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Credit card sign-up bonuses can offer hundreds of dollars – and sometimes upwards of $1,000 – of value to new cardholders, typically after you meet a minimum spending requirement. But it’s not always easy to know whether a welcome bonus or limited-time sign-up offer is actually worth it.

If you’re thinking about applying for a credit card to take advantage of its sign-up bonus, here are some things to consider.

Different Ways to Earn Credit Card Sign-Up Bonuses

Start by understanding how credit card companies structure their sign-up bonus requirements.

There are generally four ways you can earn a credit card sign-up bonus:

  • Standard spending requirement: Typical credit card sign-up bonuses offer you a lump sum of cash, points or miles when you meet a minimum spending requirement, often within three months of your account opening.
  • One-time spending requirement: In some cases, a card may give you a bonus after you make your first purchase with it. One example of this rare option is the AAdvantage Aviator Red World Elite Mastercard, which offers 60,000 bonus miles when you make your first purchase and pay the card’s $99 annual fee within 90 days.
  • Tiered spending requirement: With this type of bonus, you may earn the bonus in increments based on your spending, instead of all at once. For example, the World of Hyatt Credit Card offers 30,000 bonus points when you spend $3,000 in the first three months. After that, you can bring in up to 30,000 more bonus points by earning two bonus points per dollar spent over the first six months. 
  • Account opening: Store credit cards in particular may give you a bonus when you open a new account.

With each of these earning structures, consider your spending habits. If you can meet a sign-up bonus requirement without changing your spending, the card could be a good fit, as long as the bonus itself is worth it for you.
“Consumers should make sure to take advantage of sign-up bonuses responsibly,” says Russell Nelson, manager of credit card products at Navy Federal Credit Union. “You shouldn’t continue swiping your card or charge more than you normally would just to earn the extra points and cash back.”

If you think you may need to spend more than you normally would to earn the bonus, consider a card with a lower spending requirement.

How to Compare Different Types of Credit Card Sign-Up Bonuses

Here’s a quick guide on how to evaluate the bonuses you come across.

Points and Miles

Cash back sign-up bonuses are easy to understand because they’re represented in dollar terms. But if you’re looking at a travel credit card that offers points or miles, it gets more complicated. Here are some things to consider:

  • Type of rewards program: General travel rewards programs typically offer flat values based on redemption type. For example, you may get 1 cent per point or mile if you redeem for travel or just 0.5 cents per point or mile for cash back redemptions. Depending on how you plan to use your points, those redemption rates can guide you. With hotel and airline programs, point and mile values are more dynamic, varying based on the travel dates, destination, cash price and other factors.
  • Partner options: Some rewards programs partner with multiple airline and hotel brands, which could potentially give you access to more valuable redemption options. If anything, they give you more flexibility. With that said, you’ll want to check the transfer ratios. Unless it’s a one-to-one ratio, it’s generally not worth it.
  • Average redemption values: With airline and hotel loyalty programs, your redemption rate will vary each time you use your points, but travel experts have used data to come up with average values based on typical redemptions. For example, World of Hyatt points are worth 2.1 cents apiece on average, according to U.S. News research. Compare that to 0.5 cents per point for the Hilton Honors program. So, if you’re offered 150,000 bonus points from Hilton, that’s about $750 in value. And if you’re getting an offer of 60,000 bonus points from Hyatt, that’s worth about $1,260. 

As a recap, it’s crucial that you avoid comparing sign-up bonuses at face value. Dig into the rewards program to understand how flexible your rewards will be and how much value you’re actually getting.


More recently, some hotel credit cards have been offering hotel night certificates instead of points. With the Marriott Bonvoy Boundless Credit Card, for instance, you can get three free night awards, valued at up to 50,000 points each, for a total maximum value of 150,000 points.

That’s not a bad point total – Marriott Bonvoy points are worth 1.1 cents each, according to U.S. News research, giving you a value of $1,650. But there are a few issues with how the bonus is structured.

For starters, you’re only getting three nights, which may not be a huge deal if you don’t travel often. But if you’re a budget traveler, you could stretch a 150,000-point bonus into several more nights by staying at lower-priced hotels.

Second, if you use one of your certificates on a property that charges less than 50,000 points per night, you lose the difference. That means the value of the bonus depends on your research skills and which properties are available at your destination.

Finally, the three free night certificates expire 12 months after they’re issued, which means that you need to plan a trip quickly to avoid forfeiting them. In contrast, Marriott points only expire after 24 months of inactivity on your account, which is easy to avoid by periodically using the card.

All in all, this type of sign-up bonus is generally not worth it.

Discount or Gift Card

Store credit cards often offer a discount on your purchase or a gift card if you open a credit card at the register.

These types of bonuses can be appealing because they provide instant gratification. And if you shop at that retailer regularly, getting the card might be worth it with or without a bonus because you could stand to benefit on future purchases.

But if you’re making your decision based solely on the bonus, these ones typically aren’t worth it, primarily because you can often get much more value from a traditional credit card.

For example, if you’re spending $200 on clothing and get an offer for a 20% discount with the Gap Inc. Visa Card, that’s a $40 discount. But if you apply for the Wells Fargo Active Cash Card instead, you’d get $200 after spending $1,000 in the first three months.

Bonus Cash Back

Some cards may offer bonus cash back on select purchases, with or without an accompanying lump-sum bonus. For example, the Discover it Miles card matches all of the miles you earn during your first 12 months with the card. The card offers 1.5 miles per dollar on an ongoing basis, so you’ll earn an extra 1.5 miles per dollar on all charges during that first year. Those miles you can convert into cash.

In contrast, Chase Freedom Unlimited offers $200 after you spend $500 in the first three months, plus 5% cash back on up to $6,000 spent at gas stations during the first year.

With either option, run some numbers to determine whether it’s right for you. With the Discover it Miles, for instance, spending $12,000 in the first year would net you $180 in extra rewards. That’s lower than what you can get with the Bank of America Travel Rewards credit card, which offers a similar rewards rate and 25,000 bonus points (worth $250) if you spend $1,000 in the first 90 days. But if you spend $20,000 in that first year on the Discover it Miles card, you’d earn $300 worth of bonus rewards.

With the Freedom Unlimited card, the cash back portion of the bonus is worth up to $240 – you’re getting an additional 4% on top of what you’d normally earn on those purchases – and you’re getting a $200 bonus on top of that when you meet the $500 spending threshold.

Of course, you’re only getting $240 if you maximize that gas spending, so you’ll need to consider how much you actually spend at gas stations every month to get an idea of how much you’ll actually earn.

“If a bonus requires spending that you would not typically be making, you probably want to reconsider,” says Jason Gaughan, head of unsecured products at Bank of America.

Consider a Credit Card’s Long-Term Value 

It’s easy to get caught up in the upfront bonuses that credit cards offer, but it’s more important to focus on how much value a card offers in the long run. “The best card is one with a rewards structure that aligns with your current budget and spending patterns,” says Gaughan, “as that will allow you to most effectively reap the rewards the card offers.”

In addition to comparing bonuses, consider rewards rates, redemption options, benefits, fees, interest rates and other features that may affect you in the long run.

If you’re considering a travel credit card, Nelson also recommends looking at one that offers a similar value for cash redemptions. “Stashing points for a big trip is great, but it’s nice to have the flexibility to redeem for cash in the case of an unexpected household expense,” he adds.

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By Richard

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