Double Your Rewards on Big Purchases With This Trick

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You can already earn some great rewards on large purchases with the right card. But this low-effort trick can easily double your return. 

Credit cards are already one of the most popular ways to pay for everyday purchases. But when it comes to the big buys, there’s even more reasons to pull out your trusty plastic payment card.

In particular, rewards credit cards can easily turn a big purchase into big rewards. And this is especially true when you pair a major purchase with a new card — and its sign-up bonus.

Sign-up bonus basics

Many credit cards offer sign-up bonuses as a way to draw in new customers. Basically, new cardholders can earn a lump-sum bonus of extra cash back, points, or miles, by meeting the sign-up bonus criteria.

In most cases, you’ll need to meet a certain spending requirement within a few months of opening your account to earn the bonus. For example, a cash back card may offer a $200 sign-up bonus if you spend $2,000 in the first 90 days.

While these bonuses can be quite valuable for cash back cards, it’s arguably travel rewards cards that pack the most profit potential. Picking the right card, and redeeming your points at the right time, could mean earning thousands of dollars worth of free travel.

Unfortunately, the cards with the best bonuses also tend to have the highest spending requirements. Some of the top travel rewards cards have bonuses with spending requirements upwards of $5,000, and some requirements can even reach into the five figures.

That’s why the very best time to get a new card — and new sign-up bonus — is when you already have a large purchase on the horizon. Maybe you need new furniture, are picking up a used car, or even just paying your quarterly taxes. Whatever the case, if you have a big bill coming up, it can be well worth the effort to make sure you have a fresh sign-up bonus to earn, too.

Double the cards, double the bonuses

Depending on the size of your purchase — and the size of your spending requirement — you may have the option to double your rewards. How? By getting two new credit cards and splitting your purchase.

Consider this: You’re about to move. This means a few grand in moving costs, as well as another few thousands dollars spent on furniture. Let’s say you’re looking at $7,000, all told.

If you can find two travel rewards cards that each have a spending requirement in the $3,000 to $4,000 range, you could easily split your purchases to earn not one, but two bonuses without much extra effort. Then, once you’re settled into your new location, you can take a free vacation to de-stress!

Watch out for issuer restrictions

As with anything, there are a few caveats to this trick. For one thing, opening new credit cards will impact your credit score. Specifically, your credit score will likely dip a bit from multiple hard credit pulls, and your average account age will also take a dip (especially if you don’t have many credit accounts).

On the plus side, paying your cards on time and keeping your balances low can help your credit score, and having more accounts in good standing can also boost your score. So this should balance out after a short while. However, if your big move also involves getting a mortgage loan, you’ll have to consider how opening two new credit cards will impact your approval (and vice versa).

Another — perhaps more important, especially if you’re not getting a loan for anything — thing to keep in mind is that many issuers have limitations about how often you can apply for new cards, as well as how often you can earn bonuses on those cards.

Chase’s 5/24 Rule, for instance, says you’ll be rejected for a new Chase card if you’ve opened five or more new credit accounts in the last 24 months. And most issuers won’t let you earn a sign-up bonus for a particular card family more than once every 24 to 48 months.

Although these downsides are worth consideration, they can be well worth it. And for people with robust credit histories — and no major loans in the near future — the two-bonus strategy can be an excellent way to boost the rewards earned on big purchases.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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