A credit card sign-up bonus is a great way for new cardholders to earn a bunch of extra cash back, points, or miles just by meeting an initial spending requirement. However, the allure of a quick rewards payday can lead people to make some key mistakes that end up costing them big time.
1. Overspending Just to Earn a Sign-Up Bonus
Generally, credit card sign-up bonuses require cardholders to spend a certain amount on the card within a specific timeframe. Before you aim for a big sign-up bonus, consider whether you can afford the spending requirement. Spending significantly more than you normally would just to get a relatively small sign-up bonus is not a sound financial strategy. Spending a bit extra can make sense, however, as long as the bonus it unlocks is far bigger than the additional amount spent.
2. Getting Distracted by Other Terms
If a sign-up bonus is what you’re after, the bonus offer’s terms should be your primary focus. For example, spend less time worrying about things like the card’s APR and other assorted charges such as late fees and foreign transaction fees. Instead, pay attention to the terms that are likely to affect your sign-up bonus the most, such as the minimum spending requirement and the time limit. The card’s first-year annual fee should also be taken into consideration.
2023's Best Credit Card Sign-up Bonuses
There is no perfect credit card that does everything well, so it’s best to have a plan for how you’ll use each credit card that you get. Then, you can shop for each card specifically with that plan in mind.
3. Applying When You Don’t Meet the Minimum Credit Requirement
The credit cards with the best sign-up bonuses require good-to-excellent credit to qualify, so make sure you meet the minimum credit requirement before you apply. You can check your credit score for free on WalletHub to assess your odds of approval. Using the issuer’s pre-approval tool, if one is available, is also an option.
4. Thinking You’ll Receive the Bonus Right Away
Don’t assume you’ll immediately get your rewards once you’ve completed the spending requirement for your sign-up bonus. Bonuses typically post to your account within a few billing cycles from when you qualify, and your account must be open and in good standing at the time the rewards are due to be paid out. If you qualify for the bonus and then fail to pay your bill on time in the following months, you could lose out on the payday.
As a result, it’s best to avoid making any plans to use your rewards until you have them. For example, don’t count on being able to apply your rewards as a credit toward your next statement balance if your bonus won’t be available until weeks later. If you’re not certain when exactly you’ll receive your bonus rewards, your rewards program’s terms and conditions should have this info readily available.
5. Redeeming Rewards for Less Than Maximum Value
Credit card points and miles often have different redemption values, depending on how you use them. To make sure you get the best value for your sign-up bonus rewards, look at your rewards program terms and conditions to compare redemption values, and be strategic about how you redeem.
Better yet, choose the rewards card that gives the best possible value in your preferred redemption category. For example, if you’re primarily interested in getting statement credits to pay your bill, steer clear of a credit card that offers the highest redemption value on travel.
6. Applying For New Cards Too Often
There are numerous sign-up bonus offers available at any given time, and you might be tempted to apply for all of them. Before you do, remember that opening too many credit accounts in a short period of time will hurt your credit score. Also, bear in mind that more bonuses means more spending requirements to meet, which can get expensive and hard to manage.
You're better off focusing on one sign-up bonus at a time rather than trying to juggle multiple offers.
7. Missing Out on the Latest Deals
The more you know about new credit card sign-up bonus promotions, the easier it will be to get the most out of them. To stay on top of the latest money-saving opportunities, bookmark our Best Credit Card Sign-up Bonus page, where you’ll find the top deals selected from 1,500+ offers.
