats a reward to spend of 175/500 = .35 so 35% cash back. If you already have one of these and refer someone else who gets the card, you would get $100 right now.

You can space getting these four cards out over a year, and it should be easy to meet the minimum spends. Some people worry this will hurt their credit, but I have better credit now than I did before I started travel hacking. A new credit card application or cancellation may temporarily make your credit score dip a few points, but it quickly goes back up. Your score is then positively effected by having a higher credit limit to use ratio. It is also positively effected by holding a credit line for a long time. This is why I still have my first credit card open, even though I don't use it. There are many travel hackers who have dozens of cards, and apply and cancel many times more than myself and have better credit ratings than me. You can also monitor your credit score for free with Chase and BOA. Mine is at 767 right now while a year ago it was at 757.

I think that getting three or all four of these cards are the way to start out using credit cards to earn cash back and travel rewards. Once you see how easy it was you might move on to some bigger bonus rewards by timing some big purchases to meet the minimum spends.

Happy Travels,

Mike

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