Should You Get a Credit Card Just for the Sign-Up Bonus? (2024)

A sign-up bonus can be one of the most attractive features of a rewards credit card, and is often front and center in advertising materials and online recommendations.

Credit card companies offer sign-up bonuses to motivate consumers to apply and start spending quickly. For consumers, these bonuses can be a great way to rack up rewards for a specific goal, such as a vacation or a large purchase, or for general use in the future.

To earn one, you’ll typically need to meet a spending requirement within a few months. For example, the Chase Sapphire Preferred® Card offers 60,000 bonus points after you spend $4,000 in the first three months.

But not all welcome bonuses are created equal, and while a bonus can give you a relatively quick injection of cash, points or miles, it’s important to look beyond the introductory offer to understand if the card itself is worth your while.

How to evaluate a credit card sign-up bonus

The value of a welcome bonus isn’t always what it seems, and there are other benefits and terms to consider to determine whether a bonus is a good fit.

The true value of the bonus

If you’re applying for a cash-back credit card, the value of the bonus is straightforward—for example, you may earn $200 after you spend $500 or $1,000 in a few months. But when it comes to points and miles, values can vary wildly depending on the program and can be difficult to decipher.

General rewards programs administered by credit card issuers are relatively transparent. Redemption values can vary depending on how you use your rewards, but they’re usually fixed—you may earn 1 cent per point if you redeem points for travel and 0.5 cents per point if you request cash back.

With the Chase Sapphire Preferred, for example, you’ll get 1.25 cents per point if you redeem for travel through Chase Travel℠, giving you $750 in value on 60,000 bonus points. However, if you request cash back, you’ll get 1 cent per point or $600. If you choose this option, you’re essentially leaving about $150 on the table. Using your points to pay for Amazon purchases nets you just 0.8 cents per point, leaving you with just $480 in value.

In some cases, redemption rates may be easy to find on the card issuer’s website—American Express provides a points calculator to make it easy to value its Membership Rewards program. But with most general travel programs, you have to be a cardholder and log in to your account to view redemption values.

With travel rewards cards or airline- and hotel-loyalty cards, however, evaluating a rewards-program currency can be tricky. Many travel rewards experts publish average values for the top rewards programs, using data derived from redemptions based on variables such as travel dates, domestic vs. international itineraries, fare types, property category and more.

“But the number that you see for what every point is worth is often what you get when you utilize your rewards in the best possible way,” says Derek Flanzraich, founder and chief executive at Ness, which offers a wellness-focused charge card. At the very least, it can take a lot of research and flexibility to maximize rewards value if you’re focused solely on the math.

To simplify things, you could focus on how the bonus can help you achieve your goals. “Are these the points that are gonna get you on that lifetime trip or pay for your honeymoon?” asks Matthew Goldman, who advises credit card companies on new credit and debit card offerings. “Flights and hotel stays have a cash value ultimately, but they also have a noncash value in terms of experiences you might not otherwise pay for, which is really important.”

The card’s annual fee

Many credit cards that offer sign-up bonuses also charge annual fees, with the first typically showing up on your initial statement. Some experts recommend dividing the value of the bonus by the annual fee to determine how many years’ of fees your bonus covers. If it’s three or more, those experts say, you’re in the clear.

But because the sign-up bonus is just one of a card’s many features, it makes sense to consider the card’s overall value to determine whether it’s worth its cost. In cases where you can get enough value from the card’s rewards program and ancillary perks to cover the annual fee, it may not be as relevant to your evaluation of the sign-up bonus.

Spending requirement

Most rewards credit cards require you to spend a certain amount within three to six months to earn the welcome bonus. With some cards, this threshold can be as low as $500, but in other cases, it can be upward of $3,000. No-annual-fee rewards cards tend to have lower spending requirements.

If your regular credit card spending is enough to comfortably meet the minimum requirement within the promotional period, you don’t need to worry. But if the threshold is more than you usually spend, overspending for the sake of a sign-up bonus could negate its value.

