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Good morning, this is Thinking Capital. A weekly mission for you to optimize your financial life. Today’s mission: Hacking credit card points.
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Greetings from Arizona!
If you haven’t been to Sedona, I’d highly recommend the trip. Red rock panoramas, a skew towards wellness, and very friendly locals. We flew into Phoenix, had a chance to test out the Hertz President’s Circle benefit via my Capital One Venture X and stayed at the Element Sedona via our Amex Marriott Bonvoy Brilliant annual certificate.
The drive from Phoenix to Sedona is straightforward and just under two hours. Once you break out of city traffic, the landscape slowly starts to transition from the harsher dessert of greater Phoenix to the lush verdure of Sedona which contrasts so beautifully with the iron-ore rich mountains. Vistas like the photo above are easy to find, but that one was taken from the Sugar Loaf loop hiking trail.
The only thing better than traveling is traveling via points
There’s something very special about redeeming points for a trip. Despite staying at a simpler hotel and renting a basic car, the scenery and overall vibe of Sedona will make this trip unforgettable. A gentle reminder that it doesn’t take a 10+ hour flight and a 5 star resort in order to make something special. As well as a prompt to dig in a little more to my own spending and see how and where I can accrue more points from my everyday spend.
Using a credit card to pay rent
During my days as a renter, I had dreamt of a way to earn points on my credit card spend. At one point, my rent was $30,000 annually, which meant I was forgoing 30k points or a roundtrip business class flight to Hawaii, but the only option would have been to pay the 3% processing fee, which I wasn’t willing to do at the time.
Fast forward to today and this problem is solved. Bilt Rewards allows you to pay your rent without charging any additional fees nor do they charge an annual fee for using the card. They know rent makes up the lions share of everyday expenses for most of us, and they sweeten the deal with 2x on travel and 3x on dining. Despite no longer being a renter, I signed up for this card for the dining multiple and their growing list of transfer partners.
Paying taxes with a credit card
While I’m a little late here for tax season, I know a number of us either run our own businesses or opt-in to pay quarterly tax payments. There’s a number of sites that allow you to do this with a credit card, but I only recently learned about Pay1040. Their differentiation is their price, charging a low rate of 1.87% for credit card payments and a flat fee of $2.50 for personal debit cards, meaning there’s a few times when this is worth it:
Credit Card Minimum Spend, if you’re working on a minimum spend requirement for a bonus offer, the chances are that you’re earning well over 2x points per dollar. If you’ve exhausted other expenses, this is a great way to finish that spend requirement without spending superfluously.
Credit Card Earning 2x or more, perhaps you have a card that earns 2x points or more on every purchase. While this isn’t the most amazing hack, it’s a good way to earn some points for spend you would have made anyways. You’ll be paying $1.87 for every $100 of taxes owed, but earning $2.00+ of points. It’s only net $0.13 per $100 of taxes, but that can add up if:
a) You have a large tax bill
b) You’re able to redeem those points for more than 2 cents of value per pointDebit Card Rewards, there’s a growing number of debit card offering rewards points and Pay1040 only charges a flat rate of $2.50 for those transactions. If you’re paying more than $134 of taxes, it’s worth using a debit card, assuming you’re earning more than $2.50 of rewards
An extra 30 days, while you should always pay your credit card bill at the end of the current month’s billing cycle, another way Pay1040 may be helpful is if you need to free up funds for taxes owed and can use another 30 days to do so. Paying with a credit card is slippery if you don’t think you’ll have the funds in time, but it can also be a powerful tool to extend your “due date” by 30 days.
Paying for anything else
What about schooling, daycare, car payments and other expenses? While I’m sure there are some specific hacks in each of these high cost areas, many tools will charge about 3% in transaction fees. If you’re earning 3% or more of value, it’s worth considering making the switch to card.
If you’re willing to jump down the rabbit hole, there’s a community that takes this to the extreme by funding bank accounts with credit cards, meaning you’re accruing points with the initial deposit into to your own account. This can be dangerous if you’re charged an exorbitant cash advance fee, but lucrative if you’re willing to dive in. Doctor of Credit offers a comprehensive guide, but again, proceed with caution.
How are you hacking points?
Reply and let me know so we can dive deep in a future issue. Until then, safe travels!
<3
Armand