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Forget credit card sign-up bonuses. Here’s a less risky way to score $300

Forget credit card sign-up bonuses. Here’s a less risky way to score 0

Recently, I opened my email and found an offer for a new credit card for my business. The sign-up bonus was tempting. All I had to do was spend $3,000 within three months of opening my account and I would get $300 for free.

You’ve probably come across similar offers yourself. They may not all come with a $300 bonus. But in short, it’s common for credit card companies to try to lure customers with welcome offers that put extra money in their pockets.

The problem with credit card sign-up bonuses, however, is that they can encourage overspending. This can make them dangerous, so if you’re desperate to earn a few hundred dollars in cash, there’s a much safer way to do it.

Don’t chase the sign-up bonus

In some cases may It can make sense to take advantage of a credit card’s sign-up bonus. Let’s say you want to book a big vacation that will cost you $3,000 for flights, accommodations, and meals. It might be worth opening a new card, spending the $3,000 you’ve already saved for your trip, and then getting a free $300 or whatever the welcome offer is.

The danger of chasing sign-up bonuses lies in offers that you jump at without careful consideration. And it is not your fault! These offers are So tempting.

But here’s what might happen next. You get a credit card that pays you $300 if you spend $3,000 in three months. But your normal credit card spending might only be $2,400 in three months. So if you then intentionally spend an extra $600 to get your sign-up bonus, you’re not doing your finances any favors. Only if you get a planned issue that it makes sense to aim for one of these bonuses.

A better way to get free money

Generally, the only way to get a sign-up bonus on a credit card is to spend some of your money, but opening a CD allows you to earn interest just by leaving your money in the bank. You don’t have to spend a dime.

With CD interest rates currently on the rise, it’s not that hard to find a 12-month term with a 5.00% APY. And if you have $6,000 to spare, that could earn you $300 over the course of a year.

Of course, you may not have $6,000 available to you, but even putting a smaller amount into a CD can earn you a nice sum of money back in the form of interest.

A 12-month $3,000 CD with a 5.00% APY will earn you $150 after one year. That’s comparable to some of the sign-up bonus offers you’ll see.

Credit card companies are very successful at getting their customers to spend money, but if you’d rather have free cash without having to do so, open a CD while interest rates are still high – rather than chasing the next credit card offer that comes your way.

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