DEFINITION of Minimum Spend

Minimum spend is the least amount of money a customer must charge to a credit card in a given time frame in order to earn that card’s sign-up bonus. “Minimum spend” is short for “minimum spending requirement.” For example, a credit card might offer a sign-up bonus of 40,000 points that can be redeemed for $500 in airfare or $400 in cash if you spend $4,000 in your first three months as a cardholder. In this case, the minimum spend is $4,000.

BREAKING DOWN Minimum Spend

Minimum spend varies widely. One credit card might offer a bonus with a minimum spend of a single purchase of any amount, while another card might require the customer to spend $500 in the first three months of being a cardholder and yet another card might require $5,000 in purchases. Balance transfers and cash advances do not count toward minimum spend. Many credit cards do not have sign-up bonuses and therefore minimum spending requirements do not apply. Minimum spend only applies to earning credit card bonuses; card issuers do not require consumers to charge a minimum amount to their cards each month as a condition of being a cardholder.

Methods of Achieving Minimum Spend

Some consumers have come up with creative ways to meet minimum spending requirements. These methods include using credit cards to purchase money orders that can be used to pay providers that do not accept credit card payments, such as mortgage lenders, and using credit cards to purchase gift cards that can be used in future months. Such strategies are called “manufactured spending,” and some savvy credit card consumers use them to earn sign-up bonuses that they otherwise could not qualify for because their typical purchasing habits are less than the minimum spend.

For example, a cardholder might normally charge $1,000 to a credit card over a three-month period, but they want to qualify for a sign-up bonus with a minimum spend of $1,500. To do so, they might use their credit card for all of their regular purchases, then buy $500 worth of grocery store gift cards that they will then use in future months.

Other tactics consumers might use to achieve the minimum spend threshold can include purchasing items in bulk with the credit card at a discount retailer, then reselling through a personal online storefront. They might also use the credit card to make a rent payment, a car payment, or to cover part of a student’s college tuition. The cardholder could also make purchases on behalf of others with the intent of being reimbursed in full by them.

Such methods could backfire if the cardholder cannot afford to pay their credit card bill in full and on time because any interest charges or late fees they incur will cut into the bonus.