Should You Get a Credit Card With a Sign-Up Bonus?
A credit card sign-up bonus can provide significant value, but the size of the bonus should not be the only reason you apply. Before choosing an offer, look at how much you must spend to earn the bonus, how quickly you must spend it, the card’s annual fee and whether the card will still make sense after the introductory offer is gone.
How Does a Credit Card Sign-Up Bonus Work?
A credit card sign-up bonus, also called a welcome bonus, typically requires you to spend a certain amount within a specified period after opening the account. Once you meet the requirements, you may receive cash back, points or miles depending on the card. Always check the exact spending requirement and deadline before applying.
How Much Do You Have to Spend to Earn the Bonus?
Spending requirements vary by offer. Before applying, determine whether you can meet the requirement through purchases you would normally make. Spending extra money simply to earn a bonus can erase much of its value, especially if you carry the resulting balance and pay interest.
Is a Bigger Sign-Up Bonus Always Better?
Not necessarily. A larger bonus may come with a higher spending requirement, annual fee or other conditions. Compare the actual value of the bonus with what you must spend and pay to earn it. A smaller bonus on a card that fits your normal spending may provide better overall value.
Does the Annual Fee Reduce the Value of the Bonus?
Yes, the annual fee should be included when evaluating a sign-up bonus. For example, a bonus worth $500 on a card with a $95 annual fee does not provide the same first-year value as $500 with no annual fee. Also consider whether the card’s ongoing rewards and benefits will justify paying the fee in future years.
What Happens if You Do Not Meet the Spending Requirement?
If you do not meet the required spending amount within the specified time, you generally will not receive the sign-up bonus. Purchases that count toward the requirement can also vary by issuer, so review the offer terms carefully. Avoid making unnecessary purchases just to reach the spending threshold.
Should You Carry a Balance to Earn a Sign-Up Bonus?
Generally, no. Interest charges can quickly reduce or even eliminate the value of a sign-up bonus. Ideally, the spending used to qualify for the bonus should be purchases you already planned to make and can pay off without carrying additional debt.
Can You Earn More Than One Credit Card Sign-Up Bonus?
It is possible to earn bonuses from different credit cards over time, but each issuer has its own eligibility rules. Applying for several cards simply to collect bonuses can also create multiple hard inquiries, additional accounts to manage and pressure to meet several spending requirements. Consider the long-term value of each card before applying.
Is a Sign-Up Bonus Worth It if You Plan to Keep the Card?
The best sign-up bonus offers are often attached to cards that also make sense after the bonus is earned. Look at the ongoing rewards, annual fee, APR and benefits you expect to use in future years. A valuable first-year bonus does not necessarily make an expensive or poorly matched card a good long-term choice.
Should You Choose a Credit Card Based on the Bonus Alone?
No. Treat the sign-up bonus as one part of the overall offer. Compare the card’s APR, annual fee, ongoing rewards, other fees and benefits with competing cards. The better choice is usually the card that fits how you plan to use it after the bonus period ends.
When Does a Credit Card Sign-Up Bonus Make Sense?
A sign-up bonus can make sense when the card already fits your needs and you can meet the spending requirement with purchases you planned to make anyway. The bonus should provide additional value—not become a reason to overspend, carry debt or choose a card that would otherwise be a poor fit.
Bottom Line
A credit card sign-up bonus can be valuable when you can earn it through normal spending and the card makes sense beyond the introductory offer. Compare the spending requirement, annual fee, ongoing rewards and other terms before applying. A bonus should improve an already good credit card choice—not be the reason you spend more than you planned.