If you are looking to open a credit card, competitors may promise you large sums of money as a sign-up bonus for choosing their card services. As attractive as these bonuses may sound, it is important to fully understand them and know just how authentic they are. In a world where everything comes with a price, it should not be surprising to hear that these offers are not just free money like they appear to be. So how can you identify which sign-up bonuses are beneficial to you? Here is a guideline of questions to consider before opening a new credit card account.
Do I Need a New Credit Card?
The first question you should ask yourself is whether you need a new credit card. Opening a new card could lower your credit score, so it is not recommendable to do so if you will be applying for a loan around the same time. The new credit available could also incite you to overspend, and this could put a greater ding in your credit score if it gets out of hand. If you do not think the new credit card is necessary, it is best to protect your credit score and hold back until you really need it.
How Do Sign-Up Bonuses Work?
Once you have determined that you need a new credit card, the next step is to explore the options available to you. Sign-up bonuses can be the deciding factor, so knowing how they work is important. Generally, you would need to spend a given amount of money during a certain amount of time to receive the bonus. For example, a given bonus agreement may require you to spend $750 for five months before earning the bonus promised.
Analyze and Compare Sign-Up Bonuses
If you want to take advantage of sign-up bonus offers, you need to compare different proposals and understand how each bonus works. To find the right sign-up bonus for your needs, look for this information:
- The spending required to receive the bonus
- How long you must spend the required amount
- The type of reward: cashback, points, etc.
- When you can redeem the reward
- The annual fee and interest rate of the credit card
How Do I Know If a Sign-Up Bonus Is Right for Me?
To benefit from a sign-up bonus, you need to make sure that your typical monthly expenditure aligns with the amount you are required to spend. It is never a good idea to unnecessarily spend money just to meet a bonus requirement. If you want to find the right sign-up bonus, you need to:
- Know how much you spend on credit cards every month
- Find a bonus with a spending requirement that aligns with your expenditure
- Figure out what type of reward system you prefer.
Do I Open A New Credit Card If I Have Debt?
If you are opening a new credit card account to avoid previous debt, Progressive Debt Relief can show you a better way. Our financial experts will protect your credit score and negotiate with your creditors to settle your debt once and for all. To schedule a complimentary consultation with no upfront fees, contact us today.
