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Huge sign-up offers on the wane

By Janna Herron ·
Friday, June 15, 2012
Posted: 4 pm ET

Those hugely attractive sign-up bonuses for credit cards aren't as sexy as they used to be.

Recent media reports have noted several surveys that show issuers are slagging off on lucrative sign-up bonuses. They had ramped up the incentives in the last two years to grab the highly coveted affluent consumers with great credit scores.

This year, issuers appear to have stopped one-upping each other.

"Overall sign on bonuses have been 'cool' thus far in 2012," says Roy Persson, director of competitive tracking services as Ipsos, a private research think-tank.

"We see some bonuses getting slightly richer, but the overall trend is a general cut in offers with sign-on bonuses," he says. "And, amongst those with sign-on bonuses, the values are 'maintained' from the 2011 highs we once saw."

The good news is that means the offers are still pretty good if they are on par with last year's incentives. However, they may be harder to get. Bankrate's 2012 survey of rewards cards found that many issuers required a higher spending threshold before a cardholder was awarded the sign-on bonus.

This may not be the start of a new trend, but rather the normal ebb and flow of credit card offers, says Bill McCracken, CEO of Synergistics, an Atlanta-based market research firm.

"The industry gets in a cycle of offering greater and greater points and mile, and then the next issuer tries to one-up," he says. "The industry pushes as far as they can and then there is a pullback, and that's what we're seeing right now."

McCracken predicts the sweet sign-up bonuses will be back as issuers continue to chase that narrow pool of superprime consumers.

"If consumers wait a little bit, like six to 12 months, issuers will get back to the richer offerings," he says.

Of course, there's more to a credit card than its sign-up bonus. Consider annual fees, interest rates, penalty clauses and the rewards programs. If you don't have to change your spending habits to earn the rewards and the annual fee more than pays for itself, that card may be a winner. But remember to pay off your balance every month; otherwise, what you pay in interest could outpace the value of your rewards.

What's the best sign-up incentive you've seen recently?

Follow me on Twitter: @JannaHerron

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