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Citi and AT&T have launched a new co-branded credit card that features a sign-on bonus you can use to cover the cost of your next smartphone.

Why should you care?

The smartphone offer is pretty good, at least as far as sign-on bonuses go. AT&T Access More cardholders are eligible for a statement credit that will cover up to $650 of the cost of a phone if they make $2,000 in purchases within the first three months of opening the account.

The rest of the story

Some caveats apply here: The $650 credit won’t cover the full cost of all smartphones. (AT&T’s 16 GB iPhone 6 Plus, for instance, is listed online for $749.99.) And you’ll need to activate and maintain service with AT&T for at least 15 days.

The credit can’t be applied to taxes, fees, shipping and the wireless service plan.

It also may take up to two billing cycles after you hit that $2,000 spending threshold to post, so you’ll need to be able to cover the cost of the smartphone, at least for a little while, if you choose to order it before that happens.

The flip side here is that if you do purchase the phone right away, the $650 cost will count toward your qualifying purchases.

Beyond the smartphone

Citi has been steadily beefing up its credit card offerings over the last 12 months, launching a new cash back card in August and two co-branded Expedia credit cards in September.

The new AT&T Access More touts a competitive rewards program. Cardholders earn:

  • three points per $1 on products and services purchased directly from AT&T.
  • three points per $1 on all purchases at online retail and travel sites.
  • one point per $1 on all other purchases.
  • 10,000 anniversary bonus points after $10,000 in annual spending.

But there are associated costs that prospective cardholders should consider. For starters, cardholders pay a $95 annual fee. And you’ll pay an annual percentage rate, or APR, of 14.99 percent, 16.99 percent, 18.99 percent, 20.99 percent, or 22.99 percent, depending on your creditworthiness.

Conduct a cost-benefit analysis to figure out if you’re benefiting from the card more than the issuer is.

Determining if a card is right for you

Keep in mind, you generally only want to opt for a rewards card if you don’t plan to carry a balance — points, miles or cash back will otherwise be rendered moot by interest. You also don’t want to take advantage of a sign-on bonus — even one that can fund your next smartphone purchase — if its spending threshold (in this case, $2,000 in three months) will break your budget.

If you tend to carry a balance, you’re better off opting for a low-interest credit card. Take this Bankrate quiz to determine what type of plastic is best for you!

Follow me on Twitter: @JeanineSko.