Many credit cards offer new cardholders a sign-up bonus. They can range from cash back, 0% APR, or travel points. Sign-up bonuses are great ways to maximize your spending to get the most back. There are a few tips for utilizing these offers in the most effective way.
Cashback sign-up bonuses are one of the best ways to go. If you are planning on making a purchase, you can use this sign-up bonus for a discount on that item. For example, you need a new computer for school, which costs about $1,000. You can get a credit card with a spend of $500 and get $200 back when you spend the minimum within three months. You could get your $1,000 computer for $800. That is a 20% discount. Sign-up bonuses only work if you already know you will spend that money.
Many credit cards also offer a 0% APR for a certain amount of time. This is a great offer and is usually combined with a cashback offer as well. For example, let’s say your oven went out as well as your TV. You may not have the funds right now to pay that back, but putting these purchases on a card with 27% interest is not ideal either. A 0% APR card can help you buy what you need while not paying additional interest. Write down on your phone with a few months’ notice of the date when interest will start accruing to make sure you pay off that card in time.
Travel companies also offer credit cards with sign-up bonuses. They can be in the form of points to free domestic tickets. These are great cards if you plan a trip and know you will hit the minimum spend requirement to get these points.
Sign-up bonuses on credit cards can be a great tool if used correctly! Make sure not to carry a balance because you are paying the credit card company interest, which is how they can offer these incentives.