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The ins and outs of credit card welcome bonuses—from an expert who made $2,000 per year

CNBC Select speaks to a certified financial planner about how she uses credit card welcome offers to her advantage and her advice on managing credit with your spouse.

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Photo courtesy of Danielle Harrison
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More than 189 million Americans have credit cards, according to statistics from Debt.org. How each individual uses their credit card varies from one to the next. Some carry one card and use it sparingly while others have up to 35 credit cards and optimize every reward to earn things like cash back and free flights.

It doesn't really matter which bucket you fall into, as long as you aren't charging more than you can pay off and you make your credit card payments on time.

To find out how one expert used credit cards, CNBC Select spoke to Danielle Harrison, a certified financial planner in Columbia, Missouri, who brought in $2,000 a year from credit card welcome bonuses.

Below, Harrison shares how her and her husband capitalized on their credit cards' introductory offers and her advice for other couples. But first, we dive into a brief overview of welcome bonuses.

What is a credit card welcome bonus?

Many of the best credit cards advertise a welcome bonus if you open an account and spend a certain amount on your card within the first few months. These sign-up offers are an easy way to earn extra rewards, whether its cash back, points or miles for flights. 

For example, the TD Cash Credit Card offers new cardholders $150 cash back when they spend $500 within the first 90 days. The Chase Sapphire Reserve®, a luxury travel card, offers 60,000 bonus points after you spend $4,000 on purchases in the first three months (which can be worth up to $900 toward travel when you redeem through Chase Ultimate Rewards®).

While there are a few credit cards that don't have spending thresholds, most require that you charge $500 to $5,000 on your new card within the first three months in order to earn the bonus. It may seem like a lot of money to spend, especially in a short amount of time, but it can come in handy when you are expecting to make a large purchase. Below, Harrison tells us how.

How Harrison and her husband used their welcome bonuses

The best welcome bonus for you is the one that aligns most with your spending habits.

For Harrison and her husband, that meant targeting credit cards that offered at least $500 in introductory rewards and that either did not have an annual fee or had one that was waived for the first year. 

"In order to get the introductory reward, we would have to spend anywhere from $1,000 to $5,000 in the first several months of opening the card," Harrison says. "Although this sounds like a large amount to hit in just a few short months, it was actually fairly easy, as we had several periods in our life with large expenses."

Two of the first occasions that helped Harrison and her husband meet their minimum spend were when they bought their wedding rings in 2014 and paid for their small wedding the following year. With the cash back they earned, they were able to nearly offset the cost of their honeymoon with welcome bonuses.

When traveling, Harrison and her husband have also used the points they received from a welcome bonus for upgrading to first class on an airline and redeeming other card perks, such as free baggage.

When Harrison and her husband had their first child, they charged daycare onto a credit card from 2017 to 2018. "With the cost of childcare, hitting several thousand dollars in a short period of time, it was an easy task," she says.

Many businesses and vendors charge processing fees when you pay by credit card, so it's important to note how quickly these extra fees can add up before routinely using your credit card as a payment method for things, such as on college tuition or rent.

Harrison estimates that for about four years, she and her husband were able to pull in approximately $2,000 per year in points, miles and cash back  — all of which were excluded from taxable income since credit card rewards are seen as rebates and are not required to be reported to the IRS. 

Today's economic climate makes it harder to capitalize on new credit card sign-up offers as issuers tighten their approval requirements for even those with good credit, and some issuers have rules on how many cards you can open. For example, Chase's 5/24 rule prevents you from being approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.

Why Harrison and her husband don't jump at incentive offers as much now

Although the spending requirements for welcome bonuses were easy to hit (and the rewards helped Harrison and her husband offset other large costs), the couple doesn't use these incentives as much as they used to.

"We dabbled in it in the surrounding years, but we weren't all in like the other years," Harrison says.

The main reason is that Harrison and her husband no longer have large expenses to help them meet the minimum threshold, and they want to streamline their finances.

"Our child no longer attends a daycare that allows for the bill to be paid by credit card, so the hassle of making sure we hit the minimum spend isn't worth the majority of the current reward offerings we are seeing," Harrison says.

For simplicity sake, they now just have one joint credit card, the Amazon Prime Rewards Visa Signature Card (for which her husband is an authorized user), that they charge all their joint expenses on, along with their own personal credit cards.

Harrison's advice for other couples

If you are looking to open a new credit card because of an attractive welcome offer, Harrison suggests keeping in mind that you have to pay off your credit card on a monthly basis and not keep a balance in order to really benefit. Otherwise, any rewards you receive will quickly be eaten up by high interest charges on unpaid balances.

For couples, she says to take advantage of authorized users on credit cards. "If one partner has a strong credit history and score, the other partner can be added as an authorized user on the card and 'piggyback' off of their strong history," Harrison says. 

Just be aware that an authorized user's credit score will be affected by the primary cardholder's payment history on that card, whether it's good or bad. The primary cardholder is also liable for anything that the authorized user does. "This strategy should only be used if there is high certainty that both partners will use the credit cards appropriately," Harrison says.

Information about the TD Cash 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.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.