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How I am Meeting the 100k American Airlines Offer Spending Requirement

ByThe Miles Professor

My new 100,000 mile American Airlines credit card sign-up bonus came with a $10,000 spending requirement within 3 months. This miles are perfect for my trip to Easter Island in December, which I need about 130,000 American Airlines miles for. That said, the $10,000 is quite far above my usual natural credit card spending over a three month period so I had to bring in my usual creative spending resources.

When faced with a high spending requirement, I usually use one of two methods:

Opportunity Costs: Kiva vs. Vanilla Reloads

With Vanilla Reloads, there is an opportunity cost. For every dollar I spend on Vanilla Reloads, I can get 5 Citi ThankYou points per dollar if I buy them with my Citi ThankYou card. If I use my American Airlines credit card, I cannot get those ThankYou points. Although the Citi ThankYou 5x offer is no longer available to new users, there are other cash back opportunities of 5% and upwards, some of which I mentioned in my post on drugstore category bonuses. In other words, if I spend $10,000 on Vanilla Reloads with my American Airlines credit card, I’d be giving up 50,000 Citi ThankYou points. For simplicity of numbers, let’s say that’s worth $500 as a conservative estimate.

With Kiva, it’s a bit different. I am limited by how much I can float in funds over a number of months while the loans get repaid, but I am fortunate to have enough funds saved up sitting idly for that to not be an obstacle. I typically use the U.S. Bank FlexPerks card for my Kiva loans as the card offers 3 points per dollar on charities. However, that card has a yearly limit in the charity bonus category. In other words, once I have loaned enough on my U.S. Bank FlexPerks card, I can’t use it for any additional loans and I won’t be giving up any more points.

Using Kiva, I give up access to my funds for the length of the loan. With Vanilla Reloads, I give up 5%. So how do I compare which is better?

Points as Interest on the Loan

The easiest way to compare the two is to view my 5% as a return on the loan. While 5% is not a bad return, just saying that I get 5% interest does not account for the length of the loan as interest is usually quoted on a yearly basis.

What is my annualized return?

I usually take on loans of about 8 months that are paid back in roughly equal payments over all 8 months. The loan duration is then 4 months. What is loan duration? It’s the time weighted average of the repayments. But in simple terms, this means that I can cycle through each dollar 3 times a year. So I can earn that 5% three times in a single year.

Now we can calculate the annualized return. Because I earn miles from the loan and not cash, I can’t reinvest my returns and compound my interest. This is why use a simple interest calculation:

Annualized return = (.05)*3 = 15%.

At 15% annualized return, the choice for me is simple. If I am going to spend $10,000 in Vanilla Reloads, I’d rather spend it with my Citi ThankYou card and earn $500.

As a final note, the one thing I want to state is that with Kiva, it is possible to lose money if you don’t do proper and thorough research beforehand and don’t manage your risk. I want to stress again and again that you need to know what you’re doing! I have had a close to 100% repayment and I explain some of my process in my post:  The Guide to Earning Miles and Points with Kiva. But do proceed with caution!

31 Comments

    1. It’s $120k a year. I try not to get very close to that number and keep it around half to two thirds so “the limit” I refer to is more my comfort limit. There also used to be a greater abundance of 6 month loans for a 3 month effective loan duration, which meant reaching it faster.

  2. Hi MP,

    If I use VR to meet minimum spend for a credit card can I repay the charges I make on the card through Blue Bird? So if I buy X amount of reload cards can I pay the c.c. bill using B.B?

    I want to use this method to meet the 10K minimum spend on the American Airlines card.

    Thanks!

    1. Yes, you are able to pay any account (including credit card accounts) with the Bluebird BillPay feature. You need to indicate your bank name and account number under ‘Pay a Bill’.

      1. Thanks so much! I normally use Blue Bird to earn points and pay bills such as my mortgage. I didn’t realize I could repay the credit card that I’m using to meet minimum spend by purchasing V.R. and just paying the bill using B.B. So I can buy $10K worth of V.R., load the $10K onto my B.B. account and pay the bill…

        Is that correct? Is there any restriction on doing this?

  3. Thanks for the post. You are fortunate to have the option of vanilla reloads as many of us do not have stores near us that allows the use of credit cards to purchase (cash only).

