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A new service, Plastiq, lets you pay any company or person with a credit card for a 1.99% to 2.49% fee. This means you can pay your rent, mortgage, student loans, insurance, or tuition by credit card to satisfy the minimum spending requirement on a new credit card.

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How Plastiq Works

You select a company from the list of payees or designate any other person or company as the payee.

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If the company is already on the list of payees, clicking “Pay Now” will show you what the fee will be on the bottom left of the next page. For instance, paying “Saddle & Sirloin Club” will incur a 2.39% fee.

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You pay Plastiq with a credit card. If you want Plastiq to send your landlord a $1,000 check and Plastiq charges a 2.49% fee, your credit card is charged $1,024.90.

Plastiq either pays the payee by check or electronic transfer. They do not require the payee to do anything to collect the money, so you don’t need to warn your landlord or sign him up before making payment.

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Paying People

Can you just send your spouse $50 to get some credit card spending?

Plastiq says that person-to-person transfers must be for goods or services. They may ask you to send an invoice for the goods or services.

Cash Advance?

Cash advances never count toward the minimum spending requirement and always earn interest. One Plastiq user says that his Plastiq payment did NOT code as a cash advance.

You can guarantee that something doesn’t code as a cash advance by calling your credit card issuer and setting your cash advance limit to zero. That way if something would be a cash advance, your transaction will not work. And if your transaction does work, you can be sure it is not a cash advance.

When Not to Use Plastiq

Earning one mile per dollar while paying 1.99% to 2.49% is a terrible deal. There are no miles I want to manufacture for 2 or 2.5 cents each.

That means you should not use Plastiq for everyday payments and spending.

When to Use Plastiq

Use Plastiq if it your only or easiest way to meet a minimum spending requirement to unlock a huge bonus.

For instance, imagine you have a card that offers 50,000 bonus miles after spending $3,000 in three months, and you normally only spend $2,000 in three months on credit cards. If you have another payment or payments that normally must be done by check that total $1,000 in three months, it is will worth paying $20 to $25 in fees to unlock 50,000 bonus miles.

Currently only Visa, MasterCard, and American Express are accepted by Plastiq. There are plans to accept Discover in the future. If you have a Discover it Miles Card, it offers 3x miles per dollar on all purchases for the first year you have the card. Miles are worth 1 cent each, so each payment using the card on Plastiq would earn 0.51% to 1.01% profit.

Bottom Line

Plastiq is a new way to make payments to people or companies that only accept checks with your credit card.

I look at Plastiq as a way to use your rent, mortgage, student loans, insurance, and tuition payments toward minimum spending requirements that you wouldn’t otherwise meet. There may be cheaper, more complicated ways to get those payments onto credit cards. But this is super simple.

Simple doesn’t mean risk-free. Investigate Plastiq for yourself, and give its checks enough time to be sent and processed to ensure that you profit from the service instead of losing money.

Hat Tip Doctor of Credit

 

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