Recently I came across a credit card offer for a $200 sign up bonus. All I had to do was spend $1,500 in my first three months as a cardholder, and boom – I’d get a nice $200 paycheck.
The offer was tempting, but I chose to pass. And if you’re considering applying for a new credit card with a sign-up bonus, here are a few reasons you might want to reconsider.
1. You recently applied for another credit card
Each time you apply for a new credit card, a thorough investigation is done on your credit report to ensure that you are a reputable borrower. One serious inquiry shouldn’t hurt your credit score too much, but multiple serious inquiries might. So, if you recently applied for another credit card, you might want to wait to apply for a new card with a sign-up bonus.
This is especially true if you’re trying to buy a home and need a mortgage, or if you plan on applying for another large loan in the short term. In this case, it’s best not to have too many recent inquiries on your credit file. Not only can they bring down your score, but they can also serve as a red flag that you are borrowing too much.
Some credit card sign-up bonuses are easier to get than others. But if you’re considering a bonus that will require you to spend more than usual, or more than you anticipated, then it’s really not something worth looking for.
Imagine you come across a $300 sign-up bonus offer for spending $2,500 within three months of opening a new credit card. If you normally only charge your credit cards $700 a month and have no major purchases planned, your regular spending will only net you $2,100.
At this point, you might feel compelled to spend another $400 to get your bonus. But in this case you will actually be down $100 instead of up $300.
3. The bonus is not so generous
It’s one thing to chase down a credit card sign-up bonus that gives you a nice amount of cash. But if the offer you’re considering isn’t a whole lot of free money, you might want to wait for a better deal to hit your radar.
This is the main reason why I chose not to go after this $200 bonus offer. While spending $1,500 over three months is by no means a stretch for me, I prefer to sit back and aim for a more generous bonus.
Sign-up bonuses are a great way to earn free money that you can use to pay bills or cover the cost of hobbies and entertainment. But they are not always worth pursuing. Before you rush out to apply for the next job on offer, take some time to think about how it might impact your credit score, whether you’ll have to spend more to get your money, and whether it’s worth it. to hold a better bonus opportunity.
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