Why You Shouldn’t Change Your Spending Habits When You Get New Credit Cards

I’ve successfully converted a number of friends to points and miles earning credit cards, but I sometimes worry about what I’ve done. In general, the credit cards I recommend to my friends have minimum spending requirements (like $3,000 in the first three months for the Chase Sapphire Preferred, which is the card I normally recommend to newbies) in order to get the full sign-up bonus, and while I do believe wholeheartedly that these sign-up bonuses are worth the minimum spend, it’s possible to make inefficient decisions that negate the benefits of applying for credit cards.

The most dangerous thing that I see people do is change their spending habits to hit minimum spend requirements. This isn’t inherently bad, but it depends on what you’re changing. If you’re just shifting around spend onto a credit card that you would already otherwise do, that’s great! This is a good change, as you’re maximizing the value of your spending. If you’re just frontloading your spending (e.g. buying Christmas presents in July instead of in December to hit a minimum spending requirement), this also isn’t bad, provided that you have the ability to float the money (there’s an inherent cost to spending your money now rather than later, and Christmas presents are not very likely to appreciate in that time period).

But the thing you should almost never do is buy things you wouldn’t normally buy, and I worry that the notion of having a minimum spend requirement makes people more willing to spend money that they normally wouldn’t spend. For example, if you’re at Whole Foods watching a guy doing a Vitamix demonstration and you think to yourself, “gosh, I don’t really need a Vitamix, but it’s pretty awesome and it makes such smooth smoothies and can even make soup, and I do have a $3,000 minimum spend that I need to meet”, then you’re in the danger zone. Stop and reconsider! If you spend $500 on a blender that you don’t really need and the sign-up bonus is only worth $500 to you, then you’ve negated the entire sign-up bonus. (I don’t mean to disparage Vitamix blenders at all, as they are really, really awesome and totally worth it for some people)

How do you get around this and avoid this spending trap? Essentially, you need to ignore the fact that you have a minimum spend requirement and spend as you normally would. You’re not maximizing your benefit if you end up spending money on things that you don’t need.

But what if you’re like me and your normal spending habits aren’t nearly high enough to hit minimum spend requirements? This is where manufactured spend comes into play. Pretty much everyone can easily manufacture an extra $1,000 per month for free via Amazon Payments, and if this still isn’t enough, then you can try something like Bluebird and Vanilla Reloads to get up to an extra $5,000 per month at a cost of $3.95 per $500 of manufactured spend (well, technically paying $3.95 per $503.95 of manufactured spend). It’s true that you’re changing your spending habits and spending money that you normally wouldn’t have spent, but at least this way, the spend is much more constrained, and you’re still almost certainly going to come out ahead paying $3.95 per $503.95 of spend on almost any decent rewards card.