How To Buy Nothing And Earn Thousands Of Credit Card Points

How To Buy Nothing And Earn Thousands Of Credit Card Points

What? Buy nothing and still earn thousands of credit card points and miles? How is that even possible?

Frequent readers of my blog will notice an interesting dichotomy.

On the one hand, I often write about frugality, minimalism, the buy nothing challenge, the buy nothing project, and conscious consumerism.

Then on the other hand, I also write about how I have a lot of credit cards and how I earn hundreds of thousands of points for free travel (sometimes in a crazy luxurious fashion).

But don’t you have to spend quite a bit of money on credit cards just to earn the thousands of points from sign up bonuses? 

That’s true.

But the key is that you don’t have to spend that money on things. Especially material things that don’t bring sustained happiness and joy.

As Americans, we already spend a lot of money overall in our everyday lives.

In fact, Americans tend to spend a lot of money…

How much money does the average consumer spend?

According to recent data from the Bureau of Labor and Statistics, the average American consumer annual expenditure was $60,000.

This is ridiculously high when considering that the average American income before taxes is about $73,500!

Here’s a snapshot of the statistics.

All of these expenses (food, transportation, healthcare, insurance, gifts) can potentially be paid for using a credit card. And if you rent, you can even pay for housing with a credit card too.

The problem is that many people have no idea where their money is coming and going. If you have this problem, then don’t waste your time with credit cards. You need a budget. And if you have already have tons of credit card debt and can’t seem to to pay it off, don’t apply for more cards. In fact, you should probably listen to Dave Ramsey and cut up your credit cards.

But if you’re like most people in the personal finance community, then you’re probably good with money and have decent budgeting skills.

Personally, I don’t use YNAB or Mint. My wife and I don’t even have a budget. All I do is periodically track my spending and investments on Personal Capital. It’s very easy to track spending when you don’t spend very much outside of food, housing, and taxes. 😉

Credit card sign up bonuses

In earlier posts, I have mentioned that the quickest and easiest way to rack up points and miles is to sign up for credit cards with large signup bonuses.

An example of a large bonus is 100,000 points for $4,000 of spend in 3 months. This was offered for the Chase Sapphire Reserve credit card more than a year ago (when it was brand new). This is offer is no longer valid. The bonus is now only 50,000 Chase ultimate rewards points.

One of the more popular cards these days is the Chase Ink Preferred* business card. By the way, anyone can open a business card even if you don’t run a traditional “business”. AirBnb, buying and reselling goods online, Uber/Lyft, or any kind of side hustle counts as a business. I include a small bit on applying for business cards here. This card has one of the more lucrative signup bonuses publicly available. It has a sign up bonus of 80,000 points for $5,000 of spend in 3 months.

*Full disclosure: All links to this card are referral links. This means that if you apply for the card using my link and are approved, I will receive a referral bonus of Chase Ultimate Rewards points.

How to easily meet minimum spending requirements on credit cards

Meeting minimum spending requirements on credit cards just to earn the sign up bonus can be a bit tricky.

Yes, the sign up bonuses can be lucrative and can lead to “free travel” (or at least heavily discounted travel). However, the pressure to spend a certain amount of money in a limited time will likely cause you to spend more money than you otherwise would.

The trick is to earn the sign up bonus by only spending on the things you normally would anyway. And If your normal day-to-day spending is projected to fall short, then there are creative ways to manufacture spending to bridge the gap.

Digging a little deeper, let’s use the Chase Ink Preferred business card sign up bonus as an example.

Hypothetical Example

Let’s assume that you:

• Are financially responsible
• Have a good credit score and always pay your bills on time
• Have a decent emergency fund of at least $5,000
• And you’re approved for the Chase Ink Preferred business card. Yay for you!

Now, in order to earn the 80,000 point sign up bonus, you’ll have to spend at least $5,000 in the first 3 months. That’s no easy feat. $5,000 is a lot of money.

So how do you do it?

Tip #1: Plan for the big ticket items

One of the easiest way to meet spending minimums is to only apply for a credit card when you anticipate a big ticket purchase.

Planning to buy a thousand dollar sofa? Open up a new credit card with a huge sign up bonus and charge it.

Getting married in a few months and anticipating spending $10,000? Apply for one or two cards.

You get the idea. If you already know you’re going to spend a lot of money, you might as well get some money or travel rewards in return in the form of a credit card sigh up bonus.

Personal experience

In the beginning of the year when we accepted the challenge to buy nothing, we had made exceptions for the things we had already planned to buy. These items were baby stuff, a new Tesla car, and a non-toxic Naturepedic bed.

