3 Tips for Maximizing Sign-Up Bonuses

by Maurie Backman | Updated July 21, 2021 - First published on Feb. 26, 2021

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A young couple sitting on a bench at a mall with a phone and credit card in their hands.

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Here's how to make sign-up bonuses work for you.

There are plenty of good reasons to use credit cards. There's the convenience of swiping a piece of plastic instead of constantly hitting up ATMs. And the option to store your card details on your phone or laptop for easy checkout. But perhaps the best part of using credit cards is when you get rewards for purchases you were already planning to make -- and for opening the card in the first place.

In fact, many credit cards today offer generous sign-up bonuses. You'll get a certain amount of cash back or points if you reach a certain spending threshold within a short period after opening your account. For example, you may qualify for a sign-up bonus that gives you $500 if you spend $3,000 within three months of becoming a new cardholder. If the idea of snagging a sign-up bonus sounds sweet to you, here are three tips to employ.

1. Apply for the right offer

You might see a credit card with a generous amount of cash back as part of the sign-up bonus, but you'd need to spend more than you normally do to qualify. Those aren't the cards for you. The best way to take advantage of sign-up bonuses is to apply for those that are easily attainable given your spending habits. For example, let's say you normally charge $1,000 a month on an existing card. It's worth going after an offer that requires you to spend $3,000 within three months. But it's not worth applying for a card whose sign-up bonus requires you to spend $5,000 within three months. At least not unless you have a specific large purchase coming up that falls outside of your normal spending.

2. Apply at the right time

Sign-up bonuses are easier to snag if you're already planning to make large purchases. Time your applications around those purchases and it'll be easier than you'd think to get that extra money. Say you want to buy some new sinks and vanities for your bathrooms, and you expect to spend about $2,000. You've got your eye on a credit card with a sign-up bonus for spending $3,000. If you plan to make those purchases and do the work in April, March would be a good time to apply.

3. Boost your credit score so you qualify

To qualify for great credit card offers, you'll need a reasonably strong credit score -- one that shows issuers you'll pay your bills on time. Each credit card company sets its own criteria, but generally, you'll be good to go if your credit score is above 700, and you'll be in especially good shape once your score reaches the mid-700s. If you're not there yet, work on boosting your credit score so you're more likely to qualify for any sign-up bonus offer you want. You can increase your credit score by paying all incoming bills on time, paying off some existing credit card balances, and correcting errors on your credit reports.

Sign-up bonuses are a great way to pocket free cash, but make sure to approach them strategically. There's little sense in applying for a credit card for the express purpose of snagging a bonus, only to miss out on it because you don't spend enough. Worse yet, it definitely doesn't pay to overspend on things you can't afford for the sole purpose of getting a sign-up bonus. A little planning on your part, however, could make it possible to maximize sign-up bonuses this year and enjoy a bundle of extra money.

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