At a Glance
Some cash-back credit cards offer a sign-up bonus, which is extra cash in your pocket if you meet certain spending requirements within a specified time period. Taking advantage of these sign-up bonuses can help your rewards go further.
In this article, learn more about:
What is a cash-back credit card?
A cash-back credit card is a great way to get rewarded for shopping. When you use a cash-back credit card to make purchases online or in stores, you will earn a small percentage back for each dollar you spend. Typically, these rates can range from 1% to 6% or more depending on the category of the purchase and type of card you have.
When comparing cash-back credit cards, one factor to consider is whether they offer a sign-up bonus. This is an extra incentive offered when you apply and are approved for the card. There are different ways you can get this bonus, and qualifications you must meet to earn them.
Types of credit card bonus offers
The two primary ways sign-up bonuses are offered are in cash back or points/miles.
- Cash back bonuses are the more flexible option, and while you may not earn as much as you would with points/miles, they are easier to redeem and spend. To redeem the cash back, you can request a statement credit, get a paper check, or have the funds directly deposited into your checking or savings account.
- Points and miles typically go the furthest when you redeem them for travel purchases, such as flights or hotel stays. Some cards allow you to redeem these points/miles for cash, statement credits, or gift cards, but the conversion rate won’t be as high. However, redeeming them as points or miles may be a little more time-consuming because you will want to make sure you’re getting the best travel plan deals.
Most cards offer a cash back, points or miles sign-up bonus if you meet certain requirements, like spending a set amount of money within a distinct period. For example, get $500 cash back if you spend $1,000 in the first six months of having the card. Or you may receive 50,000 points if you spend $5,000 in the first three months.
Be sure to read the card’s terms to understand how the cash back works.
How to choose a cash-back credit card with a sign-up bonus
There are several factors to consider when comparing cash-back credit cards, with a sign-up bonus being just one of them. However, even comparing sign-up bonus options has several considerations. Some questions to ask yourself include:
- What is the card’s annual fee? Most cash-back credit cards do not come with an annual fee, but if the card does have one, be sure to weigh the fee against the bonus and other perks. In most cases, the lower the fee, the smaller the sign-up bonus, but they also likely have lower minimums to meet to activate the bonus.
- Can I reach the minimum to activate the bonus? Calculate how much you’ll have to spend to reach the bonus threshold and be sure it fits into your budget. Don’t spend a bunch of money you did not plan for just to get the bonus, because it will not be worth it if you can’t pay off your balance and start accruing interest.
For example, if you typically spend $1,000 per month, but the minimum to earn the bonus is $5,000 in three months, that card may not make sense for you.
- Is this the best offer available? If you do not travel very often, a card that offers a points/miles bonus may not make sense for you, no matter how high the bonus is. Be sure to research offers from different companies, as well as the redemption options available, so you don’t get a bonus that you can’t use.
- Compare all of the card’s factors. Look at the APR, type of cash-back card (i.e. flat-rate, fixed bonus category, or rotating bonus category), the types of spending categories that are rewarded, reward rates, fees, and other factors. Don’t just compare sign-up bonus options because the card with the best bonus may not be the best overall for you.
Ways to maximize a sign-up bonus
Once you decide on a card, there are a few things you can do to get the most out of your sign-up bonus:
- Align your application with your spending. Is there a time coming up when you’ll be spending more money, such as right before the holidays or booking a vacation? If so, submit your application before that. This will help you reach any spending limits to get the bonus.
- Know what spending counts toward earning the bonus. Some cards don’t allow certain purchases to count toward earning the bonus, such as gift cards or cash advances. Make sure to read the fine print in the cardholder agreement to know what does and doesn’t count.
- Stick to your budget. Don’t overspend just to get the bonus. Doing so can add to your credit card debt and be more harmful than helpful in the long-run.
- Keep an eye out for special offers. Sometimes cards offer different sign-up bonuses throughout the year, or add on additional offers for more points, miles, or cash. Be on the lookout for these offers.
- Avoid fees. Pay attention to fees such as convenience fees, annual fees, or others that can take away from the bonus you earn.
Best cash back sign-up bonus credit cards
Card sign-up bonus offers can change throughout the year, but as of March 2022, here are some of the best sign-up bonus offers:
|Amazon Prime Rewards Visa Signature Card||
|Bank of America Customized Cash Rewards Card||
|Capital One Quicksilver Rewards||
|Capital One SavorOne Cash Rewards||
|Chase Freedom Flex||
|Chase Freedom Unlimited||
|Citi Custom Cash Card||
|Wells Fargo Active Cash Card||
American Express also has several cash back cards that provide sign-up bonuses, but the minimum you must meet to get the bonus is higher, and many of these cards have an annual fee. However, cardholders can earn up to 6% on purchases in certain categories. Non-cash back cards offer rewards as membership rewards points, but these points can be redeemed for travel, gift cards, statement credits, points with transfer partners (like airlines and hotels), shopping, or charitable donations.
What is a credit card bonus offer?
Some credit cards offer a sign-up bonus for new cardholders if they spend a specific amount within the first few months of having the card. This minimum amount, and the bonus itself, depends on the card. Bonuses can come in the form of cash back, points, or miles, but may also have additional special bonus offers.
Should I get a cash back card with a sign-up bonus?
Sign-up bonuses are a fantastic way to earn a little extra for opening a credit card. If you’re looking for a new card, you should compare cards with bonus offers. However, be sure reaching the bonus threshold is feasible. Don’t spend more just to meet the bonus; otherwise, you can easily start accruing credit card debt.