Is a Credit Card Sign-Up Bonus Worth It?

That new credit card sign-up bonus might look tempting, but before you apply to get the cash back, points or rewards, take a few things into consideration.

A woman sitting on her sofa smiles as she looks at her credit card and holds a tablet.
(Image credit: Getty Images)

Many credit card companies offer a welcome bonus as an incentive for consumers to open a card and start spending money. A credit card sign-up bonus can range from less than $100 to upwards of $1,000 in the form of cash back, points or miles.

Before you open a new card for the bonus cash back, points or miles, though, it's important to consider a few things to determine whether it's the right financial move.

What to Consider Before Jumping on a Credit Card Sign-Up Bonus

Whether you've had your eye on a credit card for a while or you've recently seen a card with a solid limited-time offer, here are some of the factors to consider before you choose a credit card and submit an application:

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Bonus value. Cash back credit card bonuses are pretty straightforward, but when it comes to points and miles, avoid picking a bonus based solely on its face value. While some rewards programs are transparent about how much each point or mile is worth, others are less so. Travel rewards websites like The Points Guy can help you get a good idea of how much a bonus is worth based on the value of the program's rewards.

Spending requirement. Review the spending requirement to earn the bonus and determine whether you can meet that threshold without spending money you wouldn't otherwise spend.

Other card benefits. Base your decision whether to apply on the entirety of the card's features, not just the bonus. For example, check to see if the rewards rates align with your spending and consider how much value you can get from ancillary card benefits.

Annual fee. Some credit cards that offer sign-up bonuses also charge an annual fee. Although it's possible to get that value back through the card's benefits and ongoing rewards alone, it can still be a good idea to calculate how many annual fees you can cover with just the bonus. Personal finance website NerdWallet recommends that a sign-up bonus cover a minimum of three years' worth of annual fees.

Your spending habits. It's best to consider a rewards credit card only if you can afford to pay off your bill in full every month and avoid interest. If you carry a balance from month to month, the interest you pay could diminish or even neutralize the value of your bonus. If you've had issues with overspending in the past or you're concerned about carrying a balance, the bonus might not be worth the headache. Even if you plan to pay off your balance in full each month, know what the card's interest rate will be in the event that you can't.

Also, keep in mind that most credit cards that offer welcome bonuses require you to have good or excellent credit to get approved. According to FICO, that typically means having a credit score of 670 or higher.

Choosing the Right Credit Card for You

Credit card sign-up bonuses can provide a lot of value, but it's important to consider a variety of factors to determine if a specific card and bonus are right for you. With the right approach, you can decide for yourself whether you should apply for a credit card and, if so, whether a bonus is worth it to you.


Ben Luthi

Ben writes about all things personal finance, including consumer credit, credit cards, mortgages, student loans, investing and budgeting, as well as travel. Before his career as a writer, Ben worked in financial planning and insurance, banking and auto financing. After working as a staff writer at NerdWallet and Student Loan Hero, he started freelancing full time in 2018. Ben earned a B.S. in business administration with a finance emphasis from Brigham Young University. He lives near Salt Lake City with his two kids and two cats.