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I got a new credit card with a very large signup bonus - as long as a minimum amount is spent on the card in the first 3 months. I usually don't go for things like this but in this case the bonus is so large that it's worth the hassle. The amount I have to spend is probably about $5000 more than I would normally spend in this time.

What are some creative ways that I can "spend" this money, without:

  • taking on extra cost (I could just send my friend $5000 via paypal, pay the 3% or whatever, and be done with it - but I don't want to lose that 3%)
  • spending too much time or effort (e.g. the "scam" where people would buy thousands of dollar coins, then lug them to the bank and deposit them)
  • obviously, spending money on things I wouldn't normally spend it on (I could just buy a car and be done)

My current plan is to see how much I have left to go with about a week left, and then just buy myself an Amazon gift card (nearly as good as cash) for the balance, but I'd rather this be closer to $500 than $5000.

What else can I do?

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Here's a question: if you take out a consumer loan, will the interest payments (I'm assuming you can pay the loan via credit card) be significantly less than the CC bonus you're getting? Keep in mind that you can pay off the loan in full in 3 months; no need to pay more than 3 months' worth of interest -- or even 1 month assuming your credit card can stand the balance. –  Carl Witthoft Apr 17 at 15:40
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No loan is needed. He just wants to run $10k through the card quickly. –  JoeTaxpayer Apr 17 at 17:25
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Just a note, I received a 1099 for an equivalent value for the miles. They valued them at about 2.5c per mile. –  goodeye Apr 19 at 3:16
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Now when I was offered a rebate bonus (in an attempt to convince me to use "credit card checks", which I really hate), I didn't go out of my way to punish the bank for making the offer -- I simply used those checks to pay my rent for the next few months, which was my largest outflow at the time and thus produced the best payback without making me feel I was cheating or putting me at any risk of not being able to immediately pay off the next card statement. –  keshlam Apr 20 at 2:02
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@goodeye - a bonus for simply opening an account may result in a 1099. A rebate given as a percent of purchase cost is consider a return of your own money and should not produce a 1099. –  JoeTaxpayer Apr 30 at 1:15

8 Answers 8

up vote 23 down vote accepted

Are you in the US? One thing you can do is prepay taxes at a rate of a 1.8% fee. Much lower than paypal. I would do this on what is "left over".

Here are somethings that I would tend to do in your case:

  • Pre-buy gifts. Do your Christmas shopping now. Even if you don't know what to buy, you can get gift cards to the stores you are likely to buy from.
  • Pre-buy non-perishables. This would include cleaning supplies, and wrapping for gifts.
  • Pre-buy auto maintenance. You'll probably have to change your oil two or three more times this year. If you DiY get GC to your favorite auto parts store, if you have it changed does your service station offer GCs? What about tires, etc?
  • On your utilities that do not charge a fee for CCs, why not pay extra? If your cell phone is 100/mo, why not pay for the next 12 months or so? Then use that $100 to replenish savings.
  • if you are paying car or renter insurance monthly, you can prepay them also and save some $30 on car insurance alone.

Those are some of the things I would be looking at.

Do you care to share the details of your offer?

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+1 for prepaying cyclic bills. –  Carl Witthoft Apr 17 at 15:38
    
Great ideas, especially on the utilities. My contract's up at the end of the year but I can definitely prepay 6 months' worth of cable and cell phone bills for about $1000. –  Jer Apr 17 at 15:39
    
Oh, and the offer was 100,000 American Airlines miles if you spend $10,000 in the first 3 months. –  Jer Apr 17 at 15:41
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Typically considered worth about 2c per point. $2000 average depending how you use them. I'd say well worth this effort. –  JoeTaxpayer Apr 17 at 17:10
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There were a lot of good ideas here, but I'm going to select this as the answer because paying utilities in advance has the right combination of "something not everyone would think of", "can make a substantial dent in the $10", and "close to zero risk and effort." –  Jer Apr 24 at 21:05

The gift card for specific stores has no fee. In our budget of nearly $500/mo for supermarket, it would be easy to just buy 10 x $500 cards, and then be careful with them. A look at your past 12 mo of spending should provide a hint what GCs might work for you.

Else, for a $4.95 fee, I've bought $500 generic Visa cash cards. When my new credit card offered a 10% cash bonus for spending, I spent. Took us nearly 18 months to burn thru 500 cards. But a net $4500 gain was sweet.

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Didn't even think of the supermarket gift card - that's even better than Amazon I think. –  Jer Apr 17 at 15:40
    
Are you sure a credit card won't consider a generic visa to be "cash equivalent" and start charging interest on it immediately? –  DJClayworth Apr 17 at 18:34
    
@DJClayworth - I am sure that your concern didn't impact the $50K I charged at CVS to buy 100 cash cards. Whether another store has different coding or another bank is on the lookout for this, I can't say. All I know is that 3 weeks into my deal, the bank pulled down the offer for new customers, but let mine run. –  JoeTaxpayer Apr 17 at 19:32
    
I stand corrected. And impressed. –  DJClayworth Apr 17 at 20:59
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Not corrected. My good luck may have been just that. Your warning stands. My first act was to charge 4 cards, $2000 and wait a few days till I saw it hit the account on line to verify this very issue. So it's more 'great minds think alike.' –  JoeTaxpayer Apr 17 at 22:01

There are a couple pretty good answers here already, but I wanted to add that, depending on your location, many grocery stores sell gasoline. Gift cards for those grocery stores can be used for gas and groceries and usually do not include any fees. Since we all need to eat and most of us need to fill the tank on a regular basis, this seems like the best way to run up the bill without purchasing frivolous items.

