Credit card sign-up bonus offers can be a great way for new cardholders to quickly reap rewards. These promotions let you earn extra cash back, miles or points after spending a certain amount of money on the card in a set time frame, usually your first 3 months. If you’re torn between several cards, an impressive sign-up bonus (think rewards worth hundreds of dollars or more) can be a differentiator.
Our experts examined over 350 cards to identify the best credit card sign-up bonuses. Here are our top picks from our partners for cards with the best sign-up bonuses.
Credit card sign-up bonus offers can be a great way for new cardholders to quickly reap rewards. These promotions let you earn extra cash back, miles or points after spending a certain amount of money on the card in a set time frame, usually your first 3 months. If you’re torn between several cards, an impressive sign-up bonus (think rewards worth hundreds of dollars or more) can be a differentiator.
Our experts examined over 350 cards to identify the best credit card sign-up bonuses. Here are our top picks from our partners for cards with the best sign-up bonuses.
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
Earn 2 miles per $1 spent at restaurants, on hotel stays, and on United purchases
2X
Earn 2 miles per $1 spent at restaurants and eligible delivery services
1X
1 mile per $1 spent on all other purchases
At A Glance
Intro Bonus
Up to 65,000 Bonus Miles
40,000 bonus miles after you spend $2,000 on purchases in the first 3 months your account is open. Plus, an additional 25,000 bonus miles after you spend $10,000 in the first 6 months
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
3X points on travel immediately after earning your $300 travel credit.
3X
3X points on dining at restaurants including eligible delivery services, takeout and dining out.
1X
1 point per $1 spent on all other purchases
At A Glance
Intro Bonus
60,000 points
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Ultimate Rewards®
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
Earn 2X ThankYou® Points at Supermarkets and Gas Stations for the first $6,000 per year and then 1X Points thereafter.
1X
Earn 1X ThankYou® Points on All Other Purchases.
At A Glance
Intro Bonus
15,000 points
Earn 15,000 bonus points after you spend $1,000 in purchases with your card within 3 months of account opening; redeemable for $150 in gift cards at thankyou.com
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
Earn 3X points on dining, including takeout and eligible delivery services, for the first year.
2X
Earn 2 points per $1 spent on Southwest® purchases.
1X
Earn 1 point per $1 spent on all other purchases.
At A Glance
Intro Bonus
40,000 points
Earn 40,000 points after you spend $1,000 on purchases in the first 3 months. Plus, earn 3X points on dining, including takeout and eligible delivery services, for the first year.
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
Earn up to 9 points total for Hyatt stays – 4 Bonus Points per $1 spent at Hyatt hotels & 5 Base Points per $1 from Hyatt as a World of Hyatt member
2X
Earn 2 qualifying night credits towards tier status every time you spend $5,000 on your card.
At A Glance
Intro Bonus
Earn up to 60,000 points
Earn 30,000 Bonus Points after you spend $3,000 on purchases in your first 3 months from account opening. Plus, up to 30,000 More Bonus Points by earning 2 Bonus Points total per $1 spent in the first 6 months from account opening on purchases that normally earn 1 Bonus Point, on up to $15,000 spent
CreditCards.com credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.
Earn 3X points on dining, including takeout and eligible delivery services, for the first year.
2X
Earn 2 points per $1 spent on Southwest® purchases.
1X
Earn 1 point per $1 spent on all other purchases.
At A Glance
Intro Bonus
40,000 points
Earn 40,000 points after you spend $1,000 on purchases in the first 3 months. Plus, earn 3X points on dining, including takeout and eligible delivery services, for the first year.
Editorial disclosure: All reviews are prepared by CreditCards.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the bank's website for the most current information.
*All information about the Chase Sapphire Preferred® Card and the Wells Fargo Propel American Express card have been collected independently by CreditCards.com and has not been reviewed by the issuer.
Which credit cards have the best sign-up bonuses?
Sign-up bonuses are a prominent feature of the best credit cards, particularly travel, cash back and general purpose rewards credit cards. The best sign-up bonuses offer a generous amount of rewards for a reasonable amount of spending. However, the best credit card sign-up bonus for you will vary, based on your spending habits and financial goals. To help your search, we looked at over 350 cards with sign-up bonuses to determine which offers have the highest value. Along with our top picks, you’ll find information on the factors that went into our analysis and more. Here, we look at:
Whether you want to understand sign-up bonuses, choose the best one for you or identify ways to maximize rewards, we can help.
