Introduction to Credit Card Sign-Up Bonus Spending Requirements

Credit card sign-up bonuses in the U.S. can be very generous. Some offers give you 50,000 miles outright, which is more than enough for a round-trip ticket between China and the U.S.; others offer a $200 bonus, which is still a nice chunk of extra cash. But to earn a sign-up bonus, the key requirement is meeting the spending requirement. Today, let’s talk about how to complete that requirement.

Most people are already familiar with credit card sign-up bonus spending requirements. In general, new-card bonuses are structured like this: spend xxx within xxx days and receive a $xxx bonus or xxx points. For example:

  • Spend $1,000 within 90 days of account opening and get $200
  • Spend $3,000 within three months of account opening and get 50,000 miles

In general, the more premium the credit card, the higher the required spending, and the richer the sign-up bonus. When it comes to sign-up bonus spending, there are two especially important things to keep in mind:

  • How the spending clock is calculated: xxx is counted starting from the day the credit card is approved, not the day you receive or activate the card.
  • What does not count: annual fees, interest, Balance Transfer, Cash Advance, and purchases of cash equivalents are all excluded from the sign-up bonus spending requirement. Purchases that are later returned may also be deducted.

Ways to Meet the Sign-Up Bonus Spending Requirement

Plan Your Spending

Before blindly trying to meet the requirement, the first thing you should do is make a rough plan for your spending. Allocate spending across your cards in a sensible way. There are two questions you need to consider:

  • Do you have any large upcoming purchases? Are you planning to buy airfare, pay insurance, buy furniture, or buy a computer? If so, how should you allocate those purchases to best meet the sign-up bonus requirement?
  • How much do you spend each month? Excluding large purchases, how much do you normally spend in a month? Is that enough to satisfy the new-card requirement?

If you realize you simply cannot meet the spending requirement, then it may be best not to open another credit card right now. Finish your current tasks first.

Shift Spending

If your regular spending is high enough, then meeting the requirement is very easy. Just keep the new card in your wallet and use it whenever you have a purchase. Of course, to maximize returns, you can prioritize spending categories based on the cards you already have. Try to shift non-bonus categories or low-bonus categories to the new card, starting with the lowest rewards rates.

For example, if one of your cards earns 5% back on gas and 6% back at grocery stores, then you should keep dining and gas purchases on the original card and move other spending to the new card. Or if one card earns 3% back on dining and 5% back at grocery stores, but you still need to meet the sign-up bonus requirement, then you would definitely want to move dining purchases to the new card first.

Prepay Spending

Some people simply don’t spend enough each month to reach $3,000 within 90 days. Or maybe most of their spending already earns a higher cash back rate on other cards, so they naturally don’t want to put those purchases on the new card. So how can you meet the spending requirement within a limited time? The simplest method is to prepay. Common methods include:

  • Prepay utilities, phone plans, and similar bills: In general, utility and mobile phone accounts can be overpaid. In other words, even if your account balance is 0, you can still add money to it. Just prepay a certain amount and use that to meet the new card’s spending requirement.
  • Buy merchant gift cards: If you already know you will spend regularly at certain merchants such as Walmart, Amazon, or Target, you can buy gift cards from those merchants first to meet the requirement, then spend them gradually later. Of course, the potential risk is that the gift card is stolen or lost, but gift cards purchased directly from the merchant are generally low risk if you keep them safe.

Convert Spending

Sometimes certain expenses simply cannot be paid by credit card, such as rent, daycare, utilities, or mortgage and auto payments that require a check. In that case, we can use a service like Plastiq to convert expenses that normally cannot be paid by credit card into expenses that can.

  • Plastiq spending conversion: This payment method lets you pay many different bills with a credit card. After you pay on their site with your credit card, they will send an electronic payment or a check to the company you need to pay. The fee is 1%-2.5%, though it may be lower during promotions. The payment also counts as normal spending, so it can help you meet the sign-up bonus requirement and earn credit card cash back as well. See: Introduction to the bill-paying tool Plastiq

In addition to using Plastiq, some purchases also involve fees when paid by credit card directly, such as sending money to someone through PayPal with a credit card or paying tuition with a credit card. What you should do first is compare the fee for Plastiq versus paying directly, then decide whether it is worth paying around a 3% fee to meet the spending requirement. Don’t forget: if spending $500 earns you a $100 bonus, that is effectively 20% cash back, so a 3% fee may still be acceptable.

