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Maximizing Signup Bonuses by Paying Taxes


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00:00:00.000 | Now, to highlight an example of how great an opportunity a sign-up bonus could be relative to the fees for paying your taxes,
00:00:07.940 | I'm going to talk about a sign-up bonus that just came out for one of my favorite travel cards of 100,000 points after spending $5,000 in three months.
00:00:16.020 | And this is a card that earns transferable points.
00:00:18.380 | Think about the cost to put that $5,000 spend, even if you didn't have it, would be about $87.50 if you were paying 1.75% in fees.
00:00:27.740 | So you might think, okay, well, if I'm just earning one point per dollar, maybe that's not worth it because those points might only be worth $50 or $60, I'm going to pay $87 in fees.
00:00:37.720 | However, because there's a 100,000 point sign-up bonus, this looks very, very different.
00:00:41.840 | So worst case, I think you could use that sign-up bonus in the travel portal, and this card makes those travel predemptions worth 1.25 cents.
00:00:49.840 | And so 1.25 cents times 100,000 points is $1,250.
00:00:54.320 | So if you're getting $1,250 to spend $5,000, that's a 25% effective cashback rate.