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Here at DollarsAndSense, we’re firm advocates of smartly using credit cards on things you need and would already be spending cash on. In addition to having an interest-free advance on that money, you’ll rewards in the form of cashback, miles, and discounts.
Unfortunately, there are many kinds of expenditure that you need to spend on a regular basis, but miss out on getting rewarded because they do not accept credit card payments. This is the problem that CardUp aims to solve.
CardUp’s value proposition is simple but compelling: what if you could enjoy the same credit card rewards for spending on things like paying rent to your landlord, tertiary school fees, insurance premiums, and other categories of expenditure that you previously weren’t able to use your credit cards on?
Let’s examine how CardUp works and whether you should make use of it.
CardUp: Here’s How It Works
CardUp is a service that makes bank transfer payments that you designate on your behalf and then charging that amount (plus a 2.6% transaction fee) to your credit card, thus allowing you to earn cashback or air miles on that spend. Your recipient doesn’t need to sign up with CardUp or even know about it.
Making use of CardUp is really simple.
Step 1: Sign up for an account at CardUp’s website.
Step 2: Add your credit cards you’d like CardUp to charge your payments to and earn rewards on.
Step 3: Designate one-off or recurring payments.
That’s it! You’ll receive notifications every time your credit card is charged, and when the payment is credited to your recipient’s bank account. CardUp provides a handy dashboard for you to see and change your designated payments, or change cards you’ll like to use.
Visa, MasterCard and American Express are supported, so chances are, you already have a credit card that you can start using CardUp with.
Pros # 1 Earn Credit Card Rewards For Spending That Is Otherwise Not Eligible
As mentioned earlier, the biggest value proposition offered by CardUp is the ability to use your credit card to pay for common big-ticket items like rent, insurance, tuition fees, and more.
Payment types like insurance premiums are typically excluded by banks from earning rewards, but by using CardUp, you can be earning miles, cashback and points as well. This gives you more out of your mandatory spending.
Pros # 2 Ability To Schedule Recurring Transactions Automatically
Another benefit that CardUp’s service provides is to automatically schedule recurring payments so that they go out automatically, without any intervention on your part. This convenience is actually really attractive to me, since paying the same instalment payments every month is something no one enjoys.
Note that you need to schedule your payments at least five days before your desired transaction date. Three days before each scheduled CardUp transaction, you’ll receive a SMS notification to remind you about it, so you can cancel or amend it if necessary. This is really helpful in case you forgot that you don’t need to make any payment that month, or need to change the amount.
Pros # 3 You Can Use CardUp Even If Your Recipient Doesn’t Accept Credit Cards
CardUp does a bank transfer to your recipient, so it doesn’t matter whether or not they accept credit card, and neither do they need to be registered with CardUp. This is what makes CardUp such a fantastic solution, and I only wish I discovered it sooner.
CardUp already has many recipients on its platform, but if you still can’t find yours, all you need to do is to set up a new recipient so that the transfer can go through. In addition, you can even set up recurring payments so you don’t have to log in every month just to transfer.
Cons # 1 Processing Fee
CardUp charges a 2.6% processing fee, so the convenience of paying with credit cards needs to be worth at least that to you.
Alternatively, if you’re using CardUp for the cashback or air miles rewards from your credit card, then it is essential that your card’s rewards outweigh the CardUp processing fee.
If you have the wildly popular card for miles lovers, Citi PremierMiles, you earn 1.2 miles per dollar (mpd) here’s how your cost-benefit calculation would look like over 1 year:
Paying $3,500 in monthly rent/insurance/car loan using CardUp: $3,500 x 12 = $42,000
CardUp transaction fee: $42,000 x 2.6% = $1,092
Miles earned: $(42,000+1,092) x 1.2mpd = 51,710
With 51,710 miles, you can redeem a return Economy ticket to Cape Town, South Africa and explore the peak of Table Mountain! Buying an equivalent ticket would set you back about $2,200, which means you effectively save more than $1,000 using CardUp – without spending on additional items you wouldn’t already be paying for!
Cons # 2 Rewards Are Dependent On Your Credit Card Provider
Credit cards all have different exclusions about what kind of credit card spend qualifies for rewards, as well as caps on the amount of rewards you can receive in a month.
You can check with your bank or the CardUp team to on how your CardUp payments will be categorised and what you’ll earn from transactions. CardUp also has a handy calculator to help you estimate how much you can miles and cashback you can earn.
Cons # 3 Limited Set Of Payments Available
Currently, CardUp supports a number of payment types such as rent, insurance, income tax, season parking, condominium maintenance fees, etc. This already makes it immensely useful, but we would like to see even more payments supported.
For payment types not found on their dashboard, you can still set it up under the ‘Miscellaneous Payments’ category, and CardUp will review the payment.
In its current form, CardUp is a already service with a valuable and powerful use-case today. As the product matures, we can expect that it will only get better. If you the convenience and flexibility that CardUp offers is already useful to you, then its a no-brainer to sign-up and give it a try!
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