Should I Still Apply for a Card If I Can’t Earn the Welcome Bonus?

Mar 26, 2019

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“Reader Questions” are answered twice a week by TPG Senior Points & Miles Contributor Ethan Steinberg.

For most people, stepping into the world of travel rewards means learning a new skill or two, such as understanding the mechanics of opening and paying off a credit card or learning how to budget your spending to earn a valuable welcome offer. TPG reader Nick wants to know if he should still apply for the Chase Sapphire Preferred Card even if he can’t meet the minimum spending requirement for the sign-up bonus…

Is it still worth applying for the Chase Sapphire Preferred if I know I’m not going to be able to spend the $4,000 in 3 months to earn the bonus? I’m 25 and don’t make nearly enough to be spending that much money in a three-month period.

TPG READER NICK

Assuming you’re not locked out by Chase’s 5/24 rule, the Sapphire Preferred is one of the all-around best starter cards and a great choice for many travelers. However, much of that recommendation comes from the card’s newly-enhanced sign-up bonus, which TPG values at $1,200.

Nick should know that there are plenty of ways for him to charge $4,000 to his new credit card without blowing up his monthly budget. The most important rule of travel rewards is to always pay your balance in full, and you should never spend money you don’t have chasing rewards. TPG‘s Katie Genter compiled a great list of tips to help you hit minimum spending requirements without going beyond your means, including paying your rent or mortgage on a credit card, prepaying your insurance or utility bills, or putting the dinner check or bar tab on your credit card and having your friends pay you back. If you stack a few of these strategies together and focus on putting every possible expense on your new credit card, $4,000 in three months doesn’t sound so daunting.

Still, it’s entirely possible that Nick won’t be able to get to the $4,000 mark, and so the question remains: Should he apply for the Chase Sapphire Preferred? If Nick is spending so little that he can’t earn the sign-up bonus on the Sapphire, he’ll have a hard time ever racking up enough points to redeem for a trip. While starting with Chase cards (to avoid the issuer’s 5/24 rule) is one of the first lessons most people learn in their introduction to travel rewards, in Nick’s case it might be better to instead target cards with a lower minimum spending requirement. Maybe he could start with the Barclaycard AAdvantage Aviator Red World Elite Mastercard, which offers 60,000 AAdvantage miles after making your first purchase and paying the annual fee of $95. Those miles are enough for a round-trip saver economy award to Europe and a great way to jumpstart Nick’s points earning.

There’s another angle to this as well: annual fees. If you’re going to have a hard time spending a few thousand dollars in the first three months (a common timeframe for earning a sign-up bonus), it’s highly doubtful that you’re spending enough to justify an annual fee. As a result, you can apply the same logic above to other mid-tier cards with decent sign-up bonuses that require a fair amount of spending. You’re not just missing out on a welcome bonus due to your limited spending; you’re also paying an annual fee for premium earning rates or benefits that you’d likely not be able to maximize.

If that’s the case, Nick may be better off with a no annual fee card instead.

Bottom Line

Limited spending on the Sapphire Preferred means no sign-up bonus and minimal earning potential during the year, though there are ways to reach minimum spending requirements without carrying a balance.

Just because a credit card requires you to spend a certain amount to earn a welcome bonus doesn’t mean that money has to come out of your pocket. By funneling all your existing expenses onto your new card and looking for new avenues to create spending (starting a business, paying bills for your friends and family and having them pay you back, etc.) it becomes much easier for people with low expenses to still earn valuable sign-up bonuses. At the end of the day, these new-card welcome offers are the best way to earn a critical mass of points, and I would not recommend applying for a credit card, especially a valuable one like the Chase Sapphire Preferred, if you don’t think you can hit the minimum spending requirement.

Thanks for the question, Nick, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

Featured photo by golubovy via Getty Images.

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