Planning a Big Trip? This Could Help Pay for It

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The right credit card could make your next trip more affordable.

Many people spent the better part of 2020 cooped up at home -- or close to it -- and that extends to those who would normally do their fair share of traveling. If you didn't get out much last year, you may be eager to take a big trip this year, especially now that coronavirus vaccines are readily available and there are fewer restrictions on travel.

But paying for a big trip may prove challenging, especially if you're low in the savings department. If you could use a little extra cash to cover your travel costs, here's one credit card move worth making.

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Seek out a generous sign-up bonus

These days, a number of credit cards offer sign-up bonuses that give you cash back, miles, or points for spending a certain amount of money shortly after opening your card. You may, for example, be eligible for an offer where you get $500 cash back for spending $3,000 within three months of opening a given card, which is a pretty good deal. Or, you may be eligible for 50,000 reward points, which you can cash in for free flights or hotel stays, for spending $5,000 on a new card within three months.

Now there is a catch -- the most generous sign-up bonuses out there are usually reserved for credit card applicants with strong credit scores. If your score is just average, you may not qualify. But otherwise, it pays to apply for a sign-up bonus credit card if you have a big trip planned. Just make sure you won't have any trouble meeting the spending threshold to score that cash back or pile of points.

In fact, one mistake consumers tend to make with regard to sign-up bonuses is spending needlessly just to earn their free cash or points. A better bet, therefore, is to time sign-up bonuses with costly events, like vacations.

Say you need to spend $3,000 on a new credit card within three months to score $500 cash back. If you normally only charge $800 a month in expenses on your credit cards, that means you'll have to spend above your usual threshold just to get your bonus. But if you know you'll be putting down a $1,500 deposit for an upcoming trip, you can open that new card and meet half of your spending threshold by virtue of that one charge alone.

Find the right offer

You don't have to limit yourself to a single sign-up bonus at one time, but applying for too many new credit cards at the same time isn't always a good idea. It could lower your credit score and serve as a red flag on your credit report, both of which could hurt your chances of getting approved for these offers in the first place. You may be better off limiting yourself to a single credit card sign-up bonus. So to that end, prepare to do some research.

Specifically, compare different offers to see which gives you the largest amount of cash back, percentage-wise. Also, see which offer will be easiest for you to snag. An offer of $500 cash back for $3,000 in spending within three months may be generous in its own right, but if an offer of $200 back for spending $1,500 within that same time frame better aligns with your spending plans, then it's probably a more suitable option for you.

If you're gearing up for a big trip this year, it pays to be strategic about the credit cards you sign up for. The right card could not only put a nice bonus in your pocket to offset your vacation costs, but it could also reward you nicely for the expenses you incur in the course of your travels.

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