Credit card companies compete for customers by offering different types of incentives. Sign-up bonuses, which are sometimes called welcome offers, are a common incentive offered to people who aren’t already cardholders with their company. Before rushing to accept these offers, here’s what you should know about credit card sign-up bonuses.
How Credit Card Sign-Up Bonuses Work
Sign-up bonuses are perks you can earn when you sign up for a new credit card account. These are incentives for new customers to get in the habit of using the card regularly and usually require you to spend a certain amount of money within the first few months. Bonuses offered range from hundreds of dollars of cash back to hotel points or airline miles to put toward travel expenses. However, these bonuses come with a cost. Usually, you’re required to spend a minimum amount of money in a specified period of time in order to earn them.
Things to Watch Out For
If you have a certain amount of time to earn bonuses, day one is typically the day you’re approved for the card, which may not be the day you have the card. Some bonus programs don’t expire but others may expire under certain circumstances. Points that can be applied to hotel or airline expenses may expire if there isn’t any account activity for a while. Some transactions that happen during the first few months may be excluded from counting toward the minimum threshold spent. Examples are balance transfers and cash advances.
Should You Apply?
Bonuses and ongoing rewards can vary greatly from one card to another. Consider the spending requirements to earn a sign-up bonus. Some may be a few hundred dollars, but others may be in the thousands. Do you typically spend the required amount in a few months?
Find out if there’s an annual fee or any other fees to help you decide whether the bonus offered is really worth spending a minimum amount of money to earn. If there is an annual fee, it most likely doesn’t count toward the spending minimum. Research your options to find out which one makes the most sense for you.
Getting Ready to Apply for New Credit
Getting the best deals and rates depends on having good credit. Before applying for a new credit card or any other new loan, make sure you know how your credit looks to potential lenders. You’re entitled to a copy of your credit report each year, which can be obtained from AnnualCreditReport.com. Errors on credit reports are surprisingly common, so make sure you don’t find any inaccurate information. Look for mistakes in your personal information and confirm that balances and payment histories are being correctly reported.
If you find any errors, dispute them with the credit bureau right away. Dovly can take care of this for you. Dovly is an AI credit engine that can help you track, manage, and fix your credit. Try it risk-free with our free membership tier. Contact Dovly today.
