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Rewards credit cards advertise plenty of perks to get people to apply. Airline credit cards come with free checked bags and priority boarding, while some hotel cards reward members with free stays each year. But one of the best benefits a rewards credit card can offer is a big sign-up bonus.
A credit card sign-up bonus is a stash of points or miles you can earn when you open a new credit card account. These bonuses can include anything from thousands of airline miles or hotel points to put toward free travel, to hundreds of dollars in cash back. In general, sign-up bonuses are a great way to earn a lot of points or miles when you first get your new credit card.
Sounds easy, right? For the most part, it is. Just keep in mind that the sign-up bonuses offered by credit cards usually require you to spend a certain amount of money using your new card in order to earn them. Here's what you need to know.
How a Credit Card Sign-Up Bonus Works
Credit card sign-up bonuses are pretty straightforward. When you open a new card, you usually have to spend some money on it in your first few months to earn the sign-up bonus. The size of the bonus you're offered, as well as how much you have to spend to get it and in what time period, will all depend on the specific card you apply for.
If you want to earn tens of thousands of points, you usually have to use your new card to make hundreds or even thousands of dollars' worth of purchases in a short amount of time. But these terms and requirements can vary a lot.
Some cards, for example, may offer a tiered sign-up bonus where you earn a certain number of miles after a minimum spend in the first three months and an additional number of bonus miles if you hit a larger spending target in the first six months with the card.
Finally, some rewards cards do not even have a set spending requirement to keep track of. Barclays' AAdvantage® Aviator® Red World Elite Mastercard® is offering new cardmembers 60,000 bonus American Airlines AAdvantage miles just for making their first purchase within the first 90 days of account opening and paying the card's $99 annual fee in full.
As you can see, not only do sign-up bonuses vary in terms of their size, but the hoops you have to jump through to earn them can also be very different from card to card.
How to Get a Sign-Up Bonus
If you want to get a sign-up bonus, you have to apply for a new credit card. It's not quite as simple as it sounds, though.
There are many credit cards geared toward folks with no or low credit. However, the rewards cards with the highest sign-up bonuses usually require anyone applying to have good to excellent credit scores.
Before you apply for a new credit card, find out if you need a minimum credit score to be considered. Then make sure you can meet any spending requirements that come as part of the bonus offer. After all, you wouldn't want to apply for a great new credit card and a shot at tens of thousands of points only to end up not earning them because you can't make enough purchases with your card in the first few months. That said, make sure you'll be able to pay off those initial purchases right away so you don't accrue interest, which can be high on these cards.
How to Get the Most out of Your Credit Card Bonus
There are a few more important things to keep in mind as you think about what credit card sign-up bonuses you would like to earn and how to get the most value from them.
1. Pick a card that earns the types of points or miles you need.
We can all be tempted by offers of 100,000 points or $1,000 back. But before you apply for any and every card out there, make sure you are actually signing up for one that earns you miles with airlines you actually fly with, points with hotels you actually stay at, or cash back on things you actually need. It's no good signing up for an airline-specific credit card if you never fly on that airline.
2. Look for special offers that are higher than usual.
One of the most confusing things about sign-up bonuses is that they can change from time to time, even for the same credit card. By applying at the wrong time, you could miss out on thousands of miles, extra cash back or other extra perks. So if you come across an enticing offer, go to the issuer's website to make sure the bonus you saw is valid before you apply for the card.
3. Make sure you are eligible for a bonus.
Some credit card issuers have strict rules about who can and cannot earn sign-up bonuses. These policies are different from bank to bank and card to card. But a general rule of thumb is, if you already had a specific card and then canceled it, you will probably not be able to earn its sign-up bonus again if you reapply. Also, if you opened several new credit cards recently, most banks will automatically deny your application for another one. Before applying, check your credit report to confirm what cards you have or had, and how long they have been open. Then read the terms and conditions of any specific credit card you want to apply for to see if you might be excluded from earning its sign-up bonus.
4. Don't spread yourself thin.
It can be hard to resist great new sign-up bonuses when they come along. But remember that you usually have to spend a lot of money to earn them. Before you apply for a new card, make sure you can meet any spending requirements to earn the sign-up bonus without straining your finances or, worse yet, carrying a balance. Doing so might not only lower your credit score over time, but the interest and late fees you are charged could wipe out the value of any points you earn.
5. The annual fee doesn't count.
One of the most common mistakes people make with sign-up bonuses is thinking that their new card's annual fee counts toward the spending requirement for the bonus. It does not. You have to pay any annual fee on top of the minimum spending requirement, which is only counted on purchases made with your new card. Pay close attention to your spending in those first crucial months or you could miss out on the bonus altogether.
Look Into These Cards Offering a Sign-Up Bonus
Most rewards credit cards, with the exception of the most basic products, offer sign-up bonuses. But the bonus, ongoing rewards and especially annual fees can vary greatly, so research your options carefully and decide which types of rewards best fit your lifestyle before deciding on a card. Here are a few of the best that are currently available:
Chase Sapphire Preferred® Card: Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 toward travel when you redeem through Chase Ultimate Rewards, but these points can also be transferred to the loyalty programs of 10 partner airlines and three hotel chains. The card's annual fee is $95.
- Bank of America® Premium Rewards® credit card: Earn 50,000 bonus points, a $500 value, after you make at least $3,000 in purchases in the first 90 days of account opening. The annual fee is $95.
- Southwest Rapid Rewards® Premier Credit Card: Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. In addition, during the first year, new cardholders can earn 3 points per dollar on dining, including takeout and select delivery services. The annual fee is $99.
Make Sure Your Sign-Up Bonus Works for You
Credit card sign-up bonuses can be the fastest way to earn rewards points or cash back. Some of the best rewards credit cards offer sign-up bonuses of thousands of points or miles that you can redeem for free flights or nights at hotels. Other cards offer points worth hundreds of dollars in cash back that you can put toward travel and other expenses.
Before you apply, though, make sure you will be able to meet any spending requirements for a new credit card (and pay off the balance quickly) and that you will be able to use the bonus points or miles for the rewards you want. Otherwise, you might not get the value you expect from your sign-up bonus. You can find current credit card offers and personalized picks through Experian CreditMatchTM.
All information about the Barclays' AAdvantage® Aviator® Red World Elite Mastercard® and Bank of America® Premium Rewards® credit card has been collected by Experian and has not been reviewed or provided by the issuer of the card. Offer details may be outdated.