Best credit card sign-up bonuses
Chase Freedom Unlimited®
Why it’s the best sign-up bonus credit card for cash back: New cardholders earn a generous sign-up bonus ($200) after reaching a relatively low spending threshold ($500 within the first 3 months of opening an account). The card has a competitive base rewards program: 1.5% cash back on general purchases, plus 5% cash back on travel purchased through Chase Ultimate Rewards, 3% on dining (including takeout and eligible food delivery services) and 3% on drugstore purchases. Plus, there’s no annual fee.
Read CreditCards.com’s full review of the Chase Freedom Unlimited
Wells Fargo Cash Wise Visa® card
Why it’s the best sign-up bonus credit card for flat-rate rewards: This card provides cardholders the ability to earn $150 after a $500 spend on purchases in the first 3 months of card membership. They’ll also enjoy an excellent 1.5% cash rewards on purchases with the Wells Fargo Cash Wise Visa, alongside the opportunity to earn 1.8% in cash rewards on Apple Pay® or Google Pay™ their first 12 months from account opening. There’s no annual fee, but the card charges a 3% foreign transaction fee.
Read CreditCards.com’s full review of the Wells Fargo Cash Wise Visa
Marriott Bonvoy Bold™ Credit Card
Why it’s the best sign-up bonus credit card for Marriott guests: Cardholders earn 30,000 points after a $1,000 spend within the first 3 months, which is quite generous for a no annual fee card. Beyond that, this card mightily rewards Marriott guests: The card can be utilized on travel purchases (rewarded with 2X points) to visit destinations within Marriott’s boasted largest hotel network in the world. Plus, you earn 3X Bonvoy points at more than 7,000 hotels participating in Marriott Bonvoy and receive 15 Elite Night Credits annually, qualifying you for Silver Elite Status. (Restrictions apply.)
Read CreditCards.com’s full review of the Marriott Bonvoy Bold Credit Card
United℠ Explorer Card
Why it’s the best sign-up bonus credit card for airline travel: Cardholders can earn 40,000 bonus miles if they spend $2,000 within the first 3 months, plus an additional 25,000 bonus miles after spending $10,000 in the first 6 months. The card’s base travel rewards are competitive: You earn 2X miles when spending on hotels, restaurants or United airfare and 1 mile per dollar on all other purchases. You also get a statement credit of up to $100 on Global Entry or TSA PreCheck, priority boarding privileges and 2 one-time passes to United Club℠ each anniversary. There’s a $95 annual fee, but it’s waived the first year.
Read CreditCards.com’s full review of the United Explorer Card
Chase Sapphire Reserve®
Why it’s the best sign-up bonus credit card for dining at restaurants: Cardholders can earn 60,000 points after spending $4,000 within the first 3 months, a $900 value when booking travel through Ultimate Rewards. As part of the card’s base rewards program, you earn 3X points on dining at restaurants, one of the highest rates for dining out there. You also earn 3X points on all travel purchases after you earn the card’s annual $300 travel credit. (And, when those points are used for booking travel through Chase Ultimate Rewards, you get a 50% boost.) The travel benefits come at a price, however, specifically the card’s $550 annual fee, so make sure you travel enough to justify that cost before applying.
Read CreditCards.com’s full review of the Chase Sapphire Reserve
Citi Rewards+® Card
Why it’s the best sign-up bonus credit card for everyday points: Cardholders earn 15,000 bonus ThankYou points after spending $1,000 in purchases with the card within 3 months of account opening, redeemable for $150 in gift cards at thankyou.com. The card’s base rewards program lets you earn 2X ThankYou points at supermarkets and gas stations for the first $6,000 spent annually and 1X points on all other purchases. Plus, the card carries a unique feature in that it automatically rounds up to the nearest 10 points on every purchase. There is no annual fee.
Read CreditCards.com’s full review of the Citi Rewards+
Southwest Rapid Rewards® Plus Credit Card
Why it’s the best sign-up bonus credit card for Southwest flyers: Cardholders can earn 40,000 points after they spend $1,000 on purchases in the first 3 months. Plus, they’ll earn 3X points on dining, including takeout and eligible delivery services, for the first year. As base rewards, you’ll earn 2X points on Southwest purchases, Rapid Rewards® hotel and car rental partner purchases, and 1 point per $1 spent on all other purchases. The card carries a $69 annual fee.
