Minimum Required Spend (MRS), or just plain “Spend”, is the amount you’ll purchase to earn initial credit card signup bonuses. It doesn’t include annual fees or cash back. Spend can vary from “1st purchase” (perhaps a dollar’s worth of gas) to 10K or more. Typical Spend for many credit cards runs between $1,000 and $3,000. By rethinking your auto insurance, you can save money while also meeting Spend on a new credit card. How does it all work?
Avoid Spending Sprees
First, think about meeting Spend with purchases you’d already make. Don’t go on Spending Sprees just for the sake of earning a signup bonus. That quite defeats the aim of free and frugal travel. No point in parting with more dollars than you would were you not pursuing a signup bonus. Car insurance is one product most of us need rather than merely want. So it’s a great candidate for meeting Spend.
Pay Auto Insurance Premiums With a Credit Card
Many of the large auto insurers not only take payment by credit card; they do so without charging a transaction fee. At least for me this has been true with Geico, Allstate, and Amica. Ask (either via Google or the old fashioned way) if yours takes plastic.
Get Quotes From New Insurers Annually
If it’s time for a policy renewal and you like your insurer, see if you can pay the full amount on a points-earning credit card. A better option is to get three quotes from new insurers and switch if it makes good sense (you save money and trust the insurer). Checking annually is what many personal finance pros recommend, regardless of whether you’re in the points hobby.
For more years than I can remember, I was a loyal GEICO customer. You know the cutesy ads they run about saving money on car insurance? Well, that gecko can be a real rat! Turns out they’d been jacking my rate up slowly over time. By showing loyalty, I was what’s considered in the industry as a price-insensitive customer. I saved hundreds of dollars switching from GEICO to another insurer. Turns out that the next insurer played the same game, e.g. raised my rates over time, unwittingly incentivizing me to switch yet again.
Auto Insurance for the Long Haul
For the majority of my driving life, I presumed auto insurance policies were written for 6 months only. Not true. Several great auto insurers will write 12 month policies, doubling the Spend opportunity. Among them are Amica, Liberty Mutual, and USAA. So, consider going long to shorten up your Spend interval.
Don’t just stop at auto insurance for your Spend. Consider paying for other insurances with a credit card: Umbrella Insurance, Apartment Insurance, and Homeowner’s insurance. Most folks blindly accept paying for Homeowners as part of an escrow system. But you can cancel the escrow and do it yourself if you’re disciplined and won’t let it slip. This may or may not be worthwhile depending on your temperament and dependability.
Do or do not try this at home. I haven’t. Just floating the concept. There could be adverse unintended consequences. So, if you change insurers mid-policy you’ll get a prorated refund check. This gives you funds toward paying off the new policy. If one change is good for meeting Spend, another may be better.
For example, I just paid around $2,000 for a two-car auto policy in the State of Florida using Amica. The triggering event was having to change policies anyway as moving from NC to FL required it. Since I used a credit card, this instantly met 2/3 of the $3,000 Spend on my new Chase British Airways card. It could have met 100% of a $2,000 or $1,000 Spend. Or half of a $6,000 spend–a good way, incidentally, to reach after cards you might otherwise avoid. My wife Mandy and I have been averse to Spends any higher than 3K. In writing this post, it occurs to me that I could pursue credit card with higher Spends in good comfort and confidence using this method.
It further occurs to me that I could look at other insurers now. And if I found a competitive premium, I could switch again. Either to meet the remaining spend on my “BA” card or to meet Spend on a new card. I’m always looking for the next credit card signup bonus, of course. But I don’t always have enough natural Spend in the pipeline. What’s more, I could do this at whatever time best meets my Spend needs. You could switch insurers more than once in the same year and reap the benefits as well.
Only muggles pay for their auto insurance without plastic…