Does the Annual Fee Count Towards Minimum Spend?
Maximize your credit card rewards. Learn how to accurately meet minimum spend requirements for sign-up bonuses by understanding eligible purchases.
Credit card sign-up bonuses provide an incentive for new cardholders, often offering rewards points, miles, or cashback. To qualify for these bonuses, card issuers require cardholders to meet a “minimum spend” within a specified timeframe after account opening. Understanding these requirements is essential for earning rewards.
Understanding Minimum Spend Requirements
Minimum spend refers to a specific dollar amount a cardholder must spend on their new card within a set period, typically three to six months, to unlock a sign-up bonus. This ensures the card is actively used. For example, a card might offer 50,000 bonus points after spending $3,000 in the first three months. Successfully meeting this threshold is the primary condition for receiving the bonus.
The timeframe for meeting minimum spend begins on the date of card approval, not card arrival. Cardholders must track eligible purchases carefully to reach the target amount within this window. Failing to meet the requirement means forfeiting the sign-up bonus, which can be hundreds of dollars in value.
The Annual Fee and Minimum Spend
The credit card’s annual fee does not count towards the minimum spend requirement. Card issuers explicitly state that fees, including annual fees, are excluded from eligible purchases for bonus qualification.
An annual fee is a charge for holding the card and accessing its benefits, not a purchase of goods or services. It is a cost for card features, not a transaction generating merchant revenue. Cardholders must plan spending to cover the minimum amount with actual purchases, separate from any annual fee.
Types of Eligible Purchases
Most everyday transactions generally count towards minimum spend requirements. This includes common expenses like groceries, dining at restaurants, utility payments, and transportation costs. Purchases for goods and services from various merchants are eligible.
Many cardholders strategically use their new card for regular household expenses to accumulate spending quickly. Prepaying bills, such as insurance premiums or certain subscription services, can also contribute to the spend target. Review the terms and conditions provided by the card issuer, as variations in eligible purchase definitions can exist.
Common Exclusions from Minimum Spend
Several types of transactions are excluded from minimum spend calculations. Exclusions include cash advances, balance transfers, and interest charges. Lottery tickets, casino gaming chips, and similar betting activities are ineligible.
Certain cash-equivalent transactions, such as prepaid card purchases or reloads and person-to-person payments, often do not count. Refunds or reversed transactions are deducted from the total spend. Understanding these exclusions is important to avoid miscalculations and ensure spending contributes effectively to the bonus requirement.