Leveraging payments with Plastiq to earn sign-up bonuses, and more
Many our blog posts focus on credit card sign-up bonuses as a way to earn lots of points redeemable for trips. To an extent, that’s intentional – there’s nothing else that can provide quite the same ‘ROI’ on spending as those bonuses. That said, they do require that you spend thousands of dollars to earn them. Furthermore, as the available bonuses increase in size, so do those spending requirements! In fact, spending minimums as high as $4-5,000 on new credit cards are no longer atypical; pretty much all premium credit cards are in that tier nowadays.
Certainly, some folks with high day-to-day expenses will spend that amount of money within the promotional period (usually 90 days) with little effort. But others – myself included – tend to spend much less everyday on purchases. Ordinarily, this would preclude people like myself from being able to earn some of the most lucrative sign-up bonuses available on the market. But for those who don’t spend quite as much as a sign-up bonus demands, there’s at least one option you can consider that can significantly boost your spending: Plastiq.
What is Plastiq?
In short, Plastiq is a service that allows you to pay for certain purchases with a credit card, whereas you would usually pay by check. On their website, they list a bunch of examples of these sorts of payments, from professional services to utilities. But for individuals, the most common use of Plastiq is to put mortgages and rent payments on a credit card.
No matter what good or service you ultimately pay for the payment process when using Plastiq is the same. You give Plastiq a name and address, provide documentation of the expenditure (when necessary), and… you’re set! Plastiq will then charge your card, and send a check on your behalf to the recipient. Other than some Plastiq branding, this check is as good to the recipient as the traditional ones you may be sending today.
To be sure, this service is not free: Plastiq charges a flat 2.5% processing fee that payees must cover. However, even with that cost, it is often well worth using Plastiq towards the goal of earning a sign-up bonus.
How Plastiq can help with sign-up bonuses
Let’s take the recently updated Amex Platinum Card as an example. Currently, you’ll need to put $5,000 of spend on that card in three months to qualify for a 60,000 MR point bonus. If you ordinarily spend ~$1,000 a month on everyday expenses, you’d have a tough time finding a way to spend $2,000 more in order to qualify for the bonus. In fact, for many, this simply puts that bonus out of reach.
Enter Plastiq! If you have a rent or mortgage payment of, say, $800 a month, you can simply use Plastiq to pay for three months of housing expenses. Coupled with your everyday spend, you can now easily cross the $5,000 spending threshold to earn your bonus. All while not actually purchasing more product and services than you ordinarily do anyways.
…Of course, you will end up paying a bit more for out of pocket to cover those payments – $20 more a month, in this example, since $20 is 2.5% of $800. But that’s a pretty low cost considering the fact that a bonus worth as much as $1,000 (or more!) is now attainable. Furthermore, for that $820 monthly Plastiq charge to your card, you’ll also earn points on those payments, which will help to cover much of this extra cost.
What about using Plastiq to just earn points on my payments?
Until recently, Plastiq has been a great tool for acquiring sign-up bonuses, but a terrible tool for just acquiring points from otherwise-check-bound payments. For the most part, this is because of the 2.5% fee that Plastiq charges. You see, even with a card that earns lots of valuable points on everyday spend, that 2.5% fee costs more than what those points are worth. Indeed, there exists no card on the market that has a base earnings rate eclipsing the 2.5% fee Plastiq charges – it simply isn’t sustainable for a bank or credit card company to provide such a product.
However! You’ll notice that I said using Plastiq in this way was a bad idea ‘until recently’. Indeed, in what would ordinarily be a mundane event, Plastiq recently changed how they categorized rent and mortgage payments made through their service, when reporting these charges to Visa. This coding is very important to payment networks, since it is meant to reflect the type of good or service being transacted. But on the part of consumers, these codes usually don’t matter.
What makes this change important to us is that – again, for rent and mortgage payments specifically – Plastiq codes their transactions as lodging. Further, that category is covered as a ‘travel’ purchase by Chase for their premium Chase Sapphire Reserve when making those payments. Put together, this means that housing payments made with a CSR on Plastiq are currently giving the payee a generous 3 UR points per dollar!
This is a very big deal. As those points are worth at least 1.5 cents each when redeemed for travel (through Chase’s UR portal), those who pay for rent or mortgage through Plastiq are effectively earning 4.5% in value in exchange for 2.5% in additional spending*. And that’s at a minimum – when transferring those points to various loyalty programs, you can potentially redeem those points for a lot more.
Consequently, for CSR cardholders, there’s little reason not to always charge rent or mortgage payments to your card, at least while this updated coding remains. If you travel regularly, you’re effectively getting an instantaneous return of 80% on the Plastiq fees you pay. That’s pretty hard to beat!
(* It’s actually 4.51125% in value, since you earn points on the fee you pay, but I digress).
So what are the key takeaways from this?
- Plastiq is a great way to increase how much of your spending you put on your credit cards. Even with a 2.5% fee, it can provide tremendous value when you use that extra realized spend either:
- Get more sign-up bonuses than you otherwise could, or
- Get bonuses that you otherwise would not be able to.
- If you aren’t able to leverage Plastiq towards sign-up bonuses, but you have the Chase Sapphire Reserve in your wallet, charging your rent or mortgage payments to your card provides a tremendously simple way to ‘pay’ a 2.5% fee in exchange for points that are worth, at a minimum, 4.5% – giving you 2% of your monthly housing costs in profit!