Benefiting from Credit Card Sign-up Bonuses

In tough economic times, many people struggle to live on less, even as the cost of living rises. As a result, there is a smaller pool of consumers with excellent credit and more who are over their heads in debt. In an effort to lure the best customers during harsh times, credit card companies will traditionally offer bigger rewards to sign on for a new account. So with the current value of incentives at an all time high, perhaps it’s time to consider applying for a new card.

Consumers with good credit may be offered reward cards, but big bonuses will be reserved for those with excellent credit. In other words, people who pay their bills on time and have a reasonable amount of debt will be offered the best deals. So, pay your credit card in full every month and reap big rewards for the effort you put into handling your money responsibly.

The Value of Sign-up Bonuses

The value of a sign-up bonus is directly related to the level of the card – gold, platinum, etc. and the type of bonus being offered. Receive a bonus in the form of a cash rebate check, credit on your credit card statement or additional reward points or airline miles. The value of credit card bonuses currently being offered include $100 cash rebate, $250 in gift cards and $500 in travel rewards. Each credit card bonus has specific terms that need to be met before the bonus is issued, with most requiring a specific amount be spent using the card within 3 months of opening the account.

If you’re highly qualified, there are cards that have both rewards wrapped into one program like the Chase Freedom® Visa card that awards a $200 cash back bonus, while saving 5% on different categories every three months. If you don’t qualify for the top cards, look for one that matches the type of purchasing you do. Frequent travelers will benefit most from a miles reward card; long distance drivers will reap big rewards from a gas rewards card.

Another way to increase the benefit of switching to another credit card is to look for one that offers 0% interest like the Citi® Dividend Platinum Select® Visa® card. Not only will you earn $100 cash back after spending $500 with the card, but 0% interest will apply to all your purchases, and even balance transfers, for 12 months.

Savvy consumers will use their bonus to help pay off their credit card balances. Others will let their bonus accumulate with their future earned rewards on purchases to reach a specific goal. Two examples: sign-up bonuses of frequent flyer miles can help to earn a companion airline ticket quicker. Hotel cards often give a big enough welcome bonus for one night free after the first card purchase, but save them while you accumulate more for purchases and you can make a weekend out of it.

It’s never advisable to apply for multiple cards over a short period of time. So do your homework in advance of applying by visiting a credit card comparison website. After approval for a new card, don’t rush to close your old account. By remaining open, even if you never use it again, an older account shows a lengthy credit history – a positive move for your credit score.

About The Author: As a freelance writer for popular finance blogs and websites, Noreen Ruth provides readers with the most up-to-date information on credit cards and other financial issues. Her goal is to educate consumers about topic that may impact their ability to manage their credit/debt responsibly. Noreen shares tips on how to compare & apply for credit cards, understand credit card applications, manage credit card debt, apply for debt reduction help, etc., in addition to reporting on the latest credit and debt news from government and other reputable sources.