As another poster mentioned, pre-paying bills is another great way to go. Some places such as health clubs may even offer you a discount for paying in full, essentially "earning" you more money down the road.

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This isn't exactly the answer you were looking for, but it is something else to consider.

Rather than just running money through the card to get the bonus, have you considered spending that $5,000 in the form of good debt? In other words, can you purchase some asset that will create more cashflow than you would be paying on the card with the $5,000 balance?

The idea is instead of running up the balance and paying it back off to get the bonus, maybe you could buy an asset for $5,000, create positive cashflow with the opportunity for long term capital gains, and get the credit card bonus. You could even turn around and use the bonus to pay back part of the credit card balance, thus reducing the payments and widening the profit margin on the asset.

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Interesting. Any specific ideas? Do you mean like buying art? Doesn't this assume the poster had $5000 to spend on an investment vs a necessity in the first place? –  MrChrister Apr 19 at 15:56
    
The specifics would depend on a lot of variables like investment style, goals, etc. Personally, I would try to buy a profitable website because I have a background in web dev, but it could be a lot of other things too. Art would not count, because it doesn't create income. The goal is to use the income to make the payments on the $5,000 balance, then use the profit for whatever you would have bought with it to begin with, except now you have an asset. –  Aaron Wright Apr 19 at 20:46
    
I would also like to ask why this answer was downvoted. It answers the question and provides more benefit than most of the other answers. –  Aaron Wright Apr 19 at 21:02
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My DV was because taking a loan from a credit card is awful advice. OP didn't state the rate, but I'd bet 18%. Borrowing to invest is very risky, especilly given a credit card rate of interest. We're not talking about pulling $10K on a zero interest rate offer, which is why the OP wanted to run certain types of purchases through the account. Please don't take offense to a downvote, it simply means a member disagrees. And usually doesn't come with any explanation. –  JoeTaxpayer Apr 20 at 15:25
    
That's fine. No offense taken. But understanding why people disagree is helpful to my own learning process. –  Aaron Wright Apr 20 at 20:46

I think you're not considering the opportunity cost of giving up your money early. I'm not sure what the total money you have to spend, but spending extra on things you're going to buy later might not be the best choice.

Consider you could just get a credit card that does 3% (6% with fee) on groceries, 3% on gas, etc. So you can make some money there without spending it all up front.

Also, you could be turning that money into more money by investing it. Assuming you're not going to just carry a balance and pay interest on the card, you have this cash on hand to invest.

One more thing, I'm not sure of your financial situation but I don't think something like spending an extra 5k is a pittance to you (since you wanted $500 so badly). Having the cash at hand has its own advantages even if you're just sitting on it.

In short, consider if you want to follow through with this plan. You can still keep the card.

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For simplicity, let's assume that I'm going to spend $5000, and I will "get that back" in a year. i.e. I'm going to pay for cell phone bills, groceries, etc. for the next year. I will use these things continuously throughout the year, so the average amount that I'm paying upfront is half, or $2500. My $2500 can be expected to earn ~8% if I invest it, or $200. I'm getting $1500-$2000 worth of airline miles, depending on how much you value them. Seems worth it to me! Agreed on your last point - if this was all my cash, it would be dumb to put it all on the card. I have enough cash though. –  Jer Apr 17 at 20:48
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The OP's return is 20%, if he uses up the cards in 6 months, it's really an average 3 months, or an 80% annualized simple rate. –  JoeTaxpayer Apr 18 at 21:12

Do you own your own home, or some land?

Buy materials and/or completed outbuildings (sheds, etc)

Do a small renovation on your house

Do some landscaping, gardening, etc

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and the downvotes are for ...? –  warren Apr 30 at 19:40
    
I didn't downvote, but you're violating this condition in the question: "spending money on things I wouldn't normally spend it on (I could just buy a car and be done)". –  user13820 Apr 30 at 21:28
    
@user13820 - no, there is no violation to the "condition in the question": these are things normal homeowners would buy –  warren May 1 at 15:34
    
Ehh, just my guess for your down-votes. –  user13820 May 1 at 17:13

What is the interest rate on the balance you'll be carrying? Even at a modest interest rate of only 10% (many cards can be double that) means you'll pay $500 in interest if you carry the $5000 balance for a year. At 20% you'll pay $500 interest in just six months. You also mentioned this would be $5000 MORE than you usually spend in this time, so I imagine your balance could be higher.

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Can't you just repay the whole $5k balance on the next month, instead of carrying it? If it's "without cost", then it should be affordable. –  Peteris Apr 17 at 16:23
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Sorry, I should have been more clear - I won't carry any balance. –  Jer Apr 17 at 16:31
    
Right. I pulled $50K in less than 90 days on a card with a $10K limit. And didn't pay a dime interest. Just turned some cash into cards. –  JoeTaxpayer Apr 17 at 16:41

You could buy some bitcoins with your credit card and then convert them back to physical money.

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Given the volatility of Bitcoin prices, this may involve significant costs to the OP, depending on when (or if) he converted his Bitcoins back into cash. The volatility risk is in addition to the fees he might pay to convert the Bitcoins (e.g., fees charged by an exchange). –  John Bensin Apr 18 at 17:45
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At best, Bitcoins are an extremely poor choice of "investment" if you care about your money. (They've lost over half their "value" in the past 5 months.) At worst, the system has been compared to a Ponzi scheme (see page 27). –  cHao Apr 19 at 7:52
    
@JohnBensin updated answer. If you instantly buy and sell, the difference shouldn't be too much. –  Ramchandra Apte Apr 19 at 10:50
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DJ's warning stands here. The charge to buy a virtual currency may be caught as such and the bonus, ignored. Worse, it may be treated as a cash advance. –  JoeTaxpayer Apr 19 at 15:58

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