At $3,600, the bed was a big ticket item that we purchased in January (detailed in the monthly update here). For this purchase, I used a combination of pre-paid Visa gift cards (obtained through manufactured spending) and a new credit card.

This purchase alone could meet the minimum spending requirements of some credit card sign up bonuses!

But Doc, I’m not planning to buy any big ticket items. Plus the point of this post is to earn a credit card sign up bonus without buying anything.

Good point!

So let’s move on to other tips then…

Tip #2: Use your credit card for everything

Okay. Let’s say you are a dedicated frugal minimalist who is absolutely not going to buy any material things. So no buying clothes and no spending on entertainment. Got it.

Still, you can meet your minimum spending requirements by using your credit card to pay for everything non material.

Let’s take a look at three major expenses: 1) housing; 2) food; 3) transportation.

Housing

Shelter and housing is a necessity. The average American spends $7,989 a year on housing expenses on top of their mortgage or rent. Looking at the average expenditures chart above, this can be calculated by subtracting the shelter expenditure from the total ($19,884 – 11,128 = $7,989). These costs can usually be paid with using a credit card including home insurance, repairs, renovations, and miscellaneous home maintenance. This amounts to $665.75 per month or $1,997 for three months.

Food

You also have to eat. And according to the chart above, the average American spends $7,729 on food per person. That equates to $644 per month or $1,932 for three months.

Transportation

Transportation is a big expense too. Not taking into account vehicle purchases, the average American spends $5,522 ($9,576 – $4,054) on transportation. This might include car insurance, maintenance, and gasoline. That’s $460 a month or $1,380 for three months.

Total

Guess what. In three months, the average American spends $1,997 + $1,932 + $1,380 = $5,309 on housing, food, and transportation. Don’t forget, this figure does not include mortgage, rent, or car purchases and payments.

This more than meets the minimum spending requirement of $5,000 in 3 months for the sign up bonus of the Chase Ink Business Preferred credit card.

But Doc, data from surveys like this can be biased. This doesn’t reflect my spending. I’m much more frugal than the average bear!

Okay. If you say so. Still, there’s more you can do to meet the spending requirement…

Tip #3: Purchase gifts for others

It’s good to be frugal. Just don’t be flat out cheap. You can afford to be generous with others.

If you don’t have any big ticket purchases and your every day expenses don’t add up to the spending requirements, consider buying gifts in advance.

Who cares if Christmas or your spouse’s birthday is several months away. If you already know what you want to get, just buy it now.

Maybe you’re a frugal minimalist who doesn’t buy gifts anymore. That’s fine. I can relate. My wife and I decided not to buy gifts for each other anymore.

In that case, consider using your credit card to make a donation to charity.

Tip #4: Buy gift cards for yourself

Perhaps money is tight or you can’t afford to be quite so generous.

One way to meet minimum spending requirements is to buy gift cards.

Sometimes office supply stores like Staples and Office Depot have promotional deals in which you can receive a $20 rebate on purchased pre-paid Visa gift cards. It’s a perfect way to increase credit card spending to meet a minimum spending requirement while getting your money back. I take full advantage of these deals.

If there isn’t a deal on Visa gift cards, another option is to buy store or restaurant gift cards. Just make sure that you don’t lose the gift cards and that plan to visit that particular store or restaurant in the near future. Consider buying Amazon gift cards; they are so versatile since almost anything you might need can be bought online. In the past I have bought Shell gas cards and placed them in my glove department. That way, they are easily accessible every time I need gas. I don’t do this anymore because I have an electric car.

Tip #5: Get reimbursed for purchasing things for other people

Let’s say your friend wants to buy something fairly expensive. Volunteer to pay for it using your credit card then have her or him pay you back. This is becoming more convenient with the popularity of online payment services like PayPal and Venmo.

Going to happy hour with your colleagues? Volunteer to pay for the entire bill with your credit card then have them pay you back.

You get the idea. This is another way to increase your credit card spending while getting your money back. That is, as long as people are willing to pay you back…

Tip #6: Use a service like Plastiq

With Plastiq, you can pay any bill in which credit cards are not usually accepted. This includes rent, utilities, car payments, and many other expenses (except for mortgage payments).

While they charge a 2.5% convenience free, it may be worth it to earn sign up bonuses that can be worth $800 or more in value.

There are many other services that allow you to use a credit card to make rent payments. These include RadPad, Rentler, RoomiPay, and Urbanr. Each service has their own convenience fee for using your credit card.

Tip #7: Pay your taxes

You can also use your credit to pay federal taxes. There are different services that you can use, but the one with the lowest convenience fee is pay1040.com. It has a fee of 1.87%.

