Be careful when targeting credit card signup bonuses in 2023. Here’s why.

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It’s a really bad time to be in debt.

It is common for credit card companies to offer sign-up bonuses to attract consumers. And some of those bonuses can be very attractive.

For example, you might come across an offer to get $300 in cash back if you spend $2,500 within three months of opening a new credit card. That’s a nice pile of cash.

But while it’s easy to see why you might be tempted to chase credit card signup bonuses, 2023 may not be the best year to do so. Here’s why:

I don’t want to have a lot of debt

One option is to spend enough on your credit card to get a sign-up bonus, pay off your balance quickly, and avoid accruing interest on your fees. But many consumers end up not doing that. Rather, it increases the balance that must be carried forward. And that’s where you might run into problems in the coming weeks and months.

Currently, borrowing rates are rising across the board following rate hikes implemented by the Federal Reserve. But the Fed hasn’t finished raising rates either. And in 2023, borrowing costs are likely to rise further, not just for credit cards, but for other products such as auto loans and personal loans.

So now is a bad time to get into credit card debt. Credit cards are notorious for charging large amounts of interest.But these days, you tend to pay evenly more Because of the aforementioned interest rate hike.

This does not mean that you will necessarily go into debt if you decide to pursue a signup bonus. But many consumers find themselves in this situation even when they think otherwise. And that’s a source of expense and stress you don’t really need.

Watch out for inflation

Inflation remains high these days, and that’s all the reason the Fed is going ahead with rate hikes. However, it also means that the cost of goods is still higher than usual.

If your money is tight due to inflation, you probably don’t need the pressure to spend extra money on a new credit card to get a signup bonus. You may find it more difficult than usual to pay your newly earned balance.

All in all, there is nothing wrong with pursuing a signup bonus if you are confident that you can meet the spending requirements without being too financially thin. If you need to spend $2,500 within the next few days and routinely spend $850 each month on essentials, you won’t be in debt or struggling a bit.

But be careful if you’re having trouble paying $2,500 in three months. A good payday from your credit card company is not worth the mountain of debt and the load of financial stress.