Bonuses are often the only reason why some people sign-up for a credit card in the first place. Unfortunately, they aren’t always easy to qualify for. There is a smart way to approach these welcome offers, and everyone who’s in the ‘credit card game’ should try to adhere to a strategy. Deviating too much can result in suboptimal results.
1. Apply before making big purchases.
One crucial mistake many people make when it comes to sign-up bonuses is to not time their application well. The best welcome offers are tough to get, and require you to spend a pretty penny. It’s not uncommon for banks to ask you to spend $4,000 to $5,000 within the span of just 3 months. This can be a tall order for most people on an average household budget. However, there are likely to be times throughout the year when hitting the required spend is easier than others. Perhaps you’re approaching a busy holiday spending season or have a lot of vacation tickets to book for you and your family. It helps to foresee these types of events, and plan your credit card application around them. If you knock $2,000 off a $4,000 spend requirement, it can suddenly become a lot more manageable.
2. Don’t force big (or small) purchases.
Perhaps one of the worst things you can do in trying to qualify for a bonus is to make unnecessary purchases. Maybe there is a big television or a new refrigerator you were thinking about buying. Suddenly, a card application may be all it takes to push you to make that purchase. This is a big financial mistake. Bonuses can easily cloud our judgment, and entice us to make purchases we otherwise wouldn't – all in the sake of meeting that spend requirement. Avoid justifications such as “the bonus is worth $500, so if I make this purchase, that’s really like getting $500 off”. Why doesn’t that thinking work? Assume you are considering the purchase of a $2,000 television. While it may be true that a bonus will give you a return of $500, if you were to decide you don’t need a new TV after all you'd still be saving yourself $1,500.
3. Realize if you already lost the chance to get a bonus.
Most credit card companies limit the frequency of bonuses you can earn with one particular card. This is set up to prevent people from abusing the system, and continually signing-up for and cancelling a card to get its bonus. For most banks, the rule is one bonus per card per 24 months. Therefore, if you already qualified for a card’s bonus in the last two years, don’t try to apply for it again. You won’t get the bonus, even if you meet the necessary spend requirements. Some issuers are even more severe. American Express, for example, allows users to get one bonus per card per lifetime. Familiarize yourself with these rules before you commit to signing up for a card.
4. Pick up the bill when out with friends.
Another useful trick for meeting a card's spend requirement is to cover restaurant bills anytime you’re out with friends. If you live in a city where dining out can get expensive, like New York or San Francisco, this can easily inflate your balance over the course of three months. Simply ask your friends or family to give you cash to cover their portion of the bill. You can take advantage of apps like Venmo or PayPal to make the process much easier and less of a hassle.
5. Join forces with an authorized user.
If you have a spouse or significant other who can help you meet the goal, you should add them as an authorized user to your account. Combining the two spending streams can often double the rate at which you charge things to your account. The authorized user will have his or her own credit card, but all the purchases will be charged to the same account. You should be careful with this approach. Only make someone an authorized user on your account if you absolutely trust them with your finances. Any and all purchases they make will be your responsibility. If, for whatever reason, they refuse to pay you back, you will be obligated to pay your bank back for all the charges. Otherwise, they may report your debt as being delinquent to the credit bureaus, and this will have a negative impact on your credit score.