Read CreditCards.com’s full review of the Southwest Rapid Rewards Plus Credit Card
World of Hyatt Credit Card
Why it’s the best sign-up bonus credit card for hotel guests: Not only can you earn 30,000 points after a $3,000 spend within the first 3 months, you can also earn up to 30,000 more bonus points with 2 bonus points per $1 spent on purchases that earn 1 point up to $15,000 in the first 6 months of account opening. Plus, the rewards don’t end with the bonus offer: You earn 2X points on a variety of spending, including at restaurants and on airline tickets purchased directly from airlines. The $95 annual fee isn’t waived the first year, although the sign-up bonus is quite nice, and the hotel stay rewards are superior.
Read CreditCards.com’s full review of the World of Hyatt Credit Card
Southwest Rapid Rewards® Priority Credit Card
Why it’s the best sign-up bonus credit card for anniversary bonus: Cardholders earn 40,000 points after they spend $1,000 on purchases in the first 3 months, plus earn 3X points on dining, including takeout and eligible delivery services, for the first year. For base rewards, you earn 2X points on Southwest purchases, Rapid Rewards® hotel and car rental partner purchases and 1X point on other purchases. You also receive a $75 Southwest travel credit each year, a unique feature among Southwest cards. Plus, the Southwest Rapid Rewards Priority’s anniversary bonus is the highest of the Southwest cards: You earn 7,500 bonus points after each card anniversary.
Read CreditCards.com’s full review of the Southwest Rapid Rewards Priority Credit Card
Chase Sapphire Preferred® Card*
Why it’s the best sign-up bonus credit card for points: The Chase Sapphire Preferred offers a 80,000-point sign-up bonus after a $4,000 spend within the first 3 months of card membership. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening. In addition to the generous sign-up bonus rewards, this card offers 2X points on worldwide travel and restaurants, as well as groceries (until 4/30/21). The Sapphire Preferred also offers a 25% bonus when you book travel through Chase Ultimate Rewards. It has a $95 annual fee that is not waived the first year, although its non-travel rewards make it more attractive during the pandemic.
Read CreditCards.com’s full review of the Chase Sapphire Preferred
Ink Business Cash® Credit Card
Why it’s the best sign-up bonus credit card for business: This card offers high value for businesses with substantial expenses. Cardholders can earn a $750 sign-up bonus after spending $7,500 in the first 3 months. There is also 5% cash back on the first $25,000 spent each year in combined purchases on office supply stores, internet, cable and phone services; and 2% cash back on the first $25,000 spent in combined purchases each account anniversary year on gas stations and restaurants, along with 1% on all other purchases. The Ink Business Cash charges no annual fee, which is rare for a business credit card that offers this much value – but carefully consider whether your business expenses are inside the 5% and 2% categories. Otherwise, you might want to opt for a flat-rate business rewards card like the Ink Business Unlimited® Credit Card.
Read CreditCards.com’s full review of the Ink Business Cash
Compare the best credit card bonus offers
After looking at all of the credit cards with sign-up bonus offers, here are our selections for the top offers on the market right now:
Up to 65,000 Miles
Earn 40,000 bonus miles if you spend $2,000 in the first 3 months, plus an additional 25,000 bonus miles if you spend $10,000 in the first 6 months
40,000 Points
After you spend $1,000 on purchases in the first 3 months. Plus, earn 3X points on dining, including takeout and eligible delivery services, for the first year
Up to 60,000 bonus points
Earn 30,000 bonus points after you spend $3,000 on purchases in the first 3 months. Plus, earn up to 30,000 more bonus points with 2 bonus points per $1 spent on purchases that earn 1 point up to $15,000 in the first 6 months
40,000 Points
After you spend $1,000 on purchases in the first 3 months. Plus, earn 3X points on dining, including takeout and eligible delivery services, for the first year
What is a credit card sign-up bonus and how do they work?
