I earned my sign-up bonus: what now?

A credit card sign-up bonus is a one-time prize of a fixed amount of cash, points or miles that you earn from a rewards card. To get one, you charge a certain sum within a specific number of months from when you open an account. It can be a fantastic way to jumpstart your rewards to pay off a big trip or acquire a huge cash payout.

To make the most of the sign-up bonus, it’s wise to develop a post-game strategy. This way you can get just what you want out of it, and accumulate even more rewards down the line. Ready to make some money? Here you go!

How to use rewards

Your personal needs and desires should lead you to a decision about what to do with the rewards, says Zach Honig, editor-at-large at The Points Guy. If you’re looking for guidance from the credit card issuer about how to spend them, forget it. “They’ll tell you how many you have and what they’re worth, but you should have an objective already in mind,” says Honig.

Depending on the rewards card you have, the sign-up bonus may be in the form of cash, points or miles. 

You can use the sign-up bonus of cash either as a statement credit or ask for it to be sent as a check,” says Honig. There’s no reason to wait. If you have a $200 bonus ready to go, that money is available for you to use. If you don’t already know what you want to spend it on, make a list of what excites you. Maybe you want to spend $150 on clothes and the rest for something practical like a cell phone bill. Don’t fritter it away on something that’s not important to you. 

The sign-up bonus you’ll get from a point-based rewards card will be the most versatile since you can trade them in for a variety of things. According to Honig, points usually have the highest value when you trade them in for travel expenses. 

They could be worth less than one cent per point when you buy merchandise from the shopping portal, 1 cent for gift cards and cash and 1.5 cents for flights. However, if you’re not interested in taking a vacation, consider what you do want. Shopping from the portal can be fun, and gift cards are easy presents. 

And if the sign-up bonus is miles, they’re for travel expenses. A sign-up bonus equaling $500 or more can really get you places. If you don’t already have a trip in mind, start considering where you want to go. The best and easiest way to redeem the miles is to book your tickets via the issuer’s travel portal.

Spend well for more rewards

Once you use the sign-up bonus, you’re done with it, but you can keep the rewards flowing in by continuing to spend with the card. Here’s how to do it right: 

  • Decide in advance what you’ll put on the card. The more you charge, the more rewards you’ll rack up, but let your budget guide you. List all the expenses you have in a regular month that you can put on the credit card. If your groceries, utilities, gas, insurance and entertainment total $2,500 monthly and you can earn 2 times the points for each dollar, you’d rack up 5,000 points every 30 days. In a year it would be 60,000 — the equivalent of another sign-up bonus!

  • Charge and pay. Pay everything on your list with your rewards credit card, but turn around and delete the balance with the money in your checking account. This way you can be sure you won’t get into debt, and be overwhelmed with interest charges that will devalue your hard-earned rewards.

  • Mind tiered rewards and categories. Earning the most rewards isn’t always straightforward. The account’s program may be tiered, meaning the issuer increases and decreases the percentage as you reach certain charging levels. You might get: .25% for the first $1,000, 5% for the next $1,000, and 1% for anything over $2,000. Other rewards cards offer a higher percentage back in different quarters. For example, in one quarter you may earn 5% cash back when you use the card at big box stores, and everything else is calculated at 1%. By paying attention and charging mindfully you will maximize the rewards. For example, let’s say you did all of your holiday shopping at one of the big box stores when the card is offering 5% back. If you spent $3,000, your rebate would be $175.

Get another card that offers a sign-up bonus

Credit cards with sign-up bonuses are so attractive that you may want to open as many as possible. However, while you may be able to score more, you’ll probably have to pursue them from different credit card issuers. “There are restrictions for the number of cards with sign-up bonuses you can get per credit card issuer,” says Honig. “Usually it’s one for each company.” 

Thankfully many credit card issuers offer rewards cards with sign-up bonuses so you won’t be shut out for a while. As long as you treat the accounts responsibly, maintaining a high credit score, and have the means to pay your bills, you can safely add to your plastic portfolio.

Rebecca Lake

Personal finance writer and small business expert

Rebecca lives on the North Carolina coast with her two children an assorted collection of pets. In addition to freelance writing, she also authors a blog focused on making and saving money.