If you think you’ll need the full promotional period to meet the minimum, make sure you have the right deadline. The clock typically starts when the card issuer approves and opens your account, not when you receive the card in the mail.

Ongoing rewards

Sign-up bonuses may be a reason for applying for a credit card, but if you’re planning to use the card for your everyday purchases, you’ll likely get more value in the long run from continuing rewards.

“People should consider how much they’re actually spending and what categories they’re going to be rewarded in and do the math in terms of what value can come out of the card,” says Flanzraich.

As you compare credit cards, take a look at your spending habits, particularly in which categories you spend a lot. Rewards cards may offer extra rewards on groceries, dining out, travel, gas or any other number of categories, or they may offer a flat rate on all of your purchases.

If a card has a generous sign-up bonus, but the rewards rates don’t align with your spending, or they’re too complex for your taste, it might not be the right fit.

Rewards flexibility

Consider how much flexibility you want when you redeem your rewards. If you like the idea of using points or miles to cover a variety of travel expenses, for instance, general rewards programs operated by credit card providers tend to be better than specific hotel and airline loyalty programs.

In fact, some rewards programs, including American Express Membership Rewards, Chase Ultimate Rewards, Citi ThankYou Rewards and Capital One Venture Miles, allow you to transfer your rewards to various hotel and airline program partners.

That said, if you prefer the benefits you can get with a particular airline or hotel brand, such as free checked bags and priority boarding or elite hotel status and free night certificates, having less redemption flexibility may be an acceptable trade-off.

If you want to use the sign-up bonus for a specific trip, make sure the redemption options align with your travel plans, especially if you’re opting for an airline or a hotel credit card. If you want to travel to Europe, for instance, a Southwest Airlines credit card won’t help you since Southwest does not fly there. And while Hyatt points are generally more valuable than other hotel loyalty rewards, the hotel brand has a much smaller footprint compared with Marriott, Hilton and IHG.

Card perks

Many credit cards, especially travel credit cards, offer a variety of perks that can add value to your cardholder experience. For example, a card may offer credits toward select travel purchases, complimentary airport lounge access, flight or hotel stay certificates or dining credits, among others.

In some cases, the value of these perks can be more valuable than the annual fee. To take the most advantage, though, you’ll want to pick a credit card with benefits that align with your lifestyle. If a specific premium travel credit card offers benefits on brands you already use, it could make sense to choose that card even if its sign-up bonus isn’t the best around.

“If you’re a frequent guest at Hilton hotels and you get a Hilton credit card that offers elite status, which comes with free breakfast and room upgrades, that has a lot of lasting value,” says Goldman.

Other factors to consider before applying for a credit card

Regardless of your reasons for applying, there are a few factors to keep in mind to evaluate your readiness for a new credit card.

Credit score

Credit card issuers typically don’t disclose a minimum score requirement, but most rewards credit cards with sign-up bonuses stipulate that you need good credit. According to FICO, that means a credit score of 670 or higher. However, as long as you meet the general criteria of the card, you’ll get the advertised bonus. Issuers won’t offer more for higher credit scores.

That said, your credit score is just one factor that card issuers consider when you apply for a credit card. They’ll also look at your income, other debts and credit history before making a decision.

Payment habits

Ideally, use rewards credit cards only if you can afford to pay off your balance on time and in full every month. As of February, the average annual percentage rate on a credit card was 20.92%, so not doing so can get costly fast.

If you think you might carry a balance on the new card, consider how the interest charges will diminish the value of the rewards and other benefits. Also, consider how having high-interest credit card debt could impact your budget, lifestyle and other financial goals. A new credit card isn’t worth it if it threatens your financial security—no matter how good the sign-up bonus.

Current cards

If you currently use a rewards credit card, consider how the new card’s rewards rates and other benefits complement what you already have. Having multiple credit cards can allow you to take advantage of the range of features different cards offer, but you can limit your value if you aren’t careful.

If you have a card with great rewards rates on grocery and gas purchases, for instance, it may not make sense to get another card with accelerated rewards for those same categories. And if you already have a credit card that offers certain travel benefits, try to find a card that provides perks that don’t overlap to maximize value.