A sign-up bonus is a limited-time offer that many rewards credit cards feature (including travel credit cards and cash back credit cards). These promotions, also sometimes called “welcome offers,” give new cardholders a chance to earn extra rewards in the form cash back, miles, points, free hotel nights or more. To get these rewards, they’re generally required to spend a certain amount in a specified time period in order to receive the bonus, but some offers stipulate a certain number of purchases or activate after just one swipe of the card. Typically, the higher the required spend, the more lucrative the bonus. In recent years, sign-up bonuses have become an increasingly popular way to entice new cardholders.
“A trend I’ve observed is that issuers are competing for consumers’ business based mostly on sign-up bonuses and rewards for ongoing spending,” says Ted Rossman, CreditCards.com industry analyst. “Whether you’re interested in travel or cash back, you can take advantage of offers that can put $500, $750 or even more into your wallet.”
Is a sign-up bonus worthwhile?
When choosing a card, it’s important to weigh how accessible the required spend is versus when you want to receive the intro bonus. For example, the Discover it® Cash Back card’s Cashback Match bonus matches the cash back you earned at the end of your first year, while the Chase Freedom Unlimited earns you $200 back after spending $500 within the first three months.
If your sign-up bonus comes via points or miles, how you redeem them matters, too. For example, the Chase Sapphire Preferred card’s sign-up of 80,000 points to new cardholders who spend $4,000 in the first 3 months can be redeemed for travel through the Ultimate Rewards portal for a 25% bonus, so 80,000 bonus points are worth $1,000 of Ultimate Rewards travel.
However, if you don’t redeem the bonus in the first year and continue to hold the card without using it, your rewards value drops nearly a $100 each year, due to the card’s annual fee. And if you don’t redeem the bonus at all, its value amounts to $0, because credit card points have no value outside of the rewards that you redeem them for. We’ll go into more detail below about how to determine if you’re likely to reap the rewards from a particular sign-up bonus, even when the card carries an annual fee.
How to choose a card with a sign-up bonus
Your first impulse might be to apply for the largest sign-up bonus you see, but it’s important to fully evaluate a card. There’s a lot that goes into choosing the best credit card, but for the purposes of evaluating credit cards with sign-up bonuses, it’s best to consider the offer alongside these key terms:
Base rewards: The best rewards credit card for you offers points, miles or cash back on the categories you already spend money on. So, for instance, if you travel a lot, you might want to opt for an airline credit card with a good bonus offer. If you dine out frequently, you might want to opt for a lucrative restaurant rewards card. If your spending is more varied, a general-purpose rewards card is probably your best bet. Whatever your profile, you want to choose a card with a rewards program and a sign-up bonus you’ll actually use.
Fees: You’ll want to minimize costs, so evaluate any sign-up bonus against common card fees, including the annual fee, penalty fees and foreign transaction fees. Note: An annual fee isn’t always a deal-breaker. We have more details below on how to calculate whether to opt for an annual fee credit card with a good sign-up bonus.
Annual percentage rates: You generally want to avoid carrying a balance on a rewards credit card, given they tend to carry higher APRs than, say, a low-interest credit card. However, it’s important to know what APR will be imposed in the event you revolve purchases. (Learn how to spot a good APR.)
Here are some other factors to consider when trying to find the best sign-up bonus for you.
Is this the highest bonus you can earn on the card?
Don’t just spring for the first offer that you find – do some research. Depending on the card, the amount of the sign-up bonus can fluctuate over time, so you should check the card’s bonus history to see if the offer is at a high point or if it is likely to increase soon. Also, you should check around to see if you can qualify for a special offer with a larger sign-up bonus.
What is the bonus worth?
Points from different issuers have different values, and even point values from different cards from the same issuer can vary. Points also can gain or lose value over time as issuers add or subtract options. It’s also important to consider the points’/miles’ contextual value, depending on your current circumstances. So take a look at what the points/miles are worth and what you can get with the bonus before applying, and then keep an eye out for any announcements from the card’s points program.
Are the terms of the bonus affordable?
Before attaching yourself to a new credit card to take advantage of a welcome offer, be sure the required spend fits your budget. If you have an idea of your average monthly spending, this isn’t too difficult to weigh. Overextending yourself to meet the bonus requirement isn’t a recommended practice and may lead to issues down the line, like missing a payment or a hit to your credit score.
