5 Things to Beware with Any Credit Card Sign-Up Bonus

credit card sign-up bonus

You’ve read the headlines — “How I Went to Europe for Free!” or “How to Travel the World for Next to Nothing.” Inside these articles, you can dive into the world of travel hacking.

Travel hacking is a way to use a credit card sign-up bonus to fund your travels abroad. Typically, you apply for a rewards credit card, spend a certain amount of money in the specified timeframe, and accrue enough miles to go abroad for next to nothing.

I’ll admit, I’ve done it and have scored some cheap flights (like less-than-$100-to-Europe cheap). But even with all the hype, I know that travel hacking isn’t for everyone. After all, you’re playing a game with credit cards, and by nature, credit cards can lead you down a slippery slope.

If you are interested in travel hacking, here are five things to watch out for with credit card bonuses.

1. Understand minimum spending requirements

In order to “hack the system” and enjoy a hefty credit card sign-up bonus, there are typically minimum spending requirements you must meet. These often range from $1,000 to $4,000.

In some cases, it might be easy to hit the spending requirement. But if you’re not a big spender or don’t use your credit card that much, it doesn’t make sense to get a rewards credit card that will encourage you to spend more just to get rewards.

I’ve skipped over a rewards credit card because of the hefty $4,000 spending minimum. Given the timeframe, it just didn’t align with my budget.

If you’re going to opt for a rewards credit card, make sure you know exactly what the spending requirements are. If you don’t meet them, you will not get the coveted credit card sign-up bonus.

Michelle Jackson, founder of personal finance blog The Shop My Closet Project, experienced this firsthand.

“I failed because I lost an opportunity to earn thousands of points because I didn’t hit the spending threshold to earn the points,” she says. Not only that, but while she was traveling she missed notifications about her due date and ended up missing a payment.

This travel hacking error hurt her credit score. In the end, Jackson missed out on the credit card sign-up bonus because she didn’t meet the spending minimum and ended up missing a payment, resulting in damaged credit.

Though she is working hard now to rebuild her credit, Jackson says, “Needless to say, I don’t plan on travel hacking anytime soon.”

2. What is the timeframe for the credit card sign-up bonus?

Let’s say you can easily meet the spending requirement. There’s just one thing — you need to spend that money in a certain timeframe to actually receive credit card bonuses.

Many travel rewards credit cards require you to meet the spending requirements within three months of approval in order to obtain the credit card sign-up bonus. That’s where things can get tricky.

Make sure you can comfortably meet the minimum requirements within the actual timeframe. If it doesn’t align with your budget or you’ll go into debt trying to get the bonus, signing up for a rewards card is absolutely not worth it.

3. What is the bonus actually good for?

When looking at rewards credit cards, all the credit card bonuses can seem enticing. It seems like you’re getting a ton of miles and points!

But it’s really important to understand what the bonus is actually good for. Do your research on what the value of the bonus is and how far it can get you. Before opting for a rewards credit card, check out what is required to get to your ideal destination — you want to find a credit card that can actually get you there.

For example, you may think that all credit card bonuses can get you to Europe. But all rewards cards are not created equal. Check out the award redemption charts to ensure that the miles or points you would receive can get you where you need to go.

Additionally, it’s important to be mindful of taxes when budgeting for the cost of your trip. In some cases, taxes and fees can tack on several hundred dollars to your plane ticket. While that’s less expensive than paying for a flight outright, it can be an unexpected expense if you think you’ll really be traveling for “free.”

4. How can you redeem credit card bonuses?

The point of travel hacking isn’t just to accrue miles and points — it’s to go on your dream adventure, right? Because of that, it’s important to know how to actually redeem the credit card sign-up bonus.

It’s likely you will redeem your points through a specific airline carrier or through your credit card portal, but you want to be clear on how it’s done. When it’s time to book your travel, you’ll be ready to go!

5. What are the restrictions and fees?

Every sign-up bonus credit card is different. Before opting for a rewards credit card, understand the restrictions.

  • Are there blackout dates?
  • Do your points expire?
  • Do you have to fly on a certain airline, or can you fly within a certain network?
  • Is there an annual fee?
  • What are the interest rates?

Be aware of all of these things so you’re not unpleasantly surprised if the restrictions interfere with your travel plans.

Final word

While travel hacking and opting for a credit card sign-up bonus can be a great way to travel on the cheap, it’s not for everyone. If you’re currently battling credit card debt, it’s probably best to avoid the lure of rewards credit cards.

But if you make your payments on time and can avoid overspending, travel hacking might be right for you. Research the best signup bonus credit cards and be clear on what you want to use them for.

If you’re aware of these key things to watch out for, you can the play the game correctly — instead of getting played by the game.

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Check out the testimonials and our in-depth reviews!
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Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.