What a credit card sign-up bonus is and how you can benefit from one

Charging hundreds or thousands of dollars onto your credit card within a short period of time seems like an expensive way to earn rewards, but if you have a large purchase to make or an upcoming vacation to plan, a welcome bonus can actually come in handy.

For instance, one financial expert we spoke to met the minimum spend on her new credit cards by charging her and her husband’s wedding rings and the cost of a small wedding. The couple then used the cash back she earned from welcome bonuses to help offset the cost of their honeymoon. Of course, you should take processing fees into consideration (some businesses charge 2% to 4% for credit card transactions), but if there are no extra fees this method can be quite helpful when financing large purchases like trips.

And once you do use your credit card to earn a welcome bonus, it’s essential that you pay off any large balances quickly so you don’t accrue interest that offsets the value.

Here’s some math to show how quickly interest adds up:

If you were to meet the minimum spending requirement of $4,000 within the first three months on the Chase Sapphire Reserve®, you can earn 50,000 welcome bonus points. This equates to $750 towards travel when redeemed through the Chase Ultimate Rewards® portal. However, this value is almost negated entirely if you let that $4,000 balance sit unpaid for a year. The regular variable APR on this card ranges from 16.99% to 23.99%, and even with an interest rate on the lowest end at 16.99%, you would accrue $679.60 alone in interest on a $4,000 balance over 12 months. Because of the high interest credit cards charge, make sure you can pay off whatever you spend to earn the bonus.

Here are some of the top cards of CNBC Select’s round-up of the best credit card welcome bonuses.

• Winner: TD Cash Credit Card
• Best for travel: Chase Sapphire Reserve®
• Best for cash back: Capital One® SavorOne® Cash Rewards Credit Card
• Best for no annual fee: Capital One® Quicksilver® Cash Rewards Credit Card
• Best for no spending required: Amazon Prime Rewards Visa Signature Card

If you’re interested in earning more rewards with a new credit card, consider one of the above that can help you make some extra cash when you spend.

Information about the TD Cash Credit Card, Capital One® SavorOne® Cash Rewards Credit Card, Capital One® Quicksilver® Cash Rewards Credit Card, and Amazon Prime Rewards Visa Signature Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.