All about sign up bonuses

Summary

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Sign-Up Bonuses: Your Shortcut to Free Travel

Sign-up bonuses are the golden ticket for anyone serious about earning travel points. These bonuses, offered by credit card companies to entice new cardholders, can cover an entire trip or even upgrade you to business class. Some credit cards offer up to $750 in travel just by signing up. To make the most of sign-up bonuses, align them with planned expenses. Got a big purchase coming up? Use it to hit your card's minimum spend and rack up points. The key is treating your card like cash—only spend what you can pay off to avoid debt while scoring those travel rewards.

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Why Credit Card Companies Offer Them

Ever wondered why card companies seem so generous? It’s because they’re making money behind the scenes. Every time a cardholder swipes, the card company charges the merchant a fee, typically between 1.5% and 3.5%. Spend $10,000 on your card, and the issuer pockets $150-$350 in fees. Zoom out to the average American's yearly spending of around $67,000, and those fees skyrocket to over $2,300 – enough to fund several flights. Banks also bank on the idea that you’ll use their card consistently, ideally keeping it at the top of your wallet for every purchase. That loyalty is what fuels their profits, making it worth their while to offer impressive sign-up bonuses that benefit both parties.

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The Bottom Line

Sign-up bonuses are a game-changer for those just diving into the world of points and miles. Start with one card, meet the spend, and watch those points pile up. Once the strategy clicks, it’s easy to build on it with more cards and more rewards. For now, stick to the basics: sign up, spend smart, earn big, and soon, that next trip could be booked entirely on points.