Issuer intro bonus policies
Before you apply for a card hoping to snag a giant bonus, you should take a look at the card’s terms and conditions to make sure you qualify to earn a welcome bonus. Many issuers will not award a bonus if you’ve previously owned the card. And some issuers – including Chase with its “5/24” rule – won’t give you a bonus if you’ve signed up for too many cards recently. Here’s a summary of intro bonus policies:
Issuer
Welcome bonus policy
American Express
You can only earn the bonus for a particular card once in a lifetime (includes personal and small business cards).
Chase
You can reapply for the same bonus 24 months after earning the bonus and closing the card. You are not eligible for a sign-up bonus if you’ve opened more than five accounts in the past 24 months (including authorized user accounts but not including business card accounts).
Citi
You can only earn one ThankYou Rewards card sign-up bonus every 24 months after receiving a bonus, opening an account or closing an account. Personal Citi / AAdvantage cards follow the same rules but with a 48-month window.
Barclays
According to their terms and conditions for most cards, only first-time cardholders qualify for a bonus.
Discover
First-year Cashback Match bonuses are only available for new card members.
U.S. Bank
According to terms and conditions, cardholders who have previously had an account for the same type of card won’t qualify for a bonus.
How to decide if you should get a sign-up bonus credit card with an annual fee
You shouldn’t automatically nix a card with an annual fee. If you do the math, you’ll often find that annual fee cards – due to larger sign-up bonuses and higher rewards redemption rates – offer the best value, even with a fee. Plus, some annual fee cards waive the charge in their first year. Still, you need to be sure you can afford to pay a fee and that you’ll redeem the rewards in a timely manner to make the fee worth it.
Let’s take a look at the value of a no annual fee card versus an annual fee competitor to determine the impact of each over two years. We’ll compare the travel and dining rewards value available from the United Explorer Card ($95 annual fee – waived the first year) and the Wells Fargo Propel American Express® card*. The United Explorer Card’s miles are worth 1.3 cents, according to TPG’s points valuation, and the Propel’s points are worth 1 cent each. Let’s evaluate return based on someone who annually spends $2,000 on travel expenses, $1,800 on dining and $5,000 on other purchases, while hitting their sign-up bonus along the way.
Putting it all together…
Card
Sign-up bonus
Rewards rate
Rewards
Annual fee
Total minus annual fee
United Explorer Card – Year 1
Up to 65,000 miles* x .013 = $845
2X miles on travel and dining, 1X elsewhere
($2,000 x 2) + ($1,800 x 2) + ($5,000 x 1) = 12,600 miles x .013 = $164
$95 waived first year
$1,009
United Explorer Card – Year 2
2X miles on travel and dining, 1X elsewhere
($2,000 x 2) + ($1,800 x 2) + ($5,000 x 1) = 12,600 miles x .013 = $164
$95
$69
Wells Fargo Propel – Year 1
20,000 points** x .01 = $200
3X points on travel and dining, 1X elsewhere
($2,000 x 3) + ($1,800 x 3) + ($5,000 x 1) = 16,400 points = $164
$0
$364
Wells Fargo Propel – Year 2
3X points on travel and dining, 1X elsewhere
($2,000 x 3) + ($1,800 x 3) + ($5,000 x 1) = 16,400 points = $164
$0
$164
*United Explorer Card earns up to 65,000 miles: 40,000 miles after you spend $2,000 in the first 3 months, plus an additional 25,000 miles after you spend $10,000 in the first 6 months
**Wells Fargo Propel earns 20,000 points after you spend $1,000 in the first 3 months
At first glance, the two-year rewards are lopsided. This large gap is thanks to the United Explorer Card’s sign-up bonus. As such, when looking at ongoing rewards, the Propel may be the better choice in the long-term. Although the first-year rewards are slightly one-sided, the Propel’s consistent rewards and lack of annual fee will bring you more year-to-year value in the future. It may be hard to deny the upfront rewards available with annual fee cards, but consumers hunting for a card for the foreseeable future might want to look towards the best no annual fee options.
How to maximize sign-up bonuses
Signing up for the right bonus at the right time can help you take your sign-up bonus the extra mile. Here are some tips to squeeze more value out of your sign-up bonus:
1. Look for special offers
Sometimes issuers offer sign-up bonuses to targeted groups of cardholders that are larger than the offers advertised on their sites. Visit the issuer’s site often, check your mail or call the issuer directly to find out if you qualify for a special offer.
