Around this time of year, I start getting a lot of emails about the Southwest credit cards and how to reach the 110,000 Rapid Rewards points you need for Companion Pass.
What's hard about those, and other credit card rewards bonuses, is reaching that spending amount so you can claim the bonus or other perk. It sounds easy when you apply, just a few thousand over three or four months, no big deal; but then you realize that maybe it is a big deal.
But we have a work around.
What's your biggest monthly expense?
If you're like most people, it's your rent or mortgage.
If you follow our money ratios, it can be as much as 30% of your budget!
If you're trying to spend enough for credit card bonuses, this is what you should be paying with your credit card to reach your minimum spends.
There's just one catch… your bank doesn't let you pay with a credit card. Your landlord definitely doesn't let you pay with a credit card.
Credit cards are expensive. When you use a credit card, the merchant has to pay all kinds of transaction and interchange fees. For example, Visa charges an interchange fee of 1.51% plus 10 cents on each transaction. This is why your bank or mortgage company doesn't take credit card payments in the first place. Banks and landlords don't like that.
But there is a workaround.
Pay with Plastiq
Plastiq is a service that lets you pay practically any bill with a credit card, it just costs you a 2.5% fee. You can use it for your mortgage, your student loans, and almost any other big bill you might have that doesn't already take a credit card payment.
The quick math of this is that for every $1000 you pay via Plastiq, you will pay them a $25 fee (of which I suspect more than half goes to the credit card company).
This is useful when you need to reach the minimum spending requirements of a new credit card bonus.
What if you're close but not going to make it? You can put your mortgage (or other large bill) on Plastiq, pay the 2.5% fee, and ensure you get your bonus.
A lot of the big credit card bonuses are easy to get if you can pay a large bill.
(as a bonus, you also earn cash back with the credit card so the 2.5% fee is more like a 1.5% fee or less, depending on your cashback rate)
They will pay via a bank transfer or check by mail, exactly like billpay from your bank.
If you use our referral code “wallethacks“, you can get $500 in payments without the 2.5% fee.
Plastiq isn't the only service like this but it's the cheapest with the 2.5% fee. Radpad, Rentshare, and RentMoola are similar services but charge a 2.99% fee.
When Should You Do This?
The best example is when you need to meet a minimum spend requirement to earn a sign up bonus. Many of the big bonuses require big spends. $5,000 over three or four months is common. That can hard unless you can put something as big as your rent or your mortgage on the credit card.
Besides the minimum spend, you may other perks associated with earning those points. Southwest Airlines gives a Companion Pass perk when you earn more than 110,000 Rapid Rewards points in a calendar year. With Companion Pass, a friend flies with you for free. If it's September and you're close to 110,000 but won't make it, paying rent with the card could put you over the top.
Finally, in most other cases, paying big bills with a card doesn't make too much financial sense. You may have to do it for other reasons but paying a service 2.5% to earn 1% cashback doesn't add up. 🙂
What to Watch Out For
The biggest concern is timing. When you pay with your credit card via a service, it takes time for the check to reach your provider.
Make sure you fill out all the correct information and schedule your payments early enough to account for the delivery delay. You don't want to pay any late fees or penalties because of the mail.
A single late payment dinging your credit can throw all those credit points right out the window.
To avoid this, make sure the first payment you make is earlier than your due date. Just send a little test pre-payment to make sure it's all processed properly. Better safe than sorry.
Go enjoy those points!