What is a credit card sign-up bonus?Updated: May 2, 2019

There are a lot of reasons to get a new credit card. You might be new to the game of credit and want to build yours up with a credit card. Maybe you’ve been bitten by the travel bug and want a travel credit card that will reward you for all those dollars you’re spending on flights and hotel stays. Or perhaps you’re carrying a balance on a credit card with a high APR and the interest payments are getting to be too much, so you set your sights on a balance transfer credit card. Whatever the reason, when shopping for a new credit card, you will likely run into a number of cards offering a sign-up bonus (also known as an intro bonus), and that might be cause for some uncertainty on your end. Can you take advantage of them if you already have a credit card with the provider? Is it possible to lose your sign-up bonus? Are these offers just ploys by the credit card companies to lure you into applying for a new credit card? Stay tuned if you want to understand the basics of how credit card sign-up bonuses work, as well as find out which credit cards offer the best sign-up bonuses.

What is a sign-up bonus?

Though they come in a variety of shapes and forms, most sign-up bonuses involve you, the customer, receiving some sort of perk or benefit in exchange for meeting certain criteria when you apply for a new credit card. For rewards credit cards, these tend to be in the form of spending a certain amount of money within a certain time-frame (e.g., spend $1,000 in the first 90 days) and receiving a bonus in return (e.g., $200 cash back bonus). These offers change from time to time, so you might see a credit card with a certain sign-up bonus one month and then see it advertised with a different one the next. Additionally, it’s possible for certain consumers to receive personalized sign-up bonus offers from credit card issuers based on their creditworthiness (e.g., an advertisement received in the mail or offers shown when you use a pre-qualification tool).

Why do credit cards offer sign-up bonuses?

To put it quite simply, a sign-up bonus is meant to attract new customers to apply for a credit card. Providers know that people are always on the lookout for a good deal, so pairing enticing bonuses with opening a new account is a great way to drive new customers to their cards. While some might think these bonuses are only beneficial to the credit card providers, that’s far from the truth. The discerning consumer can make credit card intro bonuses work for them by keeping a few key points in mind before they apply.

How can you make a sign-up bonus work for you?

First, you should only apply for a credit card if it makes financial sense for you to do so. Intro bonuses can be used strategically to benefit you, but if you are taking on extra debt to meet a credit card’s intro bonus minimum, then you run the risk of winding up in financial peril. It’s ideal to only apply for a credit card when you are capable of taking on the extra responsibility. Additionally, you should only consider cards with a sign-up bonus that is realistic for you. Earning $500 for spending $3,000 in the first 90 days might sound great, but if your budget doesn’t allow for that, then you are essentially throwing money into a hole. The idea is to choose a credit card with an intro bonus that is easily attainable through spending you were already planning to do — such as using the card to cover your monthly expenses. If your new credit card also has a 0% intro APR on purchases, you might also earn the bonus by making a large purchase you have been planning for to reap the benefits (and pay it off before the 0% intro APR period ends). Make sure you read your credit card agreement thoroughly to ensure you understand the full terms of any sign-up bonus you want so you don’t end up disappointed.

What to know before you apply …

  • Most sign-up bonuses are limited to new customers only. This means that if you are already an American Express customer (or have been in the past), for example, you probably won’t be able to apply for a different American Express credit card and get the intro bonus. It might seem unfair, but as these offers are designed to entice new business, that’s the way they work with most providers. You can always try asking before applying to see if you can take advantage of an offer as an existing or previous customer.
  • It’s possible to lose your intro bonus. Of course, if you don’t meet the criteria for receiving the bonus in the first place, you won’t get it. But bear in mind that it’s also possible to forfeit a sign-up bonus through actions like not paying your monthly bill or paying late too many times. This applies to special intro APR offers, as well, which can be even worse to lose since you probably applied for a credit card with a long 0% intro APR for a reason.
  • Balance transfers do not count as purchases. Some credit cards with long 0% intro APRs on balance transfers also offer attractive sign-up bonuses that can be earned by spending a certain amount, however, if you are planning to transfer a balance, then you should know that they will not help you earn the sign-up bonus. Depending on your financial situation, it may make sense for you to choose a straightforward balance transfer credit card, so you’re not tempted to spend more to receive an intro bonus.

Now that you understand how credit card sign-up bonuses work, you’ll want to make sure you pick the best bonus for your spending habits. There are so many credit cards with solid bonus offers, and you can find them all by reading our rewards credit card reviews.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.