How to Choose Among These Methods

In real life, people usually use several methods together to meet the spending requirement. Personally, I think the easiest way to organize it is to rank everything by fee. For example:

  • Large purchases (0%): Since you have to make them anyway, moving them to the new card adds no fee.
  • Prepay utilities (0%): If you have enough cash in the bank, prepaying is fine.
  • Buy gift cards in advance (0.5%): Depending on your situation, there is a 0.5% risk.
  • Pay rent (1.5%): Using Plastiq costs 2.5% in fees. If the new card earns 1%, you are effectively down 1.5%.
  • Transportation (4%): If another card gives you 5% cash back, and the new card gives you 1%, you are effectively down 4%.
  • Dining at restaurants (5%): If another card gives you 6% cash back, and the new card gives you 1%, you are effectively down 5%.
  • Grocery shopping (5%): If another card gives you 6% cash back, and the new card gives you 1%, you are effectively down 5%.

Based on the fee ranking above, during this period I would simply move the lower-cost spending to the new card first. You can see that sometimes it is actually more worthwhile to pay a little extra in fees to cover rent than to move grocery or dining spending to the new card directly. That is the opportunity cost.

Buying Visa/Master Gift Cards

If all of the methods above still do not get you to the spending requirement, then how should a sign-up bonus chaser complete it? The following content involves some risk, so please read carefully. Important: It is best not to use this method to earn a sign-up bonus on AMEX cards, so you do not end up losing more than you gain.

Typical Process

The most common method is to buy a Visa gift card with a credit card, load the Visa gift card into an account, and then use that account to pay your credit card bill or transfer money back to the bank. This is what we commonly call manufactured spending (MS). For beginners, I recommend first reading an experienced MS guide, the Frequent Miler article. I also learned step by step from that article.

Where to Buy Visa Gift Cards

  • Supermarkets: For example, using AMEX Gold, you can earn 4*MR, about 6.4% cash back. Assuming Visa gift card fees at 1.2% ($5.95 fee on a $500 card), you end up about 5.2% ahead. You can also use AMEX Hilton Surpass, which earns 6*Hilton, about 3% cash back, and after $15,000 in annual spend you can get an extra weekend FN, so the overall return is pretty good too. Of course, during quarters when Chase Freedom and Discover it offer higher supermarket cash back, you should max those out as well. And don't miss newer supermarket-related bonuses like the 5*UR from Chase Sapphire Reserve. In addition, many supermarkets run their own Visa gift card discounts, such as a straightforward $10 off (literally free money), or extra fuel points, and so on. Once again: when working on AMEX sign-up bonuses, do not buy Visa gift cards.
  • Drugstores: Chase Freedom and Discover it are worth using in quarters when drugstore cash back is higher. At other times, you can pair them with Chase Offers and drugstore cash-back deals at CVS and similar stores to buy Visa gift cards. I once saw on Reddit an app called PEI that offered 1% cash back at Walgreens and CVS with no cap, which basically offset the Visa gift card fee and worked well for meeting new-card minimum spend, but it seems to have been killed off later, and the weekly cap is now only $1.
  • Gas stations: Similarly, Chase Freedom and Discover it are worth using in quarters when gas station cash back is higher, or you can use other cards that earn multiple points or cash back at gas stations, such as Citi Premier. However, the gas stations near my place don't take credit cards, and the clerks aren't very skilled, so in cases like that it's better to skip it if you can. I also remember seeing DPs about people buying Visa gift cards at gas stations and running into problems in the end.
  • Staples: Chase Offers often has Staples cash back. Combined with Staples' own no-fee promotions, a $200 gift card can often return $20-$30 (you can pay with multiple cards). If you miss the no-fee promo, you can also buy Amazon gift cards. Or, when there are only no-fee promos, you can use it to meet a new card's sign-up bonus, since there is no card purchase fee. In addition, some apps offer extra cash back, but they often get shut down quickly, so grab them while you can. I have used Dosh, Rakuten (Ebates), and Visa card cash back inside Uber. Similar to Staples are Best Buy, Bed Bath & Beyond, Office Depot/Max, Sam's Club, and others. Details are also YMMV, so anyone who wants to do this will need to spend time tracking them.
  • Online: Usually buy on Giftcards.com or Giftcardmall. Giftcardmall is cheaper on fees; just keep each order under $1,500, assume a 1.2% fee, then use Rakuten (Ebates) for cash back. That gives you 1*MR, about 1.6% back; counting a new card at 1%, you end up 1.4% ahead. If you happen to catch extra mileage portal promotions, buying on Giftcards.com can be quite lucrative once you add the extra mileage bonus.
  • Simon Mall: Now SM's $1,000 Visa gift card only costs $3.95 in fees. The purchase limit is relatively high (up to $25,000 per transaction), but there are no cashback portals anymore, so if your MS volume isn't large, buying gift cards from SM isn't worthwhile.

