This Huge Mistake Could Cost You a Credit Card Sign-Up Bonus

Cutting it too close could keep you from getting your card's sign-up bonus.

A sign-up bonus is one of the best reasons to get a new credit card. This type of offer is an incentive for new cardholders to apply, and you can earn a big chunk of cash back, points, or miles this way. Bonuses of $200 or more are common, and the top credit card sign-up bonuses can be worth $500 or more.

Most of these bonuses have a spending requirement. For example, spend $3,000 in the first three months, or $10,000 in the first six months. In return, you might earn $300 in cash rewards or 50,000 points, to give a few examples.

If you can complete the bonus requirements, this is a smart way to maximize your credit card rewards. However, there's one huge mistake that sometimes costs people these bonus opportunities.

Not leaving yourself a margin of error

Before you apply for a rewards credit card, you should review the terms of its sign-up bonus and confirm you can complete them. In particular, make sure you'll be able to reach the spending requirement, within the time limit, based on your normal spending habits.

As you work toward the sign-up bonus, the key is to leave yourself a margin of error. Some people cut it way too close here. If you need to spend $3,000 in the first 90 days, you don't want to reach day 89 with another $200 to go.

The risk of not having a margin of error is that if anything goes wrong, you'll miss out on your card's sign-up bonus. Here are a few ways this could happen:

• You need to return a purchase for a refund.
• An order you made gets canceled.
• A merchant charges you when it ships an order, instead of when you place the order as you expected.
• You realize at the last minute that you won't be able to spend enough.

Let's say you spend $3,000 in the first 90 days to earn a credit card sign-up bonus. But you're not satisfied with one of those purchases, so you return it. The refund pushes you below the spending requirement for the sign-up bonus.

If it's already past the 90-day time limit, then you can't complete the bonus terms. You spent less than $3,000 in the first 90 days, so you won't get the bonus. If you already received the bonus, the card issuer will claw it back (deduct it from your rewards balance).

Credit card companies are usually strict about sign-up bonuses. If you don't complete the terms, you don't get the bonus. You're probably not going to have any luck calling and asking for more time.

Play it safe with sign-up bonuses

When you open a credit card, you have one shot to earn the sign-up bonus. Always do the math on how much you're going to spend to see if it's enough to meet the bonus requirement.

The simplest method is to add up your monthly credit card spending. Use that number to see if you can realistically spend enough. If you spend $1,500 on your credit cards per month, then a bonus that requires $3,000 or $4,000 in purchases within three months is doable. One that requires $5,000 or more would be out of reach.

Another option is to wait until you have some big expenses to pay. For example, if you're going to be putting new tires on your car next month or buying a new bed, that could help you earn a sign-up bonus. Just apply for the credit card you want first, so you have it before you need to make the purchase.

Most importantly, spend more than you need with time to spare. I like to spend a few hundred dollars more than what's required and have it done with at least a week or two to go. It's best to play it safe to ensure you earn that sign-up bonus.