Refundable Hotel Trick
Introduction
Sometimes, when you need to meet minimum spending requirements (MSR), you can take advantage of purchases that can be refunded. Let's say you didn't plan your spending well before getting a credit card, and now you need to meet the MSR. One solution would be to buy something just to meet the requirement, with the intention of returning it later after you've naturally spent enough. However, it's important to think about the refund policies of the stores where you make these purchases. Usually, when you buy items in a physical store, you can only get a refund within two weeks of the purchase, which might not help you extend the time you have to meet the requirement.
That's where the refundable hotel trick (RHT) comes in handy. If you prepay for a hotel reservation that can be fully refunded, you usually have the option to cancel it for free between 24 hours and 1 month before the check-in date. Moreover, you can usually make reservations up to 1 year in advance. This gives you at least 11 months to extend the time you have to meet the requirement. Just keep in mind that you'll need to have the money upfront to pay off the credit card balance.
Also, some credit cards offer credits specifically meant to cover travel expenses. In many cases, these credits are not taken away when the expense is cancelled, although there might be some complexities involved. Again, you can use fully refundable prepaid reservations to take advantage of these credits. The same applies to many travel rewards points offered by banks as part of their loyalty programs. It's important to know that the company that refunds your money, which is often an online travel agency (OTA), should be different from the company that gives you the travel credit or rewards, which is usually a bank loyalty program. So, if you book a trip using the loyalty program, you usually need to cancel your reservation directly with the company that's providing the service. If you cancel through the loyalty program, you'll usually get refunded in points. One way to avoid this is to close your account with the loyalty program before canceling the reservation. This will prevent the bank from refunding you points.
Process
The easiest way to make travel reservations using the RHT is by booking hotels. They usually have flexible refund policies and many options available. Here are the steps to use the RHT with most loyalty programs:
Find a reputable OTA to make your booking. Look for a well-known company and check their refund policy to make sure it fits your needs.
Search for a hotel reservation. Filter the options based on the amount of money you need to spend, either per night or for multiple nights. Also, consider how far in the future the reservation should be. If you want to extend the time you have to spend a certain amount, the reservation should be after the deadline. If you want to use travel credits or points, make sure it's enough time for the credit to be applied and a full refund to be triggered.
Make sure you choose a prepaid rate that can be fully refunded. Avoid any "reserve now, pay later" rates, as they won't help you trigger credits or use points. If the rate is not fully refundable, it will reduce the amount of credit or refund you receive.
The next steps depend on your purpose for using the RHT:
If you want to extend the time you have to meet an MSR, simply wait until you naturally meet the requirement and then cancel the reservation.
If you want to use a travel credit, wait for the statement credit to appear in your transactions. Usually, eligible travel credits are automatically triggered, and you just need to wait a few days for it to show up.
If you want to use points, go to the appropriate rewards portal and apply your points to the transaction after it has been posted. A corresponding credit will appear in your transactions a few days later. The process may vary slightly depending on the loyalty program.
Cancel the reservation once you are certain that the credit has been applied.
Realize the credit. Ideally, you should perform the RHT during the same statement period so that your purchases exceed the expected credit. This way, you can reduce the amount of money you need to transfer to clear your credit card balance. If the timing doesn't work out, you may have a credit balance on your account. To close the balance, you can either spend on the card or withdraw the cash. Contact your bank to request options such as a cheque, electronic transfer, or cash withdrawal. Note that a cash advance fee may apply, but you can usually get it waived by contacting the bank.
Amex MR (Can)
You can use the refundable hotel trick (RHT) to get cash from the annual travel credits on The Platinum Card ($200) and the Gold Rewards Card ($100). To access these credits, you need to make the reservation through the AMEX Travel portal. Surprisingly, Amex doesn't claw back the travel credit after you cancel the reservation. However, it's important to note that Amex US does claw back the travel credit when using the RHT for The Platinum Card (US).
You can also use the RHT to get cash from MR points, but the value you get is lower at 1 CPP. Usually, when you transfer MR points to airline partners for redemption, you would expect a higher value of 2 CPP. So, there are only a few situations where it's beneficial to use this method. The process is similar to what was explained earlier. When you want to access the credit balance, you can transfer it to another card or get it refunded as a cheque by contacting customer service.
BMO Rewards
You can use the RHT to get cash from BMO Rewards points at a fixed value of 0.67 CPP. The process is simple and follows the steps explained earlier.
CIBC Aventura
You can use the RHT to get cash from Aventura points, but usually at a low value of 0.625 CPP. However, until March 31, 2024, you can redeem half of the points for a booking, which effectively increases the value to 1.25 CPP. One important thing to remember when using the RHT with CIBC is that you must use the points while the transaction is still pending. When you want to access the credit balance, it's a straightforward process. You can transfer the amount to your chequing account online or withdraw it from an ATM without any fees.
HSBC Rewards
You can use the RHT to get cash from the annual $100 travel enhancement credit on the HSBC World Elite Mastercard. Likewise, you can use the RHT to get cash from HSBC Rewards points, which have a fixed value of 0.5 CPP. The process is simple and follows the steps explained earlier.
MBNA Rewards
You cannot use the RHT to cash out MBNA Rewards points.
RBC Avion Rewards
You cannot use the RHT to cash out RBC Avion Rewards points.
Scotiabank Scene+
You can use the RHT to get cash from Scene+ points at a fixed value of 1 CPP. The process is simple and follows the steps explained earlier.
TD Rewards
You can use the RHT to cash out TD Rewards points using either E4TD or the Book Any Way feature.
With E4TD, you make the reservation through the E4TD portal. When you cancel the reservation, your points are usually refunded. However, there is a way to get a cash refund instead of points. You need to close your TD Rewards account before triggering the refund, causing a cash refund instead of points. The best way to do this is to switch to another TD product after the points have been deducted successfully but before canceling the reservation. This method allows you to get the most value, at 0.5 CPP. Keep in mind that the refunded amount will be added to the MSR for your new card.
Using the Book Any Way feature is straightforward. The process is simple and follows the steps explained earlier. The drawback to this method is that the value is fixed at 0.4 CPP. However, the advantage is that you don't have to worry about timing requirements.
Accessing the credit balance is relatively straightforward, as TD recently removed cash advance fees for withdrawing credit balances from ATMs.
FAQ
Do transactions on X site get coded as travel?
Don't re-invent the wheel. Cash out the points using the RHT and use the credit against whatever purchase you want.