Credit cards rewards represent the closest thing to extra “free” money that most of us will ever see. Head to the store, whip out your favorite rewards credit card to pay, and earn airline miles, hotel points or cash in your bank account once you pay your bill. Everyone loves a good bonus free stuff, so you can’t beat it.
Then again, you can beat the regular 1 to 2 points or miles per $1 you’re earning with your rewards credit card — but only if you take advantage of credit card bonus offers. With a one-time credit card bonus offer, you can earn considerably more points or miles just by meeting a minimum spending requirement within a few months. The best welcome sign-up bonus offers often add up to $500 or more in free travel or cash back and some cards have additional bonuses like no annual fee and no foreign transaction fees.
If you’re ready to level up your rewards game and earn more points for each dollar you spend, you’ll want to know exactly how credit card bonus offers work. You’re in the right place. Keep reading to learn more.
How Do Credit Card Bonus Offers Work?
Credit card issuers like Chase, Bank of America, Wells Fargo, Capital One®, American Express (AMEX) and Citi do everything they can to entice consumers to sign up for their rewards credit cards, including welcome signup bonuses. The major card issuers want a bigger piece of market share, so they tend to experiment with temporary bonus offers, tweak their offers to make them more appealing and regularly release new offers.
While different offers work in their own way, credit card bonuses include three basic characteristics:
- Minimum spending requirement
- Deadline to meet the minimum spending requirement
- Amount of bonus
Take the popular Chase Sapphire Preferred card, for example. Once you sign up, you can earn 60,000 bonus points after you spend $4,000 within three months of opening your account. And remember, this is on top of the 2x points per $1 you spend on travel and dining and the 1x points per $1 you earn on all other purchases.
But not all bonus offers are quite that simple; some come with tiered terms you must meet to earn more points over time.
The Wells Fargo Propel American Express Card is a good example of this particular type of rewards card. Once you sign up, you can earn 30,000 bonus points when you spend $3,000 on purchases in the first three months and an additional 20,000 bonus points when you spend $15,000 on purchases in your first year. However, if you are in the market for a Wells Fargo card, the Wells Fargo Cash Wise visa card offers an enticing $200 cash back rewards bonus when you spend $1,000 in purchases in the first 90 days of account opening.
What Are the Benefits of These Offers?
The main benefit of credit card welcome signup bonuses is an obvious one. Instead of earning the standard 1 to 2 points or miles for each $1 you spend, you’re earning considerably more during the initial bonus period on account opening. And, not to beat you over the head with the details, but it’s important to remember that bonus points are handed out on top of the regular points you’re earning.
With that core benefit in mind, here are the main reasons you should sign up for credit card bonus offers:
- You can quickly earn $500 or more in cash back, merchandise, gift cards or travel rewards just by charging regular bills and expenses to your card.
- You can sign up for credit card bonuses from different card issuers.
- Two spouses can sign up for the same rewards credit card and earn their own bonuses, even if they live at the same address.
In summary, credit card bonus offers make it easy to collect a heap of points or miles in a hurry. They’re also not overly difficult to pursue, provided you have the credit score (excellent credit is preferred) and income to qualify for top-level rewards credit cards.
Credit card rewards expert Kevin Payne of Family Money Adventure says his family constantly reviews their travel plans to make the most of credit card welcome signup bonuses. Payne notes that tons of great welcome signup offers are available, but they don’t always match his family’s goals.
“It’s generally good to know upfront how you are planning to use your points,” Payne says.
That’s true whether you go after best travel rewards or cash back. By knowing your rewards goals and the type of rewards you want to earn, you can craft a plan to maximize bonuses and earn more rewards over time.
What to Watch Out for With Credit Card Welcome Signup Bonuses
What’s the catch with these bonuses? Like any other freebies you can get with minimal effort, there are pitfalls. Here are the main gotchas to be aware of.
