Credit card sign-up bonus has become very popular these days. Many credit card companies offer sign-up bonuses for opening a new card. You may get rewards like cash back, points, double cash back, miles, free hotel stay, etc. All the sign-up bonuses are enticing. Many people are applying for a credit card just to get those sign-up bonuses. But there is a big catch that they might not be aware of.
The catch is, to get the bonus, you need to spend a certain amount on the card within a stipulated time after opening the account.
Apart from this, many terms and conditions are there behind the card sign-up bonuses.
Gary Leff, the writer of the “View from the Wing” said, "The bigger the bonus, the higher the spending requirement. Minimum spending requirements can range from less than $1,000 to $5,000 or even more. It’s fairly common to see offers in which you must spend $3,000 in 3 months."
Here are other untold credit card sign-up bonuses catch you need to know beforehand.
1. Understand the offer's terms and conditions
As I have said in the introduction that getting the sign-up bonuses is costly. You have to spend a certain amount within a certain period to get the sign-up bonus.
So, the truth is credit card sign-up bonuses is pushing you to overspend.
So, if you want to apply for a credit card just to get rewards, then think twice. Make sure you know every term beforehand. Try to know how much you have to spend to get the point or cash back.
After knowing the exact amount, ask yourself whether or not you are comfortable spending the particular amount within the stipulated time.
If your answer is yes, then go ahead and apply for the credit card to get the rewards. If you think you are able to spend $3000 within the time, then leave the idea of applying for a new credit card.
2. Not all spending will go on your new card
Remember, not every dollar of your spending will go on the new card.
Often, mortgage servicers, insurance companies, local utility companies, and landlords charge a certain fee to pay by a credit card; and it will cancel some of the benefits of a sign-up bonus.
3. Know the exact timeline
The terms and conditions of sign-up bonuses varies from one company to another. The common rule is that the credit card holder needs to spend a certain amount in a fixed period.
The catch is, knowing the "fixed period" is very tricky.
Make sure you know the period for meeting the minimum spending criteria to get the rewards.
It is advisable to ask the credit card company about it. The company will tell you in detail and also inform you regarding the spending progress you have made for the sign-up bonus.
Lastly, the cards with good sign-up bonuses usually come with annual fees.
Don't assume that the annual fees will count as your spending; only your purchases count. Card related charges and fees are excluded from the spending goal. However, be aware of credit card debt. Don't purchase things that you can't afford; otherwise, the credit card debt trap is waiting for your grand entry.