IN CHARGE

The best ways to get a fat credit card bonus without going into debt

Saving up for a vacation used to mean sacrificing smaller splurges like dinners out, new clothes, daily lattes, and cupping therapy (just me?)

But thanks to new high-end credit cards, consumers now spend furiously to get their dream vacation. That’s because a centerpiece of credit card companies’ pitch to consumers is a sign-up bonus: heaps of rewards points that add up to a free airline ticket or a stay in a fancy hotel. To receive such bonuses—Chase Sapphire Reserve and Chase Sapphire Preferred, for example, offer at least $625 toward travel costs—consumers often have to spend $4,000 in the first three months after opening the account.

There are smart ways to do this—and dumb ways. Credit-card bonuses are not free money, and getting one wrong could land you in a pile of debt (which will only grow with interest). Here are some tips for getting the rewards without risk:

Clear your wallet

Forget about the other credit cards in your wallet and commit to just one, at least for the necessary few months. Use this card to make all of the purchases that you have cash to pay off quickly.

Timing is everything

If $4,000 is more than your average spending over three months, apply for the card when you know you’re about to buy something expensive. Airfare or lodging for your summer vacation, or any already-budgeted-for purchase like holiday gifts or a new clothing staple, should do the trick. Another good option: any business expense for which you will be reimbursed quickly.

A little help from your (reliable) friends

It’s okay to pick up the tab at the bar or restaurant if your friends can pay you back instantly through Venmo, PayPal, or Chase QuickPay. Just don’t start calling for the eighth ladies’ night of the week with a bunch of high school friends you had nothing in common with anyway.

Be boring

It may not be the most exciting option, but think of things that you can pay for in advance that you will absolutely use later on, like car insurance, utilities, or your cell phone. Online payment services like Plastiq or RentShare allow you to pay your rent in advance (though these carry a fee of around 3%). Other options include paying upfront for a year’s gym membership, enrolling in an academic or vocational training course, or making donations to charity (that one comes with a bonus bonus: tax deductions and good karma).

Pay. Off. Your. Balance.

Rewards cards offer plenty of perks, including annual travel credits, waived international transaction fees, and airport lounge access (mmm cashews and hot towels). But don’t be seduced if your spending habits or plans don’t allow you to pay off your spend from this bonus. The dark side of these perks is that cards often come with an annual fee—as high as $550, if you have the new American Express Platinum card—and interest rates that can top 20%.

“Pay off your balance. Every. Freakin’. Month,” says Liz Weston, a financial planner and columnist at personal finance website NerdWallet. “Do not adjust your spending. If you are not spending $3,000 over three months, or don’t have the money to cover those expenses, think about another card.”

Correction: A previous version of this post said landlords have to sign up for Plastiq.


Read this next: The best rewards credit card isn’t a Chase Sapphire Reserve, after all

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