If you're worried that the bank may question your spending, mix in some normal purchases when buying Visa gift cards. And if the bank actually asks, just say you're buying gifts for friends. It's best to start small and gradually work up from lower amounts to higher amounts.

How to handle Visa gift cards

  • Serve, Gobank, and other reloadable cards: The author previously used a Serve card, and you could load it with Visa gift cards at Family Dollar or Walmart with no fee, then move the funds to a bank account. The daily load limit was $2,000, the monthly limit was $5,000, and the card would often get shut down after just a few months. I wonder whether adding some actual spend would prevent shutdown? Those interested can keep reading (Gobank intro, Serve)
  • Buying money orders: Money orders can generally be bought at Walmart and supermarkets. Fees, per-transaction limits, and which Visa gift cards work are all YMMV. For example, the Walmart near my house can't use Vanilla Visa gift cards, and I can only swipe 4 cards at a time. Also, when buying MOs, you need to control the pace and volume—slow and steady wins the race. If you don't, you'll get the store shut down. For depositing MOs, I recommend a local credit union, or Alliant if you want to deposit online; it's best not to use a big-bank account.
  • Direct purchases: Visa gift cards can also be used directly for in-store or online purchases.

Of course, buying Visa gift cards also carries risks, such as losing the gift card, buying the wrong type of Visa gift card, being shut down by the bank for spending too much, or having the account used to handle Visa gift cards closed, and so on. You also need to factor in your time cost. We advocate treating credit cards and miles as a hobby, not a main job; as long as you keep a balance with work, study, and rest, that's fine. Don't let it affect your normal work, study, or rest.

Other methods

Buying and selling gift cards

Profit from buying and selling gift cards is already very low now, so I recommend not using this method to meet minimum spend. The risk is quite high.

One of the easier ways to get started is buying and selling gift cards. For a simple example, you buy a Toys R Us gift card on eBay at 80% of face value, then sell it on Cardpool at 82% of face value. That means you complete the minimum spend requirement and also earn an extra 2%—doesn't that sound pretty good?

If you want to meet minimum spend through buying and selling gift cards, the key is to pay attention to the following:

  • Where to buy discounted gift card deals: eBay's PPDG, Staples, Cashstar, Newegg. In any case, the gift cards you buy must be brand new. Never buy second-hand cards from Raise or similar places.
  • Where to sell gift cards: author has used Cardpool, ABCGiftCard, and Saveya and found them all reliable. Raise carries a bit more risk, but the range of accepted buyers and the sale price may be higher. Never sell on eBay.
  • Risks: the gift card you bought could be stolen, or it could get lost in the mail when you sell it

Running a business

I won't say much about this. If you're really running a business, meeting minimum spend is probably no problem at all. Buying for others, helping relatives buy, helping a 'doctor' buy—spending goes very quickly.