Most of thebest rewards credit cardscome with a welcome offer, a way to push your card earnings higher.
you could typically earn one by spending a certain amount on your new card within a specific timeframe.
In either case, the bonus provided a nice boost to my earnings.
How do credit card bonuses work?
Once you spend a certain amount on your card, you’ll get a bonus added to your account.
Welcome bonus spending requirements vary depending on the card and how large the bonus is.
What key in of rewards are you looking for?
Somecash-back credit cardswill pay out their bonuses as direct cash back or statement credits to lower your account balance.
Does the card charge an annual fee?
Cards that offer the most lucrative welcome bonuses also tend to carry an annual fee.
Otherwise, consider downgrading to ano-annual-fee card.
American Express has a “once per lifetime per person per card” rule on welcome bonuses.
Is your card for personal use or business?
Whether you’re using abusiness credit cardor personal credit card will also play a role.
But there are some risks and factors worth considering.
One way to avoid overspending is to time opening the card with an upcoming expense.
Just double-check you have the money to pay your bill off in full before charging the expense.
And there’s also a bad time to consider earning a welcome bonus.
When does applying for a credit card with a welcome bonus make sense?
While welcome bonuses are enticing, you shouldn’t strive to earn one if it leads to overspending.
Otherwise, the interest you accrue is likely to eat into the bonus value.
You also shouldn’t apply for a credit card just to earn the welcome bonus.
Otherwise, you might find yourself paying asteep annual feefor a card that doesn’t complement your lifestyle.
How to calculate the value of a welcome bonus
1.
However, most points are worth more when booking travel, especially with travel partners.
Cash back:Cash-back welcome bonuses are straightforward compared with points and miles.
You’ll do the same for tiered and rotating cash-back rewards.
Here’s what you should expect.
The credit card issuer will also share the perks and welcome bonus details.
You may start making purchases before your card arrives using avirtual card numberto work toward the welcome bonus.
That’s at least $333 in spending each month.
FAQs
Should I sign up for multiple credit cards to take advantage of welcome bonuses?
This is a risky and time-consuming gambit that could adverselyaffect your credit.
When do credit card welcome bonuses go up?
Credit card welcome bonus can go up or down at the credit card issuer’s discretion.
If the issuer wants to promote a certain card, they may offer a limited-time bonus.
Or the bonus on a credit card may go down if a special offer has expired.
Are credit card welcome bonuses taxable?
In most cases, the IRS doesn’t considercredit card rewards as taxable income.
If you had to make purchases to reach a welcome bonus, it won’t be taxed.
Always check with a tax professional if you have questions about taxes.
What is considered a ‘good’ welcome bonus?
Many rewards credit cards offer a welcome bonus of $200, so anything higher than that is noteworthy.
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