3 Questions I Always Ask Myself Before Chasing a Sign-Up Bonus

by Maurie Backman | Updated July 23, 2021 - First published on July 22, 2021

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Here are some questions worth asking before applying for a new credit card with a sign-up bonus.

There are several reasons to sign up for a new credit card -- better travel perks, extra rewards, and, in many cases, a generous sign-up bonus.

Sign-up bonuses put extra cash in your pocket for spending a certain amount of money within a specific period of time after opening a new credit card. You may get a sign-up bonus credit card offer, for example, of $500 cash back for spending $3,000 within your first three months of being a new cardholder.

As someone who tries not to open up too many new credit cards, I tend to approach sign-up bonuses pretty cautiously. Here are three questions I always ask myself before applying for a card that offers one.

1. Will I have to spend extra to get the bonus?

There are certain expenses I charge on my credit cards every month that won't be going away anytime soon. These include groceries, gas, household supplies, and children's clothing (because no matter how much I buy, my kids just seem to rip, destroy, or outgrow everything they own in no time). As such, whenever I'm tempted to apply for a credit card with a sign-up bonus, I ask myself whether the spending threshold I'll need to meet aligns with my regular spending habits.

It's not unusual for me to charge $1,500 a month on my credit card, so if I come across an offer like the one in the example above, it's worth going after because I wouldn't need to spend extra money just to snag the bonus. On the other hand, a credit card requiring me to spend $6,000 within three months isn't as good a deal. Unless I'm traveling or planning a big purchase, like buying supplies for a home improvement project, I may not spend that much on my credit cards alone to make that deal worth going after -- and I wouldn't want to force myself to spend extra just to get a bonus.

2. Is there a better deal?

Sign-up bonuses come in many varieties. Before going after one, I always like to do my research to make sure there isn't a better deal out there for me.

Recently, I came across an opportunity to snag $200 cash back as a sign-up bonus for spending $500 within three months of opening a credit card. That's an easy threshold for me to meet. But a deal like the one described above -- $500 cash back for spending $3,000 in three months -- actually works better for me since that's a spending threshold I can meet.

3. Will waiting work to my benefit?

As mentioned, there's a limit to how much I normally charge on my credit cards each month. But when I have vacation or home improvement plans, my spending increases. So whenever I'm tempted by a sign-up bonus that seems like a stretch, I ask myself whether waiting a couple of months will make that bonus more attainable. If I'm tempted by an offer in June but am planning to pay for a trip in August, for instance, I might wait until late July to get a new sign-up bonus card.

Sign-up bonuses are a great way to score free cash. The more strategic you are in chasing them, the more rewarding they can be, and so you may want to run through these questions the next time you come across an offer you're interested in.

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