This is the method that I often use because we don’t buy material things, our transportation expense is minimal, food spending is low, and we can’t use a credit card for mortgage payments.

Because my estimated tax bill is quite high, using credit cards to pay federal taxes allow me to meet spending requirements to earn sign up bonuses for multiple cards.

Real Life Example

In the past three months, I signed up for the Chase Ink Business Preferred card, the Chase Ink Business Unlimited card, and the Chase Sapphire Preferred card.

On July 1, I was finally under that Chase 5/24 rule. This means that I was finally able to apply for Chase credit cards that earn valuable Ultimate Rewards points.

First the business cards

Since Chase business cards do not count towards 5/24 status, I applied for the Chase Ink Business Preferred card FIRST because of the lucrative sign up bonus of 80,000 Ultimate Rewards points after spending $5,000 in 3 months.  Shortly after being approved, I applied for the Chase Ink Business Unlimited card. This card has a sign up bonus of 50,000 Ultimate Rewards points after spending $3,000 in 3 months.

Then the personal card

I waited at least 30 days before applying for the Chase Sapphire Preferred. Just to be safe, I waited 45 days to apply. This is because Chase will typically deny a credit card application if you applied for more than 2 credit cards in a 30 day time period. This is known as the “Chase 2/30” rule. Anyway, I applied for the Chase Sapphire Preferred card and after a several days I was approved. I was likely not instantly approved because I have applied for so many cards. This card has a sign up bonus of 50,000 Ultimate rewards points after spending $4,000 in 3 months.

Nevertheless, I was ultimately approved for all three cards. I’m still batting 1.000. Yay!

Paying taxes to meet minimum spending

In order for me to earn the sign up bonuses of all three cards (a total of 180,000 Ultimate Rewards points!), I would have to spend $12,000 in 3 months.

I strategically timed the credit card applications perfectly so that I can use all three cards to pay my estimated federal taxes by the September 17 due date and still be within the 3 month window.

The beauty with paying your taxes online is that you can split up your payments. However, there is a limit of two separate payments for each processor. For instance, you can make two payments using Pay1040.com and another two payments using PayUSAtax.com.

Doing the math

Because Pay1040.com has the lowest fee at 1.87%, I used them to process two payments of $5,000 (spending requirement for the Chase Ink Business Preferred) and $4,000 (spending requirement for the Chase Sapphire Preferred).

I used PayUSAtax.com to process a payment of $3,000 to meet the spending requirement for the Chase Ink Business Unlimited.

For the rest of the quarterly estimated tax bill, I used direct pay from my banking account because there is no convenience fee using this method.

Let’s calculate the fees.

$5,000 x 1.87% = $93.50

$4,000  x 1.87% = $74.80

$3,000 x 1.97% = $59.10

Total fees: $93.50 + $74.80 + $59.10 = $227.40 in total fees

The total gain of points is 180,000 (total sign up bonuses) + 12,227 (1 point earned per dollar spent) = 192,227 Ultimate Rewards points.

Ultimate Rewards points can be redeemed for 1 cent per point in cash. So on the lower end of the spectrum, 192,227 points equals $1,922.27.

Of course, Ultimate Rewards points are much more valuable if redeemed for travel or converted to airline partner miles. Because of this, points can be valued as high as 1.7 cents per point. Using this valuation, 192,227 Ultimate Rewards points can be valued at $3,267.86.

But let’s be conservative and consider the lower limit value of Ultimate Rewards if redeemed for cash. In this case, the net gain would be $1,922.27 – $227.40 = $1,694.87!

That’s pretty darn good.

It’s even more awesome when you consider that this gain of at least $1,694.87 is considered a rebate and not a taxable gain. At my marginal tax rate, it’s the equivalent of more than $3,200 of earned income. And it requires minimal time and effort on my part.

Not too shabby for a source of (semi) passive income every quarter!

Summary and Takeaway Points

• I earn thousands of credit card points every quarter all while not buying any material things
• The easiest way to rack up credit card points is to apply for cards with lucrative sign up bonuses
• However, you should only sign up for credit cards if you are financially responsible, have good credit, do not have credit card debt, and always pay your bills in full and on time
• There are many different strategies to meet the minimum spending requirements including planning for big purchases, using your credit card for all purchases, and creative ways to manufacture spending (gift cards, reimbursements, paying bills/rent, paying taxes, etc.)
• Many people don’t see the value in earning credit card points, but in reality the benefits can represent a significant value
• If done responsibly, earning credit card points can be a valuable source of non taxable income

Do you earn a lot of credit card points? What strategies do you use?