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TURNING LARGE SPEND INTO POINTS/MILES
Last fall we had our master bathroom completely renovated. We worked with a small husband/wife contractor team and initially they told us they didn’t accept credit cards.
Even though we had the funds ready for this big project, we wanted to pay with a credit card so we could get points/miles from this significant spend.
I let them know our motive behind wanting to use a credit card for the project and that we would be happy to pay the fee they would be charged by the credit card company. Once they knew this, they had no issue with us using a credit card.
WHEN IS PAYING A CREDIT CARD FEE WORTH IT?
I personally wouldn’t pay a credit card fee (typically 3%) if I were only earning 1x point/mile per dollar.
However, there are a few cards that have fantastic sign up bonuses but require a large minimum spend. This is where something like this would make sense.
For example, the Capital One® Venture X Business card has a 150K miles sign up bonus after spending $30K in 3 months. That is a spend that most people don’t typically have in a 3 month period. But here’s where eating the 3% credit card fee on your home renovation may make sense….
With the 150K miles you’d earn from the sign up bonus + the 2x per dollar on the $30K spend, you’ll have have 210K Capital One Venture Miles! If you were JUST to use these to cover charges on travel purchases, Capital One would equate that to $2100. So the $900 fee you paid for being able to use a credit card has now made you $1200!
GETTING THOUSANDS IN TRAVEL FROM ONE SIGN UP BONUS
BUT, no way would just “cover” my Capital One travel charges.
- I would transfer those points to a transfer partner and book 4 one way business class tickets to Europe for around 50K points per ticket, with a value of approximately $8K!
- OR I would transfer them for economy flights to Europe. Often times you can find economy ROUNDTRIP award flights to Europe for 30K – 40K each. Now we are talking 5 – 7 roundtrip tickets to Europe… I’d value that around $5K.
- OR Find flights to Asia on Air Canada that can be booked for 75K – 85K miles per person, each way business, you’ll be able to book 2 one way flights which could cost $8K if not using points/miles
DOING THE MATH TO SEE IF IT’S WORTH IT
Capital One® Venture X Business card –
$30K spend required in 3 months for 150K miles sign up bonus
Total earned with bonus + minimum spend, 210K Capital One Miles
3% credit card fee incurred: $900
Minimum gain: $1200
More likely gain when transferring to transfer partner for International flight: $5K
*For me, I’d say a $900 fee is worth a gain in $4K in travel
Ink Business Preferred® Credit Card –
$8K spend required in 3 months for 100K points sign up bonus
Total earned with bonus + minimum spend (figuring 1x point/dollar), 108K Chase Points
3% credit card fee incurred: $240
Minimum gain: $1080
More likely gain when transferring to transfer partner for International flight or to Hyatt for Hyatt stay: $2K
*For me, I’d say a $240 fee is worth a gain in $1700 in travel
Of course it’s super important that you are able to pay the credit card bill in full and on time so that you don’t incur interest fees. But if you have saved for your renovation and want to also get some travel points/miles from this big spend, it’s a great time to look at cards with high sign up requirements that maybe you couldn’t normally achieve.
Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.