Exploring Credit Card Spend Requirements

Update – the spend requirement for the Arrival card has now officially increased to $3,000 in 90 days. You are all doomed…

This should be news to you, because as a loyal reader of my Travel blog in Saverocity I expect you to shun all other blogs, other than the ones in our network.  The Barclay’s Arrival Card is increasing its minimum spend bonus from $1,000 to $3,000 according to a rumor somewhere on the interwebs, likely started by a dude on Dan’s Deals forums.  Now, should the rumor be true or not, I highly recommend you click my link for the card NOW, just in case it does change and that leaves you completely up shit creek without a paddle.

If the rumors are true, what does it mean for you?

It means you have to spend $3,000 in 90 days instead of $1,000 in order to capture the 40,000 point signup bonus, which is valued at $440 in Travel Related spending.

Why is it going up to $3,000?

Great question, I have no idea, but I do like to speculate.  Many people think it is because $1,000 is an artificially lowered amount to capture market share, this could be true.  But in reality it is illogical.  I think it is going to $3,000 because that is the sweet-spot for the demographic customer base that a card like this should target.

The customer that would not signup for a $3,000 spend requirement is less attractive than the one who will.  Of course, one could argue that a person who would signup at $3,000 would sign up at $1,000 too, in that situation the $1,000 customer has no ‘skin in the game’ most people, other than those on extremely lean budgets can easily meet a $1,000 spend in 90 days on regular shopping, groceries, dining out once or twice and you are there.  But for $3,000 even the higher spenders will be stretched to make it.

Being ‘invested’ in making your spend requirement

For those that don’t ‘like’ to manufacture spend on cards like the Bluebird or with Amazon Payments because it is ‘just unethical’ there is a real struggle to meet that spend requirement.  They would have to look at all the monthly outflows, and swap over cards paying the Cable bill, the Electric, all those auto-pays, to take the burden off the spend needs.   So, by setting $3,000 spend requirements the card company has got all your bills, and has got you dipping your hand into your wallet for their card for every transaction, regardless of spend multipliers at stake, in the race to get your reward.

Now, I am no psychologist, but I do like a gamble, and I would be willing to bet good money that Card companies held studies to see how long it takes of ‘complete focus’ on a single card to get the average brain reprogrammed into grabbing it after the 90 day period.  And I also believe that $3,000 is slightly beyond most people, so that they have to feel that pressure to switch over bill payments and use the card ‘all the time’ to get rewarded.  If you notice, many Business Credit Cards that offer lucrative signup bonuses set a $5,000 spend requirement, it is for the same reason, just enough ‘stick’ to whack you towards the ‘carrot’ when more outflows exist.

Card Psychology doesn’t stop there

Card companies want people who put money on their card each month (and that don’t pay it off in full) – there is a reason why they offer 12 months interest free credit on new purchases too, so that you get in the ‘habit’ of making minimum payments, then when 12 months is up forget that you are now paying interest.   Ideally they want people who will not default, so they are looking for a Mr and Mrs Perfect Customer:

• Enough money to fill 50% of their available credit line, and carry a debt of perhaps $5,000 ‘interest free’
• Enough going on in their lives to forget the debt, and wrack up interest, but have the wherewithal to pay it off rather than default (ideally over time, paying many multiples of the debt in interest).

So, does the prospect of raising the spend requirement from $1,000 to $3,000 strike fear in your heart, if so get my card now! If not, why not?

$3,000 Spend can be met with ease

I’ve discussed ‘how to’ meet spend requirements for Card Applications easily in the past, so rather than repeat myself, check out my post on how to manage this here.  One thing I think you who walk the moral high ground on such things discussed there (and frankly these are pretty clean cut ways to increase your spend) should consider toughening up a bit.  Credit cards are no joke.  The card companies offer wonder incentives in order to create new customers, no different from a crack dealer offering a free ‘hit’ or whatever they call it, they want your money!  You need to play hardball to protect yourself from that, and leverage the opportunities out there.

Opportunity Costs, what you could really lose

When the limit goes from $1,000 to $3,000 what you lose really is the opportunity cost of the spend between $1,001 and $3,000, $2K that could be spent elsewhere at a higher ROI than the Arrival card.  However, the Arrival card is no joke when it comes to average, everyday spend, as it offers 2x everywhere (the 10% bonus when spent on travel makes it a 2.2% card) so really, you aren’t missing out on much.

The actual bonus earned from the Arrival at $3,000 would be 40,000 for the bonus, plus 6,000 for 2x spend for 46,000 pts valued at $506, you don’t lose out on that extra spend, you just put more points on the card.

The only places where it clearly is inferior as a card would be if you owned a 5X card (and the 5X has to be real money, not some silly HHonors points or something) two examples of a ‘better card’ would be the Amex Blue Preferred that could earn you 6% cash back at supermarkets, or the Chase Ink Bold that earns you 5x Ultimate Rewards (easily more than 6% cash value if spent on travel) for things like your Cable TV bill.  However, even then, if we took the full $2K and compared 2.2% to 6% rebates is only $76, which is no joke, but something worth trading off in order to capture the $440 signup bonus.

Saverocity earns most of its income from Credit Card applications through this site, so we do appreciate you signing up for cards with us (we get a commission if you do) but don’t become a crack head when you do.