Earning Points or Miles You Won’t Use
As Payne suggested, you should pursue credit card bonus offers with a goal in mind that fits your lifestyle. If you pile up airline miles or hotel points but don’t travel that much, what’s the point of getting a travel card with a bonus or travel statement credits?
Pro tip: When in doubt, choose a flexible credit card like the Chase Sapphire Preferred or Citi ThankYou Premier. Flexible travel credit cards let you redeem rewards in more than one way, including travel, merchandise, reward transfers to airline or hotel programs, or cash in your bank account.
Buying Stuff You Don’t Need
Since rewards credit cards with bonus offers require meeting a minimum spending amount within a few months, it’s easy to talk yourself into overspending to reach the level where your bonus kicks in. That can be a costly approach, particularly if you drag out paying off the balance and rack up interest charges.
Pro tip: Sign up for credit cards with bonus card offers only when you know you can meet the minimum spending requirement without going overboard.
Amassing Credit Card Debt
The average credit card APR is over 17%, yet the average rewards credit card provides only 1 to 2 points for each dollar you spend. Even when you consider bonus offers, you’ll pay a lot more money in interest than you could ever earn in rewards if you wind up in debt.
Pro tip: Charge purchases on your credit cards only if you can afford to pay your bill in full right away to avoid interest charges or find 0% intro APR cards that will allow you some time to payoff the card without accruing interest payments.
Best Credit Card Bonus Offers: 4 Ways to Score
Now that we’ve covered how credit card bonus offers work, including their benefits and pitfalls, it’s time to go over the ways you can score better bonus offers. Here are four strategies.
Follow Travel Websites that Share the Best Deals
Riley Adams, a CPA, is a rewards enthusiast who founded the Young and the Invested. Adams says that following personal finance and credit card websites helps him discover great bonus offers, including the Southwest Companion Pass he earned in 2018. Now that he has this companion pass through the end of 2019, he’s saved more than $3,250 on flights he booked this year and last year.
Sign Up for Mailing Lists
Rewards veteran and blogger Logan Allec of Money Done Right says he gains the best bonus offers by making sure he’s on every card issuer’s promotional mailing list.
“The best welcome signup bonuses are often targeted, meaning that they are only sent to specific people on the card issuer’s list,” he says. “And if I were to opt out of the list, I wouldn’t see these top offers.”
For one card a few years ago, Allec received a targeted offer that supplied 20,000 bonus points above the publicly promoted offer. He leveraged the bonus to score round-trip tickets to Spain for himself and his wife.
Recruit Your Spouse
Speaking of wives (or husbands, partners and the like), the best bonus offers are ones you can double get twice. Get your spouse in the game and have them earn their own credit card welcome signup bonuses. Some rewards programs like Chase Ultimate Rewards, Citi ThankYou Rewards and Hilton Honors even let you pool points with a spouse through one account.
Watch for New Credit Cards
Certified financial planner R.J. Weiss of Ways to Wealth says he’s found most cards extend the biggest bonuses when the cards initially launch.
“As such, I try to pay special attention to new cards that come on the market from the major credit card companies,” Weiss says.
Keep in mind that you might need to act fast, though. The Chase Sapphire Reserve card delivered an astounding bonus of 100,000 points when it launched in 2016, but it cut the bonus to 50,000 points shortly afterward. While it still offers a great annual travel credit, this is a good example of needing to have your finger on the pulse of the latest card offerings. Many other cards roll out big initial bonuses for new cardholders after months of account opening only to slash them later.
The Bottom Line:
Credit card welcome signup bonuses offer a seamless way to earn a big cash bonus or a ton of rewards points in a short amount of time, but you can maximize them with careful planning and upfront legwork. Consider the type of bonus you want, scope out the best offers and be ready to strike when the offer is hot.
However, use credit cards to earn rewards only if you’re free of credit card debt and plan to stay that way. A welcome signup bonus is the last thing you need if you’re paying an APR of 17% or more on thousands of dollars in credit card debt. In other words, use credit cards to your advantage or don’t use them at all.