2. Keep an eye on the bonus after you sign up
Some issuers will award you the larger bonus amount if the offer increases after you sign up for the card. If the bonus goes up before the promotional period expires, call your issuer to see if you can qualify for the larger bonus.
3. Sign your spouse up for the same card
Many issuers will allow couples (married or otherwise) to sign up for the same card separately. Yes, even if your spouse is already an authorized user on your account, you can earn twice the number of bonus points!
4. Time your applications carefully
You’ll need to keep issuers’ policies – such as Chase’s 5/24 rule and American Express’s once-in-a-lifetime limit on welcome bonuses – in mind when deciding which cards to apply for. For instance, if you know that an issuer puts a limit on the number of new accounts you can have in a certain time frame, you might want to apply for those cards first.
5. Watch out for hidden convenience fees
Avoid using your card to pay for products or services that charge a fee to use credit cards. For example, some utility companies and providers, such as contractors or plumbers, may charge you a convenience fee of 2-4% to pay by card. See if you can meet the minimum spending requirement without paying fees.
6. Know what counts toward the minimum spend
If you read the sign-up bonus terms and conditions, you’ll likely find that the annual fee, your balance transfers, and the purchase of travelers checks or other “cash-like” items, don’t count toward your minimum spending total.
7. Be careful about returning items
If you return an item that you purchased with your card, be sure to subtract the amount from your total spending. Otherwise, you could accidentally fall short of the spending threshold and miss out on your card’s bonus.
8. Don’t get sucked into debt
What good is a few hundred dollars’ worth of bonus points if you also end up thousands of dollars in debt? Before you spring for a sign-up bonus, make sure you can afford the spending threshold. And aim to pay your monthly balances off in full, lest you lose lucrative points, miles or cash back to interest!
Frequently Asked Questions
A sign-up bonus is a limited-time offer that many travel credit cards and cash back credit cards), giving you the chance to earn as much as $750 or even more in exchange for a required spend. You might be required to spend a certain amount in a specified amount of time, make a certain number of purchases or make at least one purchase with the card. Typically, the higher the required spend, the more lucrative the bonus.
You might earn the bonus in the form of cash back, miles, points or free hotel nights. A sign-up bonus is sometimes called a welcome offer, but they are essentially the same thing. Depending on the type of card, you can then redeem the bonus for a specified reward, such as cash back, or you may have a variety of options for redeeming the bonus – such as cash back, travel, merchandise or gift cards.
With that said, a sign-up bonus can be an excellent way to earn a lot of rewards in a short amount of time. Earning a bonus is almost always worth it, if you can outmatch the card’s annual fee (which is usually the case), and if you redeem the bonus in a timely manner.
For example, the Chase Sapphire Preferred card’s sign-up of 60,000 points to new cardholders who spend $4,000 in the first three months can be redeemed for travel through the Ultimate Rewards portal for a 25 percent bonus, so 60,000 bonus points are worth $750 of Ultimate Rewards travel.
Discovering where you fall on the cash back vs. points debate can be the deciding factor in your card. A cash sign-up bonus is ideal for the consumer who wants simplicity, while a points or miles sign-up bonus is typically for a travel card. You’ll also need to decide what you want to do with your bonus, and whether you prefer value or flexibility.
Some bonuses are more valuable than others, and some are more flexible and easier to redeem than others. It depends on the type of card and the type of rewards: Points or miles
Some cards, primarily travel cards, reward with points or miles. Usually airline cards use miles, and hotel cards use points. A mile may be worth less or more than 1 cent, depending on the card and the program.
Points and miles can be earned for brand loyalty, restaurants, general travel and other types of spending. Cards like the United Explorer Card encourage repeat customers with bonus miles, while the Wells Fargo Propel can give you a lot of redemption flexibility with options beyond airfare. Cash back
Cash back is typically more straightforward. Gift cards and merchandise redemption can actually be quite lucrative with these cards.
With cash back, you can use your statement credit toward gifts you’ve bought at department stores, gas to visit family or camping at a national park.
Most rewards credit cards come with a sign-up bonus offer of some sort. Cash back cards typically offer bonuses in the form of statement credits, while travel credit cards will usually offer points or miles you can redeem for flights or hotels.
Premium cards with hefty annual fees typically have the best sign-up bonus offers. Business credit cards are also known for having better-than-average sign-up welcome offers.
