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Aug. 2, 2022, 3:47 p.m. EDT

1 in 3 people say they overspent on travel to earn a credit cards sign-up bonus

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By Weston Blasi

How rewarding are those credit card sign-up bonuses, really? A new survey suggests that some people trying to save money with travel rewards cards end up overspending so that they can collect the bonus offer.

About one in three (32%) people who opened a credit card in 2022 with a sign-up bonus say they “spent more than they could afford” in order to satisfy the credit card offer’s spending requirement, according to a new survey from ValuePenguin , a LendingTree /zigman2/quotes/204207971/composite TREE -2.59% subsidiary providing financial tools and resources.

See also: Tiger Woods turned down over $700 million to join Saudi-backed LIV Golf, says Greg Norman

Millions of Americans are still traveling this summer despite the costs of plane tickets, gasoline, rental cars and lodging all going up in 2022,  according to NerdWallet . And some travel price increases are even outpacing record inflation, which has reached its highest levels in 41-years.

So one way that many Americans are trying to cut the cost of their summer vacation plans is by opening up a new credit card and using the sign-up bonuses. But this survey suggests some cardholders may have overextended themselves to collect the rewards.

The ValuePenguin poll commissioned by Qualtrics was conducted online in June 2022, surveying 1,008 American consumers. It found almost half (49%) of Americans are thinking about applying for a travel credit card in the next six months. And among those who have already been approved for a new travel rewards card, more than 4 in 10 (45%) opened their card specifically for the sign-up bonus. A sign-up bonus typically refers to a set of points, travel miles or other rewards that a person can get by meeting spending thresholds on a new credit card.

See also: ‘Nobody wants to work anymore’ has been said for 100 years. It wasn’t true then, and it isn’t true now.

“Sign-up bonuses are always primary motivators when it comes to consumers choosing and signing up for a new rewards card, which is why so many credit card issuers employ high bonuses to attract new business,” Sophia Mendel, ValuePenguin’s credit cards and travel rewards analyst, wrote in the survey.

But it’s worth repeating that these bonuses are not mandates, and a customer can simply not spend that amount, without any penalty. “No bonus is worth going into debt over,” Mendel said.

Related: 5 ways your credit cards can help you fight the pain of inflation

Related: Nearly 25% of first-time homebuyers open a new credit card when they close on a home. Why that could be a really bad idea.

Any scenario where people are spending more than they can afford is not a sustainable idea, so it’s best to spend within your means. Consult MarketWatch’s personal finance section if you are looking for additional tips on spending responsibly and making your credit cards work for you.

Check out the pros and cons of using buy now, pay later for travel expenses. And here are some steps to take to pay down your credit card debt before higher rates show up on your bills.

See also: Nancy Pelosi’s husband buys millions of dollars’ worth of Nvidia stock ahead of vote on chip-manufacturing bill

Another avenue where Americans can go on vacation but still save money this summer could be a “ staycation .” Taking a short trip where you leave your normal day-to-day routine and stay somewhere new, even just for a few nights to break up your schedule, can be a great option for your financial and mental health.

See also: Why is crypto crashing? Mark Cuban says ‘crypto is going through the lull that the internet went through’

And learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab /zigman2/quotes/201281754/composite SCHW 0.00% Foundation. 

/zigman2/quotes/204207971/composite
US : U.S.: Nasdaq
$ 25.24
-0.67 -2.59%
Volume: 316,089
Sept. 26, 2022 4:00p
P/E Ratio
14.61
Dividend Yield
N/A
Market Cap
$331.29 million
Rev. per Employee
$772,517
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/zigman2/quotes/201281754/composite
US : U.S.: NYSE
$ 70.89
0.00 0.00%
Volume: 10.47M
Sept. 26, 2022 4:00p
P/E Ratio
23.29
Dividend Yield
1.24%
Market Cap
$134.48 billion
Rev. per Employee
$586,707
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