I use this simple trick to earn big credit card sign-up bonuses - here's how other homeowners can do the same

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. Business Insider may receive a commission from The Points Guy Affiliate Network.

homeowner homebuyer home house

AP Photo/Elaine Thompson

Many travel and cash-back credit cards offer sizeable sign-up bonuses after meeting certain minimum spend requirements within a few months of opening a new account.Advertisement

Spend enough to get credit card bonuses by skipping the escrow account

The best way to earn a credit card reward bonus is by spending money you would have spent anyway. Some savvy shoppers do this by stocking up on household items or pre-paying a large expected expense.

If you own a home, you have two major expenses every year that you probably don't put on a credit card: homeowners insurance and property taxes.
Advertisement

Read more: Preferred vs Reserve: How the Chase Sapphire credit cards stack up

If you can manage your money well enough to budget for a major lump payment a few times a year when taxes are due, paying your taxes and insurance on a credit card may make sense for you - if you can turn it into a large credit card bonus. Advertisement

I live in a high-tax state and pay extra for earthquake insurance (thanks California!), and skipping escrow on my property taxes gives me an extra $8,000 per year in credit card spend. Homeowners insurance, including the earthquake addition, runs about $5,000 per year. If I sign up for any credit card, I have about $13,000 in annual expenses I can use for a bonus if the timing is right.

Even in a lower tax state without regular earthquakes, you can likely come up with enough in taxes and insurance to meet a $3,000 to $5,000 sign-up bonus.

Some of the best current bonuses with a large spend requirement include the American Express Platinum Card (60,000 points after spending $5,000 in the first 3 months), Capital One Venture Rewards Credit Card (50,000 bonus miles after spending $3,000 in the first 3 months), and Chase Sapphire Preferred Card (50,000 bonus points after spending $4,000 in the first 3 months).Advertisement

Watch out for transaction fees when putting taxes on a credit card

While paying your taxes with a credit card can be a fast track to valuable rewards, it often incurs additional costs. Most tax payments require a service fee when made with a credit card that is not required when you pay with a check or from a bank account. But if the bonus is big enough, the fee could be worth it.

moving in millennials homeownership

Hero Images/Getty Images

Watch out for additional fees when paying your taxes or insurance with a credit card.

Property tax payments are usually made through your county, so check your county's website to find out if it's possible to pay by credit card and what fees you could be charged. For federal and most state income taxes, you can also pay with a credit card for a service charge.Advertisement

While it typically isn't worth the fee for regular tax payments, a big bonus could justify a couple of percent extra in fees. For example, if you were paying $5,000 in property taxes to get a 50,000-point bonus, you would spend $100 on process fees at 2%. But if those points are worth 2 cents each, a 50,000-point bonus is worth $1,000 - 10x more than the fee.

You can do similar math for your property taxes or income taxes. If you are self-employed or own a business, you can also pay quarterly estimated taxes on a credit card. You can even overpay your taxes with your credit card to get the bonus knowing you will get a tax refund next year when you file your income tax return. Just make sure you always do the math before paying a fee to make a credit card payment. Advertisement

Pay your credit card balance in full when using this strategy

Taxes and property insurance are nothing to take lightly, so only follow this credit card payment strategy if you can pay your credit card balance in full. If you will carry a balance from month to month, you are better off paying your bills through escrow and avoiding extra credit card charges.

Click here to learn more about the Chase Sapphire Preferred from Insider Picks' partner: The Points Guy.

Click here to learn more about the AmEx Platinum from Insider Picks' partner: The Points Guy.

Click here to learn more about the Capital One Venture Rewards from Insider Picks' partner: The Points Guy.

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. If you have questions or feedback, we'd love to hear from you. Email us at yourmoney@businessinsider.com.Advertisement

{{}}