How to choose the best sign-up bonus
Sign-up bonuses are great, but it’s important to make sure you’ll still receive value from the card when the bonus is earned and gone. Know how and where you spend money, have a solid budget in mind and take your credit score into account when searching for the perfect sign-up bonus.
Know your spending patterns
What do you spend the most on? Where? Having a good idea of your spending patterns is important when looking into new credit cards. The worst situation you could get yourself into would be applying for a card that you can’t afford. For example, if you don’t spend much on travel, it doesn’t make sense to get a co-branded airline card that offers miles as a sign-up bonus.
Don’t overspend – know your budget
It’s crucial to have a full understanding of your budget and what you can reasonably afford to spend with a credit card. Sign-up bonuses can be tempting, but always make sure you can afford the minimum spending requirement that comes with it.
For example, the Citi Premier℠ Card offers a 60,000-point welcome offer when you spend $4,000 in your first 3 months. If you can’t afford to spend approximately $1,333 a month to meet this requirement, you probably shouldn’t apply for the card. Even if you can afford it, make sure you’re not stretching to meet the requirement. If you know you can comfortably spend $4,000 in 3 months, then go for it.
Consider your credit score
Credit card applications require a hard credit check, which has a direct and temporary impact on your credit score. That means if you apply for a credit card that requires a higher credit score than you have, you could ding your credit score while being denied.
In order to minimize the chance of your application being denied, always do your research before applying. Each credit card lists the credit score required to qualify, or just check Bankrate credit card reviews for the information.
Make sure to take advantage of any pre-qualification checks a credit card issuer may offer. These checks won’t guarantee your qualification for a card, but it’s a good precautionary step.
Which credit card has the best sign-up bonus?
The best credit card sign-up bonus for you depends on a few factors:
- What type of rewards you’d like to earn (i.e., cash back, points, miles)
- The rewards structure of the card
- Whether or not you can afford to meet the qualifying spend of the sign-up bonus
If you’re most interested in earning a cash back bonus and usually spend $500 a month on your card, look for a cash back sign-up bonus with a $1,500 or less qualifying spend.
How to compare 2 credit cards with sign-up bonuses
Let’s compare the sign-up bonus value of the Barclaycard Arrival Plus World Elite Mastercard and Capital One® Venture® Rewards Credit Card:
||Barclaycard Arrival Plus® World Elite Mastercard®
||Capital One® Venture® Rewards Credit Card
|TPG March 2019 point valuation
||$5,000 * 4 quarters * 2X miles * $0.01 = $400
||$5,000 * 4 quarters * 2X miles * $0.014 = $560
||Unlimited 2X miles on every purchase
||Unlimited 2X miles on every purchase
10X miles on thousands of hotels booked at hotels.com/venture
||$89, waived first year
||$95 (waived first year)
||70,000 miles when you spend $5,000 in the first 90 days of account opening (worth $700)
||50,000 AAdvantage bonus miles after $3,000 in purchases within the first 3 months (worth $500)
||First year: $1,100 (including sign-up bonus)
Second year: $400
|First year: $1,060 (including sign-up bonus)
Second year: $560
Rewards values vary
The first thing to take away from our Barclaycard Arrival Plus World Elite Mastercard and Capital One Venture Rewards Credit Card comparison is that rewards values vary. Based on the month, the worth of a certain issuer’s points and miles can take on more or less value. (Our experts consult The Points Guy when determining the current value of credit card rewards.)
As of March 2019, Capital One Credit Card Rewards are worth 1.4 cents per point when redeemed for airfare – slightly higher than the 1.0 cent value of Barclaycard Arrival Miles. This gives the Venture card an advantage, despite the Barclaycard Arrival Plus World Elite’s larger sign-up bonus.
Is the annual fee is worth it?
In the case of annual fees, it usually goes like this: the larger the sign-up bonus, the larger the card’s annual fee. It’s common for smaller annual fees to be waived the first year, such as those in the $95 range. High-end cards tend to charge upwards of $400, but come with perks that make up for a portion of the fee (i.e., Global Entry and TSA PreCheck fee credit).
In the case of the Barclaycard Arrival Plus World Elite card and Venture card comparison, both charge a relatively small annual fee, waived the first year. The Barclaycard charges slightly less ($89) compared to the Venture card ($95), but as our calculations have found, you’ll easily be able to make up for each card’s annual fee, even after the first year.
If you think you card’s annual fee is cutting it close, make sure to add in the value of the perks/discounts offered by your card of choice, as well as your likelihood of fully utilizing them.
How to maximize your sign-up bonus
In order to maximize your card’s sign-up bonus, it’s important to know if your issuer offers the chance to boost your rewards value.
Travel and shopping portals
Did you know you can boost the value of your sign-up bonus by using a travel or shopping portal? Some credit card companies offer the chance to boost the value of your rewards by redeeming through the issuer’s portal.
Who offers these programs?
Pretty much every bank has their own travel or shopping portal. For example, Chase‘s travel portal is called Chase Ultimate Rewards Travel. Citi also offers a 25% bonus on airfare travel booked through the ThankYou® Travel Center.
How do these programs work?
The Chase Sapphire Preferred® Card, for example, offers a 60,000-point bonus when you spend $4,000 in your first 3 months. And when redeeming your bonus, you’ll get a 25% boost in redemption value through the Chase Ultimate Rewards program. That means your sign-up bonus, which started out with a value of $600, would be worth $750 when redeemed for travel through the Chase portal.
When is it best not to get a sign-up bonus credit card?
Just because a card doesn’t offer a traditional sign-up bonus doesn’t mean it’s of lesser value. In fact, some cards offer an alternative incentive. For example, in lieu of a sign-up bonus, the Discover it® Cash Back card will automatically match all of the cash back you’ve earned at the end of your first year.
Further, cards like the Citi® Double Cash Card reward you as you pay off your purchases. With the Double Cash, you’ll earn 2% back for each dollar you spend — 1% when you make a purchase and another 1% when you pay it off.
Starter credit cards like the Capital One® Platinum Credit Card typically don’t offer sign-up bonuses and instead will offer perks like no annual fee. These cards can help you to build your credit and sway you away from spending more than you can afford.
Additional reviews and research
For more information on the best sign-up bonus credit cards for spring 2019, read our expert reviews for individual cards.