The Right Way to Unlock a Credit Card Sign-Up Bonus

Credit card sign-up bonuses are the flashing neon signs of the lending world: their purpose is to draw new cardholders in with the promise of big point payoffs and lucrative cash bonuses.

The catch? It’s rare to get a sign-up bonus just for signing up. New cardholders must typically fulfill offer eligibility criteria, like spending a minimum amount of money in a set amount of time, to earn the bonus.

Is the juice of the reward worth the squeeze of spending? It depends. Here’s how to unlock a sign-up bonus without overextending yourself.

The right way to unlock a credit card sign-up bonus

1. Know the offer’s eligibility criteria

Many credit card sign-up bonuses come with strings attached. To unlock the offer, you must perform card-related actions, like making a purchase with the card within a certain period of time, spending a certain amount or setting up automatic payments.

Carefully review any eligibility criteria as you assess a credit card’s sign-up bonus — especially if there’s a spending minimum.

“A welcome offer shouldn’t cause you to stretch your spending to meet the offer requirements,” Preet Banerjee, a financial consultant, author and podcast host, said in an email. “An offer that requires a blanket minimum spend within the first few months that exceeds your pre-planned expenses could tempt you to justify spending more money in order to qualify for the offer.”

2. Get strategic about everyday spending

Gratuitous spending might help you redeem a welcome offer — but it could also land you in debt. Instead, bring purpose and intention to your everyday spending habits by finding clever ways to put your new credit card to use.

One way to strategically spend? Using your new credit card to cover regular, ongoing expenses.

“Change your payment card for subscriptions, recurring expenses, and for mobile payments to ensure you are more likely to hit any spending requirements,” said Banerjee.

Swapping out your preferred payment method for your new credit card — if only temporarily — may help you redeem a sign-up bonus without putting yourself in the red.

3. Plan a big expense

If you’ve got a large expenditure on the horizon, consider when and how you’ll cover the cost. It may pay off to apply for a new credit card with an attractive sign-up bonus ahead of your big purchase, with the intention of hitting the spending threshold in one fell swoop. Sizable expenses that may help you unlock a credit card’s welcome offer include:

Home renovations.
Post-secondary tuition payments.
Travel expenses.
Vehicle maintenance and repairs.
Groceries.
Holiday shopping.
Auto or home insurance premiums.
Daycare services.

Think beyond the welcome offer

Your journey with a new credit card doesn’t end after the welcome offer is redeemed. When sizing up sign-up bonuses, think long-term. Choose a card that will be a practical fit for your spending habits now and in the future.

“Review what type of card is going to be important to you,” says Timothy MacEachern, founder of Halifax-based Worthy Financial. “For one person, it could be grocery rewards, and for another person, it could be access to airport lounges. It’s about finding the right match.”

Banerjee suggests selecting a credit card that will reward your day-to-day spending habits. But be wary of making purchases for the sole purpose of earning points.

“Remember, rewards programs reward spending,” Banerjee said. “If you’re carrying high-interest debt, getting those balances down to zero is the best reward option out there.”

Is a credit card welcome offer worth it?

A sign-up bonus that offers thousands of rewards points might sound good on paper. But the points may not be worth what you spend to acquire them.

Let’s say you want to unlock the intro offer for an Aeroplan credit card. The offer is for 70,000 Aeroplan points, but you need to spend $12,500 within your first year of card membership to earn them.

Based on NerdWallet analysis, the average value of 1 Aeroplan point is 2.23 cents. Using this valuation, the welcome offer of 70,000 Aeroplan points would be worth about $1,561.

Is it worth spending $12,500 to earn $1,561 worth of Aeroplan points? That depends. The offer may be worth the expense if you already planned to spend money — say on a home renovation or a trip.

You’d also earn additional Aeroplan points for each eligible dollar spent at the base rates attached to the card, so that’s worth considering as well. Even so, you may need to spend far more than you earn to unlock a credit card’s welcome offer.

Another factor to consider? Interest charges. If you carry a credit card balance beyond the card’s grace period, you’ll be charged interest. This will increase what you owe and erode the value of the card’s intro offer.

“Once someone’s carrying a balance on their card,” says MacEachern, “the benefit of having the welcome offer has pretty much gone out the window.”

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