This 1 Trap Could Cost You a Credit Card Sign-Up Bonus

by Maurie Backman | Published on Sept. 8, 2021

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There's a surprising reason you could miss a credit card bonus.

There are features people tend to look for when applying for new credit cards. These include generous rewards programs, great customer service, and sign-up bonuses.

A sign-up bonus credit card gives you cash or reward points for hitting a spending threshold shortly after opening the card. You may, for example, apply for a card that gives you a $500 sign-up bonus if you spend $3,000 on it within three months of opening your account. Sign-up bonuses are a great way to put extra cash in your pocket -- cash you can use to boost your savings, pay off debt, or spend on leisure.

But be careful. There's a trap you can fall into in chasing a sign-up bonus, and it can prevent you from getting the cash you hoped to snag.

Don't lose out on that bonus

Some people wait until the last minute to make purchases that count toward their sign-up bonuses. On one hand, that's sometimes a smart financial move. If you charge too many expenses on your credit card shortly after opening it, you risk not being able to pay off your balance in full when your bill is due.

But it's also not a great idea to wait until the very end of your sign-up bonus purchase period to charge expenses on your new card. The reason? If a merchant cancels your order at the last minute, you could miss your spending threshold.

Imagine you have until Sept. 30 to spend $3,000 to snag your sign-up bonus. Let's also imagine you order a piece of custom furniture for $600 on Sept. 20, and that purchase brings you to the $3,000 threshold. You might think you're all set to sit back and wait for your bonus to arrive.

But what if the furniture company cancels your order on Sept. 29 because it doesn't have the supplies to fulfill it? At that point, you may not have enough time to make $600 worth of useful purchases.

Worse yet, what if that order gets canceled on Oct. 1? Then you're completely out of time to charge more expenses to meet your $3,000 spending requirement.

That's why it's a good idea to meet your spending minimum well before your sign-up bonus period expires. If you know you have a string of expenses to charge, don't put off those purchases.

In fact, it's a good idea to pad your savings account before applying for a credit card with a sign-up bonus. That way, if you have to consolidate your purchases, you can pay off a couple of months of higher credit card bills without carrying your balances forward. And you don't risk losing out on a sign-up bonus because an item you intended to buy is suddenly no longer available.

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