2. Sign-up bonuses

Banks often partner with airlines and hotels to offer huge bonuses in points/miles when you sign up for their credit card and spend a certain amount of money on that card in a given (usually 3 to 6 month) time frame. This sounds ridiculously unprofitable, right? Well, it is actually great business for the banks and airlines because:

  • The banks earn a small percentage of money on of each one of your transactions,
  • The banks might earn big money if you don’t pay your bills in time and accrue a lot of interest,
  • Most people don’t know where to look for the most lucrative bonuses,
  • Most people don’t use their hard-earned points/miles for optimal value, and many people let their miles expire because they simply don’t know how to use them.

Next page: Controlling your credit score

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