There’s something about a great signup bonus that can suddenly make a credit card seem a lot more appealing. But every rose has its thorn, even when it comes to financial products. While signup bonuses are enticing, they aren’t for everyone — and they do have downsides.
Case in point? In order to take advantage of most bonus offers, you’ll be required to charge a certain amount of money to your new card within a set period of time — money that you might not have spent otherwise. But, with the right strategy in place, it’s possible to take advantage of referral bonus programs without overspending. Ready to see what we mean? These tips will help you make the most of your signup offer without derailing your budget.
The Credit Card Sign-Up Bonus Conundrum
Plenty of credit cards now feature signup bonuses that offer rewards like $200 cash back or 75,000 bonus travel miles. But the catch is, in order to qualify, you might need to charge anywhere from $1,000 to $4,000 on your card within the first three months of signing up. These amounts aren’t necessarily exact, but the requirements are generally similar.
That’s why it’s important to be realistic about how quickly you can actually pay off your charges. Otherwise, any savings you gain from the signup bonus might quickly get wiped out by interest charges.
It’s never a bad idea to form a solid plan before signing up for even the most enticing bonus offers. The collection of tips and tricks below can help you put together your plan and earn signup rewards without overspending.
Get Ahead on Your Insurance Premiums
It’s fairly common to pay your home or auto insurance premiums in monthly installments. But most insurers give you the option to pay off your premium in advance. Some might even give you a discount for doing so.
This can be a great move, particularly if you can find a card with a great signup bonus as well as a 0% APR for the first year. By using the card to pay off your insurance premium in a lump sum, you can enjoy a premium discount and earn your signup bonus all in one. To pay off the charge, just send the same monthly payments to the credit card company that you normally would’ve sent to your insurer.
Make a Few Reimbursable HSA/FSA Purchases
If you have either a flexible spending account (FSA) or health savings account (HSA), then this may be the approach for you. Check to see if your account offers reimbursements for qualifying purchases that you make through different payment methods.
If it does, you can use your new credit card to cover the purchases and reach your spending threshold. Then, just submit the receipts for those purchases and request to be reimbursed.
When your reimbursement arrives, you’ll be able to use it to pay off your credit card charges. In the case of some HSA accounts, you may even be able to reimburse yourself.
Get Reimbursed by Your Friends or Employer
If your employer offers a reimbursement plan, now may be the time to get familiar with it. Some employers refund employees for any business-related expenses they make using their own money. If this turns out to be the case, why not make a few necessary work purchases that can count towards your credit card signup bonus?
Even if you can’t get reimbursed by your employer, you may have better luck with your friends. The next time you all go out to eat, offer to cover the bill with your card. Then have everyone pay you back using payment apps like Venmo or Paypal.
Make Charitable Donations or Gift Card Purchases
If you regularly donate to a certain charity or nonprofit, consider using your card to send some funds their way. Just keep in mind that, due to processing fees, the charity won’t receive the full amount of your donation if you use a credit card to make it.
You could also use your credit card to buy gift cards to various stores and use them as presents around the holidays. This is even a solid plan if you choose to use them for yourself.
If you need to meet your signup bonus minimum quickly, purchase a couple hundred dollars’ worth of gift cards to your favorite retail store. Then, use them each time you shop over the next few months. Pay off your credit card bill with the money you otherwise would’ve spent from your checking account.
Cover Everyday Purchases
This one takes some discipline, but it can be an effective way to earn a credit card signup bonus. You’ll essentially start using your new credit card to make all the purchases you normally would make on your debit card.
The key is to leave your checking account relatively untouched for the month so you’re sure to have enough money in it to pay off all your credit card purchases. If you’re in doubt, you could even transfer money from your checking account to your credit card immediately after making a purchase.
While you may not end up making many big purchases, you might be surprised at how quickly all your charges add up. This is also a great way to stick to essential purchases instead of racking up unnecessary charges just for the sake of qualifying for the bonus offer.
Prepay Your Rent or Bills
Another great way to put your credit limit to good use is to cover your utilities or bills for a few months in advance. The key here is to keep paying your bills as normal, but to the credit card company rather than the utilities provider.
Some companies may even allow you to pay your rent or mortgage with a credit card through online platforms like RentPayment or AppFolio. Just be aware that you may be charged a fee for card payments. It’s important to make sure the benefits don’t outweigh the expense.
