Credit Cards

[birjest]

Ok, I have been a member here since October.  Receive great cards after 3 years of financial recovery and heavy (only) debit card usages.  So, here is my question...why do people go wayyy out of their way to push tons of money through a card, just to get....let say 25k points, which is equal to $625 in airline fare or similar?  I just received an email about spend $10k in 3 months to get 25k points and a year later, spend the same amount for 25k points.

True, there are reasons for everything, however, when the Apprentice was the #1 show, I learned a lot from the show, as well as CNBC, and what I learned was Return of Investments (ROI).  So, again, where are the ROI, if you have to push so much, or spend so much in 3 months or less just to get so little in return for points.  Understand all about the 2,3,5% cash back, but I just don't see the returns.  Is it me?

[jefftca925]

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birjest wrote:

Ok, I have been a member here since October.  Receive great cards after 3 years of financial recovery and heavy (only) debit card usages.  So, here is my question...why do people go wayyy out of their way to push tons of money through a card, just to get....let say 25k points, which is equal to $625 in airline fare or similar?  I just received an email about spend $10k in 3 months to get 25k points and a year later, spend the same amount for 25k points.

True, their are reasons for everything, however, when the Apprentice was the #1 show, I learned a lot from the show, as well as CNBC, and what I learned was Return of Investments (ROI).  So, again, where are the ROI, if you have to push so much, or spend so much in 3 months or less just to get so little in return for points.  Understand all about the 2,3,5% cash back, but I just don't see the returns.  Is it me?

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It really depends on the offer and one's capacity to make the offer work in their favor.  One of the catches in some of these offers is that if their is a big payout in return for a minimal spend (e.g. $250 back bonus if you spend $500-$1000 in 60-90 days) is that the interest rate on the card is a lot higher than if there wasn't a bonus.  This is also true of the CCs that offer long-term 0% financing... higher interest rate when the promo ends.  If you PIF every month, this doesn't impact you at all.  If you revolve debt and don't have the capacity to pay off the spend requirement quickly, then the deal really isn't for you.  You have to really read what is being offered and understand what you are getting yourself into.  Also, there are multiple promotional offers for the same CC out there.  You just have to Google it and you'll see what I'm talking about. 

I've received TONS of these types of offers in the last couple of years and have taken advantage of a few of them.  Airline miles, Ca$h Back, etc.... to this day my CC debt is very low (around 1% util) and I've made money off the banks when years ago they made a TON off of me.  If the card has an AF, I cancel it if it doesn't work well to my benefit.  The one card that I recently got was the Amex BCP that had 0% for 12 months and a $150 cash bonus with $1k spend.  It has a $75 AF but with my grocery spend every month it is totally worth it.  I really like this card.  The airline cards.... well... that's another issue.  The AFs are up there and if you're not gonna use it or the airline doesn't offer a lot of flights out of your area, then what's the point?

All in all, these offers can be quite lucrative to someone that has a good financial plan in place and understands how CCs work and they can make $$ off of them.  Otherwise, they are a trap into financial ruin... and honestly... the banks like that kind of customer. 

[navigatethis12]

$250 for spending 10000 is a poor offer in my opinion. that is only 2.5% cashback. 3.5% if the card is a 1% cashback card already.

There are multiple ways to "spend" the money to get these bonus offers. All the cards I signed up for I did not actually spend any money. I do not know how people here would take that kind of stuff so I will not go into detail but a quick search reveals most, if not all of the methods I use.

There are also people who were going to spend the amount of money anyway. The Sapphire Preferred  is $500 after spending 3000. If someone was going to maybe buy a new television, computer, or other expensive item, then it would be easy to meet the requirment.

I do try to explain to people though not to fall into traps of spending more to get more. Like websites that tell you you only need to spend twenty  more dollars to receive free shipping; people do not get that if shipping is only five dollars, they are wasting fifteen just to not pay for shipping. If you are not going to spend 3000 and do not know how to "spend" that much, it would be silly to buy everything in sight to get the return.

I am guessing the offer you received is for a card you already have; if so then those are not usually as good as sign up bonuses.

[Dadaluma83]

Signup bonuses are only good if you would spend that amount normally through the course of the months. Like for the sapphire preferred spending 3k in 3 months for me is doable just by my normal living expenses. However I would probably pay the 4th month's rent in the 3rd month to hit the 3k. Or like a freedom card where you get a bonus for spending 500 in the first 3 months. That is easy for anyone to reach.