  4. Thanks again! Your blog is absolutely fantastic, easy to read and understand and I’ve gained lots of valuable knowledge from you!!

  5. A downside to Kiva that should be considered when you are planning longterm is that sometimes loans default. I have been lending for a while and have had a couple that have fallen by the wayside … its charity after all and these things happen.

    1. It is true with Kiva, you really need to know what you’re doing and make sure to choose good loans to properly manage risk. I avoid loans that I consider to have a good chance of default and have been able to get almost 100% repayment (with only one loan default over two years). I explain some of my process in my post: http://milesprof.wpengine.com/2014/03/18/kiva-earning-miles-points/. But it is important to do your own research! I am going to reiterate this at the end of the post!

  6. Are you just purchasing Vanilla Cards at CVS and then transferring the money to your bank account to pay off the balance? Are you worried if there are only charges of $1,007.90 every day for 2 Vanilla Cards from CVS the credit card company will shut the account down or not give the bonus?

    1. I actually never move money to my bank account from Bluebird. I use it to pay bills – rent, credit card bills, taxes, etc. There are many billpay features with Bluebird :) I also use the cards for other regular transactions and buy different amounts of Vanilla Reloads as many CVS locations sell more than 2 at a time… I certainly don’t buy 2 every day so can’t determine what reaction 2 a day would cause. But remember, the Bluebird limit is $5000 a month.

  8. As someone who faces similar dilemmas as you (NYC based, multiple Bluebirds, multiple Amazon Payments, Citi TY Preferred 5X, multiple Citi AA Exec cards), I’ve also thought about the problem of cannabalizing the Citi TY Preferred 5X at CVS to meet the multiple 10k minimum spends so I’ll offer my own thoughts.

    1) I don’t think $500 is a conservative estimate of 50k TY points; I think it’s a fair estimate. Sure, many will argue that 50k TY points is worth $625 when combined with the Premier and used on flights but when you’re sitting on lots of TY points, you’re probably redeeming them in a non-optimal manner like I am on Hyatt gift certificates etc.

    2) You’re not giving up 50k TY points for nothing; you’re giving them up for 10k AA miles. Valued at 1.5c a mile, that’s $150 so you’re really only giving up $350, which is still not ideal.

    3) Kiva can be a powerful tool but personally, it’s not for me. To lower the opportunity cost without using Kiva, one might want to just send 10k via Google Wallets etc. and eat the 2.9% fee, which is still cheaper than losing out on $350. Depending on how much you value time/avoiding hassle, you can of course buy Amex GCs first and earn the cash back to bring down the 2.9% fee since it doesn’t seem like the Citi AA Exex card is marking Amex GC purchases as a cash advance.

    1. Thanks for your comments! All solid points, except the one thing is that when comparing two methods of earning points, you cannot subtract out the value of the 10k AA points at $150. All methods under consideration give you the 10,000 AA points anyhow so that should not be considered in the calculation. That is, if I use Kiva or VR, I still get my 10,000 AA miles. But if I use Kiva in addition to the VR, I get 50,000 extra Citi ThankYou points without losing any AA points. So it really is giving up $500 and that’s the correct valuation for alternate methods.

      Not going for Kiva and using a Google Wallet, etc option, can also be a better option than Vanilla Reloads :) Like you pointed out, it may be better than Vanilla Reloads because then you pay $290, but get to still earn $500 of value for a $210 profit.

      1. Sure, you still get the 10k AA miles when you introduce Kiva into the equation, but you’re introducing a new element. If you’re strictly comparing using Citi TY Preferred or Citi AA Exec at CVS, you are either getting 50k TY points or 10k AA miles.

        1. That’s not the relevant comparison here, however. We are trying to evaluate whether it makes sense to use Kiva in order to gain the Citi ThankYou points. As the focus is whether it makes sense to use Kiva as the additional element, the Kiva interest valuation is $500 since that’s what’s being gained by using Kiva. The value of miles earned does not come into play and, in this case, it’s actually 110,000 miles, not 10,000 :)

          1. I think we’re talking about two different comparisons here as I actually agree with all your math regarding Kiva when that component is factored in.

            What I’m referring to is this line, “In other words, if I spend $10,000 on Vanilla Reloads with my American Airlines credit card, I’d be giving up 50,000 Citi ThankYou points.” For me, I’m simply thinking of either using Citi TY Preferred or Citi AA Exec since based on my personal preferences, that is the path of least hassle and when comparing the two directly (not factoring in anything else – Kiva, Google Wallets, etc.), the tradeoff is 50k TY points or 10k AA miles.

