As credit card companies face new laws and regulations that limit how they are able to charge fees to their customers, the companies are competing harder with one another for new customers. Because credit card issuers are reluctant to drop their interest rates too low, many are now competing on the basis of certain “extras,” perhaps the most popular of which are the bonuses that new customers receive upon opening a new account.
Some of these sign-up bonuses are becoming increasingly valuable. While the exact bonuses available for each card change quite frequently, a quick Internet search will help you discover precisely which company is currently offering the best deals on balance transfers, cash back awards or airline mileage bonuses.
As you research the best deals, here’s some credit card advice to help you decide what’s best for you.
Make Sure the Bonus is Relevant to You. A 20,000 or 30,000 mile sign-up bonus for a credit card tied to a particular airline might be a great deal, but not if you don’t like to fly, if that airline doesn’t serve your nearest airport or if you are active in a frequent-flier program on some other airline. Make sure that the sign-up bonus for any credit card you’re considering fits within your lifestyle. Just because it’s a “good deal” doesn’t mean it’s a good deal for you.
Weigh All the Costs. If you are considering applying for a new credit card in order to receive one of the sign-up bonuses, be sure to weigh the direct and indirect costs that will go along with it. Does the new card come with an annual fee? If so, you will need to factor this cost into the value of the benefit. Do you plan to keep the credit card, or do you intend to cancel it once you receive the bonus? Be aware that having too many credit cards open for too short a time can negatively impact your credit score.
How Strong is Your Credit Score. If you plan to take advantage of these offers, you’ll need to make sure your credit score is in good shape. Credit card companies may be becoming more competitive for customers, but they’re actually competing the hardest for the right kind of customers.
Don’t Change Your Spending Habits. Some sign-up bonuses require you to use your new credit card in order to receive the bonus, or to spend at the highest levels to receive the best bonuses. Don’t let your pursuit of sign-up bonuses get you to change your spending habits; the negatives of any unnecessary or additional spending might end up outweighing the gains you received from the sign up bonuses.
When considering signing up for a new credit card in order to take advantage of a healthy sign up bonus, be sure that the card is a good fit for your needs, and that you’re not letting the appeal of a good bonus lead to you to spend more than you would otherwise.
As credit card companies face new laws and regulations that limit how they are able to charge fees to their customers, the companies are competing harder with one another for new customers. Because credit card issuers are reluctant to drop their interest rates too low, many are now competing on the basis of certain “extras,” perhaps the most popular of which are the bonuses that new customers receive upon opening a new account.