A sign-on bonus is a surprisingly common thing to experience when you start looking at new credit cards. It’s one of the ways that companies convince new users to sign up for a new credit card – by offering a bonus when new users sign up. However, you also need to check and make sure that sign-on bonus is truly worth it. Here are the four things you need to consider before you sign up.

1. The Requirements for the Bonus

The requirement for a new credit card sign-on bonus is going to be a key factor in determining whether you should sign up for that card. For example, depending on the Southwest credit card bonus you want to go for, you may need to spend between $2,000 and $5,000 within the first three months of having your card. A family with a lower monthly budget may want to choose something lower, while a family with a higher monthly budget may be comfortable with a higher requirement.

2. The Actual Value of the Bonus

Oftentimes, especially if you’re getting a travel credit card, your reward may not be in dollars; instead, you might get a reward that’s in travel points. These points may be worth a variety of different dollar amounts, which means that it’s important to do a bit of research and see how much that sign-on bonus is actually worth. That way, you can more fully understand whether it’s a good choice.

3. The Annual Fee to Reward Ratio

Annual fees are not necessarily bad; many travel credit cards have annual fees that hover somewhere around $100 per year, which is less than $10 per month and could be a great choice for your family. However, you might want to look at how far your reward will get you when it comes to your annual fee. A card with an annual fee of $100 and a sign-on bonus worth $500 is essentially free for the first five years if you meet the requirements.

4. General Rewards and Benefits

There are also all sorts of general rewards and benefits attached to many different types of credit cards. If you’re hoping to sign up for a new credit card, you don’t want to just look at the card’s sign-on bonus, because that’s just a front-loaded benefit. Instead, you want to look at all the different ways that you might be able to get ongoing benefits.

Conclusion

A sign-on bonus can be exciting, and it’s an enticing reason to sign up for a brand-new credit card. However, you shouldn’t let that sign-on bonus distract you from making an informed decision about signing up for a new credit card. Before you sign up because of a credit card’s sign-on bonus, you need to make sure you’re looking at these important things. That way, you’ll only sign up for credit cards that you can actually benefit from on a long-term basis.