You’ll have a harder time finding a sign-up bonus offer among credit cards for bad credit and retail credit cards. Some low-interest cards also lack sign-up bonuses, as do some balance transfer cards.
In most cases, sign-up bonuses are not considered taxable income. Most offers require you to meet a spending threshold within a certain amount of time after opening the account, making the bonus more like a rebate or discount than a prize.
Cash prizes, bonuses and other types of “free” money that don’t require any spending on your part are taxable. So, though uncommon, sign-up bonuses that you get just by opening an account are taxable.
It may not be the best idea to get a new credit card primarily for the sign-up bonus, although there are exceptions. Ideally, you want to look at ongoing rewards and other perks, such as airport lounge access, extended warranties or cellphone insurance.
“Figure out how you spend your money and what you value most,” says CreditCards.com Industry Analyst Ted Rossman. “It’s not a one-size-fits-all decision. Most people prefer simplicity and have a few cards – think 3, not 23.
“Card issuers have grown tired of the sign-up bonus arms race and customers who churn through bonuses,” says Rossman. “They’d rather keep you spending with incentives on dining, transportation and streaming. Sign-up bonuses are great, but don’t lose sight of the big picture. Constantly opening and closing cards can hurt your credit score, too. The best credit card rewards strategies mix introductory bonuses with long-term value.”
Different credit cards come with a variety of redemption options, so deciding how to spend your bonus could lead to several results:
Statement credit: Perhaps the least sexy, but one of the most convenient and common options. This type of redemption is easy to manage since the earned credit is usually added right into your rewards pool or automatically goes toward your card balance.
Online shopping checkout: Essentially reserved for cash back and points cards, some issuers allow cardholders to use their rewards while paying for online purchases at certain retailers. This can be useful if you’ve found a specific item you’re interested in. For example, Discover allows you to use your cash back rewards at Amazon.com’s checkout.
Merchandise or gift card: Some cards reward generously for purchases made through their shopping portal, while others may not reward so well for merchandise or gift cards. That’s why it’s best to check before making a redemption. Travel card issuers may offer gift card rewards, but it’s often inadvisable because you’re losing value redeeming rewards and miles for gift cards. Some cash back cards offer decent deals, however: with Discover you can purchase gift cards ranging from $5 to $200 (in increments of $5), with added value to each card, and the Citi Rewards+ Card rounds up points toward gift card redemptions.
Travel – airline and hotel booking: Redeeming for travel rewards can typically yield the highest value depending on your issuer’s redemption system.
Airline card rewards are best used for brand-loyal flights, although there are many general-purpose travel cards that allow you to redeem points for most travel-related events. That means if you have a trip to Europe planned for next year, you can redeem for airfare, hotel, limo service and more. Similarly, it’s pretty much a guarantee that the best way to use your hotel card’s rewards is with hotel stays. Hotels usually offer tiers, where the higher-end hotels or resorts will use up your points more quickly, but that’s OK if you treasure the exclusive experience.
The process starts before even applying for a card, making sure you can afford the required spend to earn the bonus. Once you’ve found the right fit, there are a few ways to set yourself up for success.
The most surefire way to hit the threshold is to budget purchases ahead of time. Regular monthly expenses can often get you to your desired spend, which makes it easily attainable as long as you remember to swipe your card rather than reach for cash. Spending on any large purchases or gifts can be another way to take a chunk out of your issuer’s requirements – just don’t go overboard and put yourself in a scraping-it-together situation. If you carry alternative card options, you may have to strategically spend extra with the new card to ensure you’ll eclipse the required amount.
About the Author
Jeanine Skowronski
Jeanine Skowronski is a credit card expert, analyst, and multimedia journalist with over 10 years of experience covering business and personal finance. She has previously served as the Head of Content at Policygenius, Executive Editor of Credit.com, Deputy Editor at American Banker, Staff Reporter at TheStreet and a columnist for Inc. Magazine. Her work has also been featured in The Wall Street Journal, Fox Business, Business Insider, U.S. News & World Report and more.
About the Reviewer
Antonio Ruiz-Camacho
Antonio Ruiz-Camacho is the Senior Director of Content at Creditcards.com. His work has appeared in the New York Times, Salon, Texas Monthly and CNET.
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