Deciding how to use your credit card sign-up bonus offer
Quick insights
- Sign-up bonus offers are typically offered to new cardmembers in the form of cash, rewards points, miles or statement credits.
- Generally, cardmembers must meet spending thresholds within a specific time period to earn a new cardmember bonus offer.
- Considering your financial goals may help you determine how best to use your offer.
Credit card sign-up bonus offers, also known as a new cardmember bonus offer, are a one-time offer to new cardmembers to earn additional rewards. Sign-on bonus offers are designed to attract new customers by offering an initial reward for opening the account and meeting the specified spending requirements. However, it can be important to read the fine print to understand the specific terms—such as spending thresholds and time limits—that apply to each bonus offer.
Provided you can meet the terms of the offer, new cardmember bonus offers can be a great way to get rewards that would normally take much longer to earn.
Read on to learn about these offers and ways to use them.
Common credit card sign-up bonus offers
A new cardmember bonus offer will typically include one of the following:
- Cash back: Cards may offer a cash reward after you meet a designated spending threshold. Depending on the card issuer, the reward is generally credited to your account, deposited into a checking account or issued as a check.
- Rewards points: Cards often provide a bulk of rewards points when the cardmembers meets the pre-determined spending threshold.
- Miles: Some credit cards cater to frequent travelers by offering miles that can be redeemed for flights, hotel stays or other travel-related expenses.
- Travel or statement credits: In addition to points or miles, certain cards provide travel credits (e.g., airline fee credits) or broad statement credits.
Ways to use a credit card sign-up bonus offer
The type of bonus offer may help dictate some of the ways that you can use it. Commonly though, new users can redeem rewards or bonus offers for:
- Cash back: Convert the bonus into cash, which can be used to pay down your balance, cover expenses or even treat yourself.
- Travel: You may be able to use rewards points or miles to cover flights, hotel bookings or travel-related expenses.
- Upgrading your travel experience: Some bonuses allow you to upgrade your travel class or access exclusive airport lounges, providing a more comfortable journey.
- Statement credits: You may be able to apply the bonus as a statement credit on your account. You may want to verify whether using a statement credit provides the best value compared to other redemption options available through your card issuer.
When determining how to use your new cardmember welcome bonus offer, you may want to consider your goals or financial plans. For example, if you’re trying to pay down debt, you may find the most value in using your bonus to get cash back. On the other hand, someone who’s taking a dream vacation may find the most value in cashing in their bonus for a first-class travel upgrade.
You may also want to evaluate your options to determine where you’ll get the most value. Sometimes, booking travel or securing certain perks can provide more value per point than a cash equivalent. Similarly, you may want to verify whether using a statement credit provides the best value compared to other redemption options available through your card issuer.
Requirements to earn a sign-up bonus offer
New cardmember welcome bonus offers typically have conditions and requirements that must be met to earn the bonus:
- Minimum spending requirement: This stipulates that you must spend a specific amount on your new card within a set time frame (e.g., $3,000 or $5,000 within the first three months) to qualify for the offer.
- Time frame: The spending requirement typically must be met within a designated period after account opening. Failing to spend the specified amount within this time can result in forfeiting the offer.
- New customer status: Sign-up bonus offers are usually reserved for new cardholders. If you already have an account or different card with the issuer or have had one in the recent past, you might not be eligible.
- Eligible purchases: Not all purchases may count toward the spending requirement. Some issuers exclude transactions like balance transfers, cash advances or payments to installment loans.
- Account maintenance: In some cases, the offer may only be awarded if your account remains open and in good standing (with no significant late payments) during the promotional period.
- Activation or enrollment: Some cards require you to activate the offer or enroll in the promotion after opening an account, so you may want to note any specific instructions provided in the offer.
Knowing the card’s specific terms—such as spending thresholds and time limits—that apply to each offer can help you gauge how likely you are to meet the requirement.
How a new card can impact your credit score
Earning a new cardmember welcome bonus offer typically means that you’re opening a new credit card, which can impact on your credit score. When you apply for a new credit card, the issuer will likely run a hard inquiry on your credit. This inquiry can cause a temporary dip in your score.
But there are also potential advantages of opening a new line of credit, including:
- Improved credit utilization: Opening a new card increases your total available credit. If you maintain low balances, your credit utilization ratio may improve, which can positively affect your score.
- Credit variety: Having a variety of credit types (credit cards, loans, etc.) can benefit your credit score. Opening a new credit card, when managed responsibly, can contribute to a healthier credit mix over time.
- Improved credit history: One significant factor in your credit score is your payment history. If you use the new credit card responsibly and make timely payments, it may have a positive long-term effect on your score.
In summary
Opening a new credit card often includes a new cardmembers welcome bonus offer. These offers are usually in the form of cash back, rewards points or miles and provide the opportunity to earn rewards that would normally take much longer to earn. Your financial goals can help you determine how best to spend or cash in your bonus offer.
Keep in mind that welcome bonus offers are not guaranteed. They require the new cardmember to meet spending requirements within a specific time period. You can only earn the rewards if you meet the requirements.
