Time your credit card application this bonus season

In late 2017, San Francisco couple Riley Adams and his wife stumbled upon Comet Halley with welcome offers from airline credit cards. For a limited time, the card advertised a companion pass in addition to a big signup bonus.

“We knew we had to spend a lot in a specific area and wanted to try and shop around to get the best value for money for those needs,” says Adams, chartered accountant and owner of the Young and the Invested blog. . “If you plan it, you can really offset these costs [with a sign-up bonus]. “

If you are consider a new credit card, the bonus season from October to December is an ideal period. Your spending on Black Friday, travel and holiday meals, end-of-year charitable donations and more can easily meet a large spending requirement for a hefty signup bonus.

Here’s what you need to know about these offers.

Time a credit card bonus

A signup bonus is a one-time incentive offered by reward credit cards in addition to any outstanding cash back, points or miles on purchases. To get a bonus, you typically need to spend between $ 500 and several thousand within a certain period of time (often three months) after the card is approved.

This level of spending may not be difficult at this time of year. During the 2019 holiday season, consumers plan to spend an average of nearly $ 1,048 on items such as gifts, decorations, candy and more for themselves or their families, according to the annual survey. of the National Retail Federation.

Even if your spending isn’t entirely vacation-related, a little planning can still help you reap a windfall that you can use the following vacation season.

The Adams, for example, mapped their budget before applying for that airline credit card with the generous bonus. They met his spending requirements primarily by paying for expenses related to the work of Riley’s wife in 2017; they then put what they earn into vacation trips the following year.

“We used it all year 2018 to visit family for the holidays – July 4th, Thanksgiving, Christmas – plus two domestic trips for [our] own purposes and then fly to a major hub for an international flight on our first anniversary, ”Adams said.

Have the money on hand

It’s not worth spending the money you don’t have just to chase a big bonus. If you can’t pay your credit card bill in full each month, the interest charges will eat away at any rewards you accumulate.

But if you’ve saved up some vacation fund, you can treat yourself to a rich introductory credit card deal while you’re at it.

Andy Hill, host of the “Marriage, Kids and Money” podcast, plans to earn a signup bonus this holiday season with the savings he has set aside for Christmas gifts.

“We’re saving about $ 1,200 on Christmas gift shopping,” says Hill. “If we’re going to spend that $ 1,200, we might as well get a bonus on a new credit card to get cash back.”

Other factors to keep in mind

When you review a rewards credit card and its signup bonus, ask yourself these questions:

  • Can you meet the credit card requirements? You will generally need good credit (a FICO score of 690 or higher) to qualify for a rewards card with a big bonus.

  • Are you prepared to pay an annual membership fee? The best cards – the ones with the highest bonuses, the richest rewards, and the best perks – are charged annual fee. If you think you won’t earn enough rewards and perks to offset these costs, consider a rewards card with no annual fee. Many of them also offer bonuses.

  • Do the rewards categories on the card match your spending? A signup bonus can offer a large chunk of the initial value, but the card won’t be useful in the long run if it continues the rewards and benefits don’t match your habits.

  • Can you meet the spending requirements for the bonus with your current budget? If you know you can’t spend $ 4,000 in three months without taking on debt, look for a bonus with a lower spending threshold.

  • Will you pay your bill in full each month to avoid interest? Reward cards tend to have high open APRs, which means you don’t want to have monthly balances. If you’re already struggling with debt, a rewards credit card might not be ideal for you.

This article was provided to The Associated Press by the NerdWallet personal finance website. Melissa Lambarena is a writer at NerdWallet. E-mail: [email protected] Twitter: @lissalambarena.

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