Your last “splurge” was when you went for the name-brand whole-wheat bread instead of the generic loaf. Your monthly expenses rarely crack $200. If you’re frugal, proud and searching for a credit card, don’t immediately eliminate all the cards with sign-up bonuses just because they require you to spend more in the first few months.
But don’t try to meet a spending requirement by buying things you don’t need, like above-ground swimming pools or multiple selfie sticks.
For most, it’s simply a matter of applying for a credit card at the right time. Whether you’re getting a card that requires you to spend $2,000 in the first month or $5,000 in the first four months to get a sign-up bonus, there’s probably a time of year you’d naturally be spending that much. It’s just a matter of identifying it and then applying for a new credit card right before that happens. This way, you can avoid needless spending and collect a sweet sign-up bonus.
First, a warning
While it’s a good idea to qualify for sign-up bonuses when you can, it’s not a good idea to spend more than you make or to rack up debt — especially on rewards cards, which frequently have higher interest rates than other cards.
Do a quick reality check and make sure you actually have the money before applying for a card with a sign-up bonus. If you simply can’t afford the spending required to qualify for the bonus, consider a different card. This article is intended for people who can afford to pay off that spending in full each month but don’t usually shop so fervently.
When it makes sense
Here’s when you should consider signing up for a card with sign-up bonus and a minimum spending requirement:
1. Before paying a health insurance deductible. If you anticipate having to pay all or a large part of your deductible at once, consider putting it on a card to boost your monthly spending. Even a modest deductible can be $200 or $300, a considerable chunk of some spending requirements. If you have enough money available to pay it off in full anyway, consider using it to nab a sign-up bonus.
(Avoid putting medical costs you can’t immediately pay off on your card. If you’re due for an MRI you can’t afford, start by negotiating with your health care provider rather than swiping. Many hospitals offer no-interest payment programs and other assistance for patients struggling to pay for care.)
2. While planning a special occasion. Even penny-pinchers spend more during certain months. If you have kids and you celebrate Christmas or Hanukkah, for instance, getting a credit card before the holiday season could help you hit the sign-up bonus spending requirement. Already planning a vacation? Might as well put the plane tickets on your card. And if you have an especially big event in the works, like a wedding, putting the many vendor payments on your card could help, too.
3. Before paying your car insurance for the whole year. If you love saving money, you probably make a point of paying for your car insurance (and other types of insurance) all at once. Consider applying for a card before you pay for the next year’s coverage in full. If your insurance company doesn’t give you a discount for paying ahead of time, try negotiating one with a sales representative. Aside from saving money, you’ll have a much easier time qualifying for your bonus, and you won’t have to worry about making monthly payments.
(Check out NerdWallet’s best car insurance rates.)
4. If you can pay your rent with a credit card. If you’re really having a hard time meeting that minimum, you could put your rent on your credit card – although, in most cases, it will cost you.
The online rental aggregator RadPad allows you to pay your landlord electronically, even if he or she doesn’t have an account, but it charges a 2.99% service charge. PayPal, the electronic-payments giant, generally charges 2.9% plus 30 cents for each transaction. Say you’re trying to spend $3,000 on your credit card in three months to get a bonus worth $600. Say also that your rent is $1,000 a month, and the service fee (charged by the online payment provider) is 3%. Paying with a credit card for three months would cost $90, but you’d still come out $510 ahead.
This isn’t the cheapest way to earn a sign-up bonus, and it’s not a good long-term tactic; the fees outweigh the rewards you could earn on even the most generous cards. But if you’re out of options, it could be a smart way to avoid making useless purchases. It also gives you a little more flexibility to apply for a card during limited-time offers and collect even bigger bonuses.
Shopping (without dropping)
If you have no problem spending $1,000, $3,000 or even $5,000, racking up sign-up bonuses is probably a breeze for you. But if you hate shopping with a passion, these strategies can help. You won’t have to shell out money for 10 pairs of running shoes or a solar-powered panini press. Which is good news, because you don’t need that.
Image via iStock.