Credit Card Sign-Up Bonuses
As a nation, we’re not strangers to the idea of how special offers and bonuses work. They reel us in via sale prices, 2-for-1 offers and free gifts with purchase – and sometimes, they incent us to overspend in order to redeem offers. However, for responsible spenders, credit card sign-up bonuses can be valuable incentives for borrowers who don’t carry credit card debt. Here’s a quick look at the types of bonuses you may come across, and what to consider before signing up.
Types of credit card sign-up bonuses
The types of sign-up bonuses you’ll see usually depend on the type of rewards credit card you’re looking at. Here are some of the most popular kinds of bonus offers:
1. Travel rewards points/miles
Most travel rewards credit cards come with sign-up bonuses, typically in the form of a number of free rewards points or miles. For example, the Capital One World Aspire MasterCard gives you 35,000 miles on your first purchase, which could be valued at $350 if you save your points and redeem on $600 of travel or more. It also comes with 10,000 miles on every anniversary, which could be valued at $100 if spent correctly, and would knock the annual fee down from $120 to just $20.
The one thing to consider, before signing up, is what the value of those points really is. For example, two different cards may both offer 30,000 points, but one could be the equivalent of a free flight whereas the other may only get you halfway to the same destination. Determine how the rewards cards’ points are valuated and crunch some numbers, to make sure you’re getting the best deal.
2. Companion flights
If you get a credit card attached to a specific airline, they will sometimes offer a free or cheap companion flight as part of the sign-up bonus. The WestJet RBC World Elite MasterCard is one card that not only comes with a travel reward ($250 WestJet dollars) but also an annual round-trip companion flight for just $99. A companion flight is good for a second ticket on the same exact flight, so you can bring a friend or loved one along with you. Just note that you may also have to pay the surcharge fees and taxes, even if the companion flight is said to be free.
3. Waive of annual fee
One of the only downsides to getting a rewards credit card is they usually come with an annual fee, often in the $20-120 range. Fortunately, some credit card sign-up bonus offers include the waiving of that fee for the first year; this adds immediate value to the card, because it means you’ll receive a year of its rewards at no cost to you. The Scotiabank Momentum VISA Infinite is a cash back credit card that is currently waiving its $120 annual fee as part of its sign-up bonus.
Usually, you only receive cash back rewards once a year or anytime you reach a specific milestone (e.g. you get a cheque every time you reach $50). However, sometimes you’ll come across a cash back credit card that actually offers you cold hard cash as part of its sign-up bonus. If the card has a low annual fee, this type of reward may immediately pay for itself, so it’s an offer worth investigating.
You’ve likely seen more and more ads up for banks that are offering new customers free electronics, such as tablets and smartphones, just for opening accounts with them – and some credit cards do the same thing. On top of that, some include things like free movie tickets, gift cards to certain stores and more. Scotiabank’s SCENE VISA is one of its most popular credit cards, because you get 4,000 SCENE points (equivalent of 4 free movies) with your first purchase.
6. Discount off today’s purchase
One of the most popular ways retailers get shoppers to sign-up for store credit cards is by offering them a discount on their purchase for doing so. One of the more popular retailers to offer this is Amazon.ca with the Amazon.ca VISA. When making a purchase on their website, you’ll be prompted to sign up for the card; doing so gives you $20 off your purchase and you’ll earn 2 points for every $1 spent on their site in the future. While this seems great at the time – especially when they tell you the exact dollar amount you’ll be saving that day – unless you’re a regular shopper at their store and their rewards are great, it’s probably not worth signing up for this offer. Store credit cards come with higher interest rates than most other credit cards, so you’d never want to rack up a bill you couldn’t afford to repay in your grace period.
7. Third-party sign-up bonuses
Finally, if you choose to apply for a credit card from another vendor (such as a retailer) other than through a credit card issuer (e.g. a lender), you’re probably doing so because of the extra sign-up bonus it comes with. Companies often establish partnerships with credit card providers so they can offer additional sign-up bonuses to bring in customers. Amazon is one example of a retailer who hosts online application forms for a limited number of credit cards. By signing up for the card through Amazon’s website, you not only get the rewards card and its usual sign-up bonuses, you also get an Amazon gift card, typically in the range of $25-75.
What to consider before applying to get a sign-up bonus
Before you start filling out application forms for every great sign-up bonus you see, there are a number of things you should consider:
- You need to have a good credit score (sometimes even excellent) to qualify for a rewards card. Without that, you may be declined, which takes an automatic hit to your credit score.
- You should carry little-to-no credit card debt. Carrying a balance on any credit card, especially one that has an annual fee, can easily null out the value of the sign-up bonus and rewards your card offers.
- Each application you submit is an inquiry on your credit report. Every time you apply for credit, your credit score takes a hit, so it’s important to only apply for the cards you believe will be most valuable to you.
- Most important: Read the fine print in the terms and conditions. Some sign-up bonuses are applied immediately, while others require you to make a purchase, or spend a specific amount in a certain number of days. If you fail to meet these conditions, you won’t receive the sign-up bonus.
While it can seem like applying and owning multiple credit cards with great sign-up bonuses and rewards is good, one more thing you should consider is how much available credit you have in total and what lenders think when they look at that. Even if you don’t carry a balance on a $17,000.00 credit card, it’s still registered that you have $17,000.00 of available credit. With a handful of cards like this, it could actually hurt you to apply for more and more credit – because while you could afford to repay one card, there’s nothing saying you could afford to make all your payments if you maxed out all of your cards. If you don’t need a high limit, consider lowering it – especially if you have multiple credit cards in your wallet.
Now, the good news is that we’ve gone through the terms and conditions of each credit card, determined the value of their sign-up bonuses and included the dollar amount + the conditions you must meet to qualify for the credit card in the comparison tables on our site. You still want to be smart about how often you apply for new credit, but a responsible borrower may be rewarded with some great credit card sign-up bonuses. Just remember that if you’re someone who carries credit card debt, you may want to get a low interest credit card instead of a rewards card, so the fees and interest charges don’t outweigh the sign-up bonuses and rewards you earn.