I receive compensation for many links on this blog. You don’t have to use these links, but I am grateful to you if you do. American Express, Citibank, Chase, Capital One and other banks are advertising partners of this site. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all credit cards that are available -- instead focusing on miles, points, and cash back (and currencies that can be converted into the same).
Plastiq.com is a service that will charge your credit card and mail checks on your behalf. (With some vendors they also make electronic ACH payments.)
Their usual fee for this is 2.5%. It’s worth it to incur that fee if you’re earning a signup bonus with the credit card charges, or you’re meeting a spending threshold for a bonus. For instance I work to spend $40,000 on my Citi® / AAdvantage® Executive World Elite™ Mastercard® (10,000 elite qualfying miles) and $50,000 on my AAdvantage® Aviator® Silver World Elite Mastercard® (10,000 elite qualifying miles; 6000 qualifying dollars; companion ticket).
However I generally advise that it’s not worth it for the ongoing miles without a spending bonus. At various times some Chase products have coded Plastiq.com payments as 3 points per dollar for instance.
You don’t want to incur a 2.5% fee to earn 1 mile, you’re buying that mile at 2.5 cents. No mile is worth that.
This may be totally obvious but it struck me when I was having a conversation with an award booking client, I told him that it wasn’t worth a 2% fee or higher to generate spending and he replied “but it’s business spending, so I write off the fee.” Of course that’s right. If you’re paying business bills via Plastiq.com your net cost is 2.5% minus (2.5% * your marginal tax rate).
A sole proprietorship in the top tax bracket paying tax at the top marginal rate (and not qualifying under recent tax reform for the lower corporate rate on pass throughs) will pay a net rate around 40% in federal taxes. To that person the ‘cost’ of Plastiq is about 1.5 cents per dollar, something that can be easily worth it with a well-crafted card strategy.
For instance pair a Chase Freedom Unlimited card with a Chase Sapphire Preferred Card or a Chase Sapphire Reserve and you’ll earn 1.5 points per dollar, transfer them to Sapphire Preferred or Reserve and the points become worth 1.9 cents apiece transferrable to miles. You’re earning a 2.85% rate of return at a cost of 1.5%, or netting 1.35 cents for every dollar you charge via Plastiq. That’s because the net fee is a lot lower when the fee is written off as a business expense.