          2. Oh I see now! That sentence is taken out of context and the whole post is about Vanilla Reloads vs. Kiva in meeting the minimum spending requirement for the 100k offer. That is, in reference to meeting the spending requirement (which I will do one way or another), the sentence conveys that I give up $500 by doing it with Vanilla Reloads… but of course, we agree on that point :)

        2. TMP is right! You’re not looking at it the right way. You’re going to earn some miles and how many is not relevant, whether it’s 2k, 10k, 25k or 100k. The question is: Float money and consider TYP as interest or just buy VR and forgo TYP? Great post, MP!

  9. I also have a Citi 5x card and, I agree, I’m not willing to waste my Vanilla Reload purchases on “ordinary” manufactured spending. My solution, other than Amazon Payments, is the Target Reload. You have to get your hands on one of these cards (not all Targets have them), and you have to have access to a fee-free ATM (the Wawa convenience stores are popular). If so, each person can load $5000 per month, with individual loads of $1000 for $3. You then have to take the money out at ATMs, which can be somewhat inconvenient, especially since you’re limited to $400 withdrawals. The first withdrawal is free per month, and additional withdrawals are $3. So it’s not free, but it’s a cheap way to meet minimum spends.

  10. This seems like a silly question but still new to this and curious. Forgive my newbie ignorance ;). Im thinking of applying for the AA Exec WE card for 10k/3mo = 100k miles. Since Citi has 2 other offers going right now 1k/3mo=30k miles and 5k/3mo=60k miles, my question is, if I try for the 10k/3mo=100k miles and come up short (say I only get 7 or 8k) am I just out all the miles completely, or will they match be based on the other 2 offers and maybe Id still get the 60k miles for doing more then 5k spend? Ive never really done vanilla reloads or bluebird stuff before so unsure if I can even find places around where I live to be able to complete this way. If not, I’ll have to try and spend 10k in normal daily activity type spend (groceries, gas, new clothes, etc).
    Again – silly question – and Im assuming the answer is ‘no your just out the miles completely’ but thought I would check since I’m still learning and trying to understand all of this. I could comfortably meet the 5k/3mo spend, but would like to try for the 10k/3mo, so debating if its worth the risk to try for the 10k/3mo and may or may not make it, or play it safe at the 5k/3mo although less miles.

    1. Hi! It is certainly worth asking the question, but your thought was correct. There is usually no “partial credit” for not meeting the spending requirement. One backup option is to simply use Paypal or Google Wallet to send money to a friend. There is a 2.9% fee so making up $5k this way would cost $150. Not free, but at least an option. That said, you never want to put yourself into situations where you’re spending more than you want to or stretching your finances for rewards… so it may be a good idea to play it safe and not put yourself through the stress of getting all 10k spent. These miles are meant to bring more relaxation to our lives, not put us in uncomfortable situations :)

      1. Hi, I just found your site and I’m enjoying reading it.

        I have a question, as I’m also hoping to get the AA Exec WE card for 10k/3mo = 100k miles, and also will have a problem meeting the 10k 3 month purchase deadline.

        I thought your idea above for using Paypal could be the answer to getting my spending to the needed level. But I was being cautious, so I called customer service for my current Citi AAdvantage credit card, and asked if a cash transfer via Paypal paid for by my credit card would count as a purchase. The agent said no, it would be considered a cash advance. As further evidence of that, she said that the amount would not earn miles.

        Am I missing something? Unless I am, that would mean that sending money to a friend via Paypal wouldn’t contribute anything toward the10k requirement.

        That plus the recent changes on reload cards leaves me wondering how to get there to10k. But I really want the card!

        I don’t know that you can answer this, but if the card offer is still available this August (a little over 3 months from now), I’ll have a lot of expenses over the next 3 months that could get me to 10k. Do you have any thoughts as to the likelihood of the offer still being available at the beginning of August? And do you know how long it typically takes from time of application to receiving the card? Thanks for any help you can provide!

  11. I thought Vanilla reloads were dead. I haven’t even tried to buy them since March. If it is still a viable option I will try for the AA 10k otherwise it’s too much spend for me.

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