How signup offers work
Credit card signup offers can sometimes almost sound too good to be true. Depending on the provider, however, some of these offers may be worth several hundred dollars in the short term in exchange for you simply using the card for a predetermined amount in purchases for a limited time, usually the first two or three months that you have the card.
Signup bonus offers typically come in two forms, travel rewards or cash back. Cash back comes in the form of a credit statement or a physical check mailed to you (or direct deposited into your account). Some cash back offers also come in the form of gift cards to outlets such as Amazon or other merchants. Travel rewards or points can be a big boon at the beginning of your rewards-earning journey, earning you flights or hotel stays right out the gate.
While these offers are a one-shot deal, they are quite lucrative. Just be sure to research and choose the one that suits your financial requirements.
Here’s how to maximize your signup bonus
While these signup offers are one-time events, there are several ways through which you can get some pretty good mileage out of them. For starters, make sure you can meet the requirements without going into unnecessary debt. Use the card for as many of your routine expenses as possible and get into the habit of paying off your balance every month.
Some folks like to get the card, make use of the bonus, then close the card. This is the financial equivalent of buying a big TV for the big game, then taking it back the next day. It does nothing beneficial for your credit history and may even make obtaining credit in the future more difficult.
Keep in mind that not every transaction counts toward your minimum spending requirements. Returned items, cash advances and balance transfers do not qualify, as these are more along the lines of “moving money around” as opposed to spending it productively.
While signup bonus offers are attractive and enticing, it is most important to determine your financial needs and goals before committing to any card. Read the card’s disclosure thoroughly before making any commitment.
Signup bonus best practices
There are a number of common-sense rules to follow when considering your credit options, along with any signup offers that may come with them.
Consider all options
You will receive any number of attractive offers in your mailbox almost every week. And look beyond the signup offer at the other terms of the agreement. Many times, this is where the make or break decision is to be found.
Don’t run out the clock.
The signup bonus offer means nothing if you don’t meet the time requirements.
Go beyond the minimum.
You don’t want to see your benefits negated because of an unexpected return or a miscalculation. Allow a bit of a safety net to make sure you qualify for the reward.
Don’t violate the terms.
This is the single most surefire way to make sure you never see any return on your efforts. Be familiar with the terms of the agreement and abide by them.