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Rewards cards are a great way to get more out of the spending you already do, and a welcome bonus can sweeten the deal. A credit card welcome bonus, also called an intro bonus, allows you to earn extra rewards by spending a certain amount of money within the first few months you have the card.
A little bit of planning can bring meeting the spending threshold for a welcome bonus easily within reach. Here's how.
How a Credit Card Welcome Bonus Works
Credit card issuers offer welcome bonuses to encourage consumers to open up a specific credit card and use it to make purchases. Like other credit card rewards, welcome bonuses typically fall into one of three main types:
- Cash back
- Miles
- Points
To earn a welcome bonus, you'll typically have to spend a specified amount on the card within a certain amount of time from when you open the account, such as within three months. For example, a welcome bonus might require you to spend $300 within three months to qualify for rewards.
If the spending requirement is fairly low, as in the case above, it can be straightforward enough to spend enough based on the spending you already do each month. However, some cards have higher spending requirements to earn the bonus, such as $4,000 within three months. If you don't spend that much on a credit card in a given period, this bonus card may not be your best choice unless you're planning a large purchase soon.
On the other end of the spectrum, some credit cards offer bonuses simply for signing up, with no minimum spend requirement. For these cards, you may receive your bonus in the form of a store code, gift card or a coupon code directly after approval.
How to Earn a Welcome Bonus
Here's how to earn a welcome bonus on a credit card:
- Qualify for a card that offers a welcome bonus. Research which welcome bonus credit cards you're most likely to qualify for and compare their benefits. Note that the most lucrative rewards cards typically require you to have good to excellent credit to qualify.
- Use the credit card for purchases. Shifting some of your usual spending onto your new card helps you meet the spending requirements without spending irresponsibly. Consider using your credit card for all your purchases, including essentials like bills and groceries, if you're able. Avoid making unnecessary purchases just to meet the spending requirement.
- Time your application with a large purchase. If you're springing for a planned, large purchase in the near future, such as an engagement ring or a vacation, consider coordinating your spending plans with a new welcome bonus credit card to make earning the bonus attainable.
- Pay off your balance. Be sure to pay off your balance in full each grace period—doing otherwise can cause interest charges to cancel out the benefits of any bonus you earn.
How to Get the Most Out of Your Credit Card Bonus
Welcome bonuses help you get more out of credit cards—and you can earn rewards without taking on interest. Be sure you make these moves to ensure your welcome bonus is actually benefiting you:
- Compare the intro bonus to the annual fee. Be sure the monetary value of the welcome bonus is large enough to make the card a prudent move even when considering the card's annual fee. For example, if the annual fee for a given card is $95 and the introductory bonus is $350, then you can be confident that the card's fee won't offset the value of the bonus. It may be even better, however, to look for a credit card with no annual fee and the same introductory bonus.
- Avoid interest. Going into credit card debt and getting hit with monthly interest charges is bad for your bottom line. Avoid interest entirely by paying off your balance before the end of the grace period. Create a budget and use it alongside your credit card to ensure you are only making purchases you can afford to repay.
- Know your best redemption options. Learn about the various possibilities for redeeming your credit card rewards within your credit card's online portal or mobile app. If a credit card allows you to redeem your points for either airline ticket purchases or retail, for example, check which has a better redemption value. Credit cards typically offer multiple ways to redeem, but there are usually only one or two options that give you the best bang for your buck.
The Bottom Line
Consider using the credit card matchmaking tool Experian CreditMatch™ to find the right introductory bonus card for you and earn a welcome bonus worth writing home about. As is the case for all credit card rewards, the best way to set yourself up to earn credit rewards is to take a look at your score now.
Sign up for free credit monitoring through Experian to receive regular updates on your credit score. You'll see how your credit moves are helping or hurting your score, and you can work toward raising your score by keeping balances low and making on-time payments.