10k in 3 months would be completely unreachable for me. 10k in a year would be more like it.

[Open123]

Spending $10K in 3 months isn't a very good offer.

Most sign up bonuses require around $1,500 - $3,000 spending over a span of 3 months.  Some even less, such as the $300 cash back for spending $500 in 3 months from the Freedom card.  And, some even offer 50K ($500 equivalent) for the very first swipe, such as a cup of coffee.

Also, never spend money unless you were going to anyway.  For instance, let's say your rent is $1,000 per month.  You have sign up bonus of $500 to spend $3K in 3 months.  Why not incur the $90 fee to charge your rent and netting $410 on what you were going to do anyway?  Or, if you had a$500 tax bill, why not just use the Freedom to pay it for $300 rebate even with the $15 processing fee?

Stay away from anything requiring more than $3K over 3 months.  Most targetted offers even require less spending, such as when Amex was offering 75k - 100k for spending $1,000 in 3 months.  Finally, only spend on what you were going to anyway; and NEVER spend on anything you otherwise wouldn't have without the bonus.

If adhered to, there is no downside, except maybe making an effort to find a destination to use your free business class ticket.

[jefftca925]

the two offers that I took advantage of recently were a BofA Cash Rewards VISA that had $250 back after a $500 spend in 90 days (very easy) with 0% for 12 months and the Penfed Plat Rewards VISA with 25000 points after $1k spend in 3 months.  These are very doable with everyday spending and netting 25-50% cash back is a no brainer.  A 10k-25k spend requirement really isn't for the average consumer but more geared towards a business owner that can hit that spend level pretty easily.  At my job we put almost everything thru our CC and we rack up more than $250k per year which is a lot of points/miles/cash back.  But the bonus would have to be more generous to make a business owner turn their head. 

[birjest]

I agree with what everybody is saying..really.  I try to scratch my head when people are pushing tons of money, just to meet the requirements.  However, it is quite understandable if one was going to spend such amount any way.  Why not take advantage of the cc companies. 

[JaysonT]

The only real reason to take adavantage of any of those offers is if you already have plans to spend the money anyway.  If you are going to spend the money with or without the offer, getting even 1% return is better than 0% return.

I have received lots of offers over the last 30 days from each card and why I need to run my stuff through their card.  I do the comparisons and go with the one which gives me the best return.

There is one scheme I am in now with Discover which requires me to spend $500 per month in Feb./March/April and then they will give me $75 credit.  Sure, it doesn't seem like much but even if I were to just run the card through my own business charging $500 each month and then in the end credit me back $1500 (via check) so there is no income tax involved I would only spend $41.25 in fees (yes, I pay higher credit card fees as I barely ever use it).  The resulting in a profit of $33.75 or 2.25% return on my money with very little effort involved.

[ebenbow]

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JaysonT wrote:

There is one scheme I am in now with Discover which requires me to spend $500 per month in Feb./March/April and then they will give me $75 credit.  Sure, it doesn't seem like much but even if I were to just run the card through my own business charging $500 each month and then in the end credit me back $1500 (via check) so there is no income tax involved I would only spend $41.25 in fees (yes, I pay higher credit card fees as I barely ever use it).  The resulting in a profit of $33.75 or 2.25% return on my money with very little effort involved.

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Doesn't seem like a very legal proposition.

[JaysonT]

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ebenbow wrote:

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JaysonT wrote:

There is one scheme I am in now with Discover which requires me to spend $500 per month in Feb./March/April and then they will give me $75 credit.  Sure, it doesn't seem like much but even if I were to just run the card through my own business charging $500 each month and then in the end credit me back $1500 (via check) so there is no income tax involved I would only spend $41.25 in fees (yes, I pay higher credit card fees as I barely ever use it).  The resulting in a profit of $33.75 or 2.25% return on my money with very little effort involved.

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Doesn't seem like a very legal proposition.

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I don't think there is anything illegal about it.  The rules of the offer say that I must spend $500 over the three months involved on my Discover card which is what I am doing.  Either way, the fact is that sadly I spend more than $500 per month on just the one card means I don't actually need to put this into play.