Annual fees and minimum spends can seem like significant issues when trying to accumulate points without breaking the bank. Today we will discuss strategies to lessen the blow of annual fees and some tactics to achieve those intimidating minimum spends.
What are we supposed to do when we find a lender who does not offer a first year rebate on their product? Sometimes you just have to eat it, but there are a couple of options.
RBC, for instance, has been known to waive the annual fee on their Visa Infinite products if you hold a Visa Infinite product with another lender. There are many data points out there that suggest that this works, and just as many that it doesn’t, so the only thing you can do is try. Upon receiving your new RBC card, you’ll have to call the RBC credit cards department and try to convince a customer service representative to waive the annual fee. If they tell you no, hang up and call again. Contrary to what you may believe, most CR reps at any organization don’t know what is happening within their companies. This is especially true with banks. I would try this at least three times before giving up.
Another option is Great Canadian Rebates. This is an affiliate link. It costs you nothing to join and we would receive compensation for any products you purchased or applied for through the GCR portal. GCR has rebates on everything you can imagine. Automotive, fashion, technology etc. and even credit cards. Lenders currently on GCR include American Express, Scotia, MBNA and HSBC. Rebates are available on multiple cards from each lender ranging from $30- $200. They won’t take care of an entire annual fee, but it is something back. GCR gets a kickback from these Lenders by driving more business to them. They share some of that kick back with you.
The one downside to GCR is with American Express. Many of the juicy sign up bonus offers I have referred to are only available through a referral link. The offers on GCR will be the same publicly available offer found on American Express’s website. This will make GCR a viable option for your first AmEx card if you want to save a bit on your annual fee, but after that you would want to refer with your other players.
Minimum Spending Requirements (MSR)
After reading through previous posts you have probably seen some of the high MSR that accompany some cards. You’re probably asking yourself how you would put that much money on a single card in three months, Let alone acquiring three cards at the same time, all with minimum spends. It’s not as intimidating as it may seem, you just need to be creative. Let’s have a look at some ways to meet a minimum spend.
- First and foremost shift ALL of your spending to credit cards. When I moved to Canada with Angela in 2014 I pulled $100 out of the bank just to have emergency cash laying around. Here in 2021 there is still more than $65 of that scattered around the house. Seriously, outside of cash taken out for vacations I have spent all of about $35 in cash in the last 6.5 years.
- Pre-pay your utilities, phone, internet, cable etc. You are going to make that payment anyway. Pay 6 months of it in advance to put a big dent in your minimum spend. Every provider that I know of in Canada accepts credit cards
- Plan any large spends around card applications. For example, our auto and home insurance was about to renew so we applied for new cards two weeks before it was due. One of the cards was the business platinum from American Express with it’s $7000 MSR. Boom, one transaction and we were more than halfway to the MSR. Need a new furnace, appliance, laptop or phone? A new car? Some dealerships will allow a partial down payment with a credit card.
- Pay your rent. There are companies (such as Plastiq and Pay TM) that will accept your credit card and mail a cheque to your landlord. This will incur a 2.85% fee, but you have to pay rent anyway. $2000 a month rent will incur $57 in fees. In three months you have made $6000 in MSR at a cost of $171. This does not work for mortgages.
- Pay your HOA fees. Same method as paying rent.
- Buy gift cards. Many of the places you shop sell gift cards to other places you shop. There are many credit cards out there that offer 3, 4, or 5 points per dollar spent at grocery stores and then a lower multiplier for gas etc. Every grocery store sells Esso gift cards. Buy $300 worth of Esso gift cards and earn up to 1500 points for doing so. Have a purchase in mind at Hudson’s Bay? Buy the Bay gift cards at your grocery store and earn the big multipliers.
- Refundable hotel trick. This is a little shady for us so we won’t do it, but maybe you are ok with it. The main reason for us is that somebody has to eat the merchant fees and in this case it would be Expedia. Keep in mind you have to float your own money for an extended period of time before getting it back. This is how it works: Say you are having trouble finishing off your MSR (hypothetically $2000 left) and are fast approaching your three month deadline. Go to Expdia.com (NOT Expedia.ca) Find a hotel under fully refundable rates that you can cancel up to 24 hours before arrival. You book a hotel room for 10 months later. Choose the pay now option, not upon check in (this where you are floating your money). You have instantly met your MSR at this point. Then cancel the room before the arrival date for a refund. You just bought yourself an additional 10 months to meet your MSR. It is important to continue to spend to meet the MSR as intended or once the refund goes through you will lose the welcome bonus.
- When getting together with friends for dinner and drinks offer to pick up the tab and let them reimburse you. Immediately apply the cash received to the credit card.
- Friends, family or work have any big purchasing upcoming? Buy it for them with your shiny new credit card and let them repay you.
- Pay your taxes
As you can see there are many ways to go about meeting minimum spends without spending money frivolously. In almost every instance we are only spending in advance for things we were going to spend for anyway. There is one last thing I want to discuss and while we are uncomfortable with the refundable hotel trick, this one is an absolute no-go for us. I have read a lot about it so figured I would share what I know of it.
Manufactured spending (MS) is buying something with your credit card and liquidating it for full or close to full cash value, then taking that cash and paying the credit card off. While I am not condemning anybody that practices this, it just isn’t for us. While it’s not illegal, it closely resembles money laundering. Keep in mind every credit card issuer has the right to terminate your accounts for any reason at any time and these methods increase that risk significantly. So let’s take a look at some past examples. The methods below are 100% dead and a quick google search will turn up millions of hits on these specific methods and more:
- The Royal Canadian Mint. In 2011 they started what they called the face value coin program. It was a campaign to attract new customers to coin collecting. The Mint allowed you to buy multiple denominations of coins with your credit card. They were all legal tender and a $20 coin cost $20. It didn’t take long for the points crowd to catch on to it and started buying large quantities of these coins and walking straight to the bank to deposit them. Immediately paying off the credit card they purchased them with. Free points. The CBC even did a story on one university student who was able to travel the globe on the points he had earned. In the end the Royal Canadian Mint was on the hook for the merchant fees with the lenders, a 2% administration fee to the banks that received them and the Fed-Ex fees for them being returned to the Mint by the banks.
- CIBC Air Canada AC conversion card. This was a prepaid card that could be loaded with 10 different currencies and was meant to be used for travelling. The only problem was initially it also allowed for Canadian dollars to be loaded and withdrawn on it. And if you used a CIBC ATM there were no fees for using it. You could also load it with a credit card with no fees. It had a $3000 daily limit and CIBC was lit up. Shockingly it stayed active for about 8 months with it dropping at one point to a daily limit of $2000 during this 8 months. They finally caught on and reduced CAD limits to $100 per day.
My understanding is that there are always a few active methods possible for manufactured spending. I know of one currently but there definitely is a cost involved. What is it? Well, I am not telling you. Much the same way you won’t find any information online regarding this practice in Canada. While I am not willing to do it, I also am not willing to ruin it for those that do. This is why MS methods dry up so quickly, too many people talk about them.
At first sight both Annual fees and MSR seem intimidating. With a little understanding on how to approach each, they become much more manageable. I hope this helped relieve some of the stress involved if you were considering get into the game but were hesitant because of these issues