November 7, 2019
MELISSA LAMBARENA of NerdWallet
In late 2017, San Francisco couple Riley Adams and his wife stumbled upon the Halley’s comet of airline credit card welcome offers. For a limited time, the card was advertising a companion pass on top of a large sign-up bonus.
“We knew we had a lot of spending in one specific area coming up, and we wanted to try to shop around to get the best value for those needs,” says Adams, a certified public accountant and owner of the blog Young and the Invested. “If you plan for it, you can really offset those costs (with a sign-up bonus).”
If you’re considering a new credit card, the bonus-friendly season from October through December is an ideal time. Your expenses on Black Friday, holiday travel and meals, end-of-the-year charitable donations and more may easily meet a large spending requirement for a juicy sign-up bonus.
Andy Hill, host of the podcast “Marriage, Kids and Money,” plans to earn a sign-up bonus this holiday season with the savings he’s earmarked for Christmas gifts.
“We save about $1,200 for Christmas gift shopping,” Hill says. “If we’re going to spend that $1,200, we might as well hit a bonus on a new credit card for us to get some cash back.”
OTHER FACTORS TO KEEP IN MIND
As you size up a rewards credit card and its sign-up bonus, ask yourself these questions:
— Can you meet the card’s credit requirements? You’ll generally need good credit (a FICO score of 690 or higher) to qualify for a rewards card with a big bonus.
— Are you willing to pay an annual fee? The top cards — those with the highest bonuses, richest rewards and best perks — charge one. If you don’t think you’ll earn enough in rewards and benefits to outweigh that fee, consider a no-annual-fee rewards card. Many of them also offer bonuses.
— Do the card’s rewards categories match your expenses? A sign-up bonus can offer a chunk of upfront value, but the card won’t be useful long term if its ongoing rewards and perks don’t fit your habits.
— Are you eligible for the bonus? Check the card’s terms. For example, you may not be able to earn a bonus if you’ve already received one from the same issuer recently.
— Can you meet the spending requirement for the bonus with your current budget? If you know you can’t spend $4,000 in three months without going into debt, look for a bonus with a lower spending threshold.
— Will you pay your bill in full every month to avoid interest? Rewards cards tend to have high ongoing APRs, meaning you don’t want to carry a balance month to month. If you’re already struggling with debt, a rewards credit card may not be ideal for you.