This topic came up a lot last night at the NYC Miles and Points Meetup, so I thought I’d do a post about it.

Lots of people were planning to use REDbird + points/miles credit cards to pay off large sums of debt, meet minimum spend requirements, and reach threshold bonuses offered by certain credit cards.

It’s an incredibly easy but effective idea.

Run all your bill payments through REDbird

REDbird lets you load up $5,000 per month – for free – using a points or miles credit card.

If you max that out for a year, that’s $60,000 run through a credit card.

My own personal example is my student loan. I’m so tired of it hanging over my head and I’m about ready to turn around and kick that sucker in the face – but I’m gonna get a free vacation out of it!

For roundness or whatever, let’s say you owe $50,000 to:

• Student loans
• Your car payment
• A mortgage
• Medical bills
• Credit cards
• Or any or company or even person

You can add any company as a payee on the REDbird website.

At the top of the site, hover over “Pay & Transfer” and a dropdown menu will appear.

From there, click “Add Payee” and get rockin’ and rollin’.

What you get out of it

BUT WHYYYY go through the extra steps of going to Target twice a month for a year just to run some money through REDbird?

Well, a few reasons.

• If you owe the money anyway, it’s a great way to earn more points and miles while making regular payments
• It will allow you to use a credit card (albeit in a roundabout way) to pay merchants that do not accept credit cards
• If the debt you owe accrues interest and you are paying it down aggressively, this is a great way to reduce your principal while earning points

Depending on what card you use, you can score a whole host of benefits for paying off your $50,000.

Here’s what you get if you use the:

• Barclaycard Arrival, it’s 100,000 points, worth $1,100+ in travel credits.
• Club Carlson Visa, it’s a whopping 250,000 points – easily enough for a lot of Club Carlson stays.
• Amex EveryDay Preferred, I get 75,000 points (assuming I get 1.5 points per dollar by meeting the 30 transactions per month)
• Fidelity Amex, I get an extra $1,000 added to my IRA, which could turn into much more in 30+ years.
• Chase British Airways Visa, I get 62,500 Avios (at 1.25 points per dollar) PLUS the Companion Certificate for running $30,000 through the card – although it’s not as good of a deal as it used to be
  

  More Avios!

A couple of other observations

If you wanted, you could open up a brand new credit card – one with a 0% APR intro period.

• The Amex EveryDay Preferred gives you 15 months with 0% APR (and I’d love to send you a referral for it)
• The Barclaycard Arrival Plus gives you 12 months with 0% APR
• The Chase Slate card would give you 15 months with 0% APR, too – and no transfer fees if you want to move another credit card’s balance over

But wait. Running your money through the REDbird would effectively let you move a credit card balance to a new card with 0% APR without a balance transfer fee, too. Just move it in pieces.

Every time you load the REDbird, use the new card and let it hold the balance for the 0% period, however long that may be. Then use REDbird’s bill pay to pay off the card that accrues interest – a bit of a back door approach, but worth it if you A). don’t have a big balance B). don’t want to deal with the transfer fees, or C). want to consolidate several balances from a few different cards into one.

Even if you don’t have an intro APR, you could also use this to transfer a balance from one card with a high APR to another one with a lower APR, like from 18% to 5%, or whatever – and save yourself a bit of money while earning points in the process. It all comes back to the points with this.

But it is also a financial tool – and as such, should be treated with care. If you use this wisely, if could fill your mileage account with points and put some cash back in your pocket, too.

With that, some caution

Don’t carry a balance on a credit card just to earn some points for paying off a large debt. Only do this if you were planning to go hard on an existing debt anyway – and you can pay your credit card balance off each month. That way, the points are truly free. Credit cards will almost always have a higher interest rate than a student loan or a mortgage – those are between 3-7% – while the premium cards we like start at around 13% and go up from there.

So be careful here. Again, these are financial tools. And you can use them for good or for ill. If you use them to pay off a big balance here’s your reward:

• A history with the credit card and issuing bank of usage and repayment
• A higher credit score for paying off a debt
• A higher credit score for managing your credit responsibly
• A lot of points
• Psychological feeling of freedom from debt, which is priceless

Bottom line

Last night, I heard from people who are using this method to earn points while paying off car loans, their co-op maintenance and mortgages, and student loans (ahem, that last one would be me).

You don’t have to take it this far, of course. You could simply cycle your money through REDbird and get the points free and clear. This post is about intention. If you intend to pay something off anyway, with a little bit of effort you could have a few free flights, free hotel rooms, or just free money (which is reason enough, right?).

What I am most looking forward to is the feeling of being free from my large debt (and the feeling of travel). And I will continue to use PayPal My Cash cards to pay my rent.

Having the points will be nice, too. 😉

Does anyone else use REDbird in this way? Or do you simply do it for the points? Would love to hear how others are approaching this!

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