What a sign-up bonus actually is
A sign-up bonus is cash back, points, or miles that a credit card issuer gives you for opening an account and spending a set amount within a set timeframe. You do not pay extra to earn it — the bonus is part of the card's offer. The issuer covers the cost because they expect to make money from your ongoing spending and interest charges.
The bonus lands in your account after you meet the spending requirement, which is usually stated as "spend $3,000 in the first three months" or similar. You meet it by making regular purchases on the card. Once the requirement is satisfied, the bonus posts within a few days to a few weeks, depending on the issuer.
Bonuses vary widely. A basic card might offer $100 cash back. A premium travel card might offer 50,000 points, which could be worth $500 to $750 depending on how you redeem them. Some cards offer a mix — for example, $200 cash back plus 10,000 bonus points.
Key Takeaways
- Sign-up bonuses are real money or points you receive after meeting a spending requirement, usually within the first few months of opening the account.
- The spending requirement is the catch: you need to charge enough purchases to the card to unlock the bonus, so only pursue it if you would spend that amount anyway.
- Annual fees can erase the bonus value, so compare the fee against the bonus amount and the card's ongoing rewards before opening.
- You can only earn a sign-up bonus once per card, and many issuers have rules preventing you from earning it again for a set period (often 24 months).
- The bonus is taxable income in the eyes of the IRS, though most people do not receive a tax form unless the bonus is unusually large.
How the spending requirement works
The spending requirement is the dollar amount you must charge to the card to unlock the bonus. It is usually $1,500 to $5,000 for standard cards, and $5,000 to $15,000 for premium cards. The timeframe is typically three to six months from account opening.
Regular purchases count: groceries, gas, utilities, restaurants, online shopping. Balance transfers usually do not count. Neither do cash advances, fees, or interest charges. Some issuers exclude certain categories like gambling or government payments, so read the terms before you open the account.
The key question is whether you would spend that amount anyway. If the requirement is $3,000 in three months and you normally spend $1,000 a month, you are already on track. If you would have to change your spending habits or put planned purchases on the card just to hit the number, the bonus may not be worth the effort.
Annual fees and whether the bonus covers them
Many cards with generous bonuses also charge an annual fee, ranging from $95 to $550. The bonus can offset the fee in year one, but you need to do the math. A $200 bonus on a $95 annual fee card nets you $105 in value. A $500 bonus on a $450 annual fee card nets you $50.
The real cost appears in year two and beyond. After the first year, you pay the annual fee without a bonus to offset it, unless you earn enough rewards through regular spending to justify keeping the card. Some people close the card after the first year to avoid the fee; others keep it because the rewards rate on ongoing purchases makes up the difference.
Read the card's rewards structure carefully. If the card earns 2% cash back on all purchases, and you spend $10,000 a year on it, you earn $200 in rewards — enough to cover a $95 fee and then some. If the card earns 1% cash back, the same spending generates only $100, which barely covers the fee.
Timing and how long the bonus takes to appear
The bonus posts after you meet the spending requirement, not on a fixed calendar date. Once your spending crosses the threshold, the issuer typically confirms it within a few days and credits the bonus within one to four weeks. Some issuers are faster; others take longer.
Check your account online or call the issuer's customer service line to confirm the bonus has posted. If it does not appear within the timeframe stated in the offer, contact the issuer with proof of your spending — your statement or transaction history. Bonuses are rarely lost, but mistakes happen, and the issuer can usually correct them quickly.
Do not close the card when ready after the bonus posts. Some issuers have rules that claw back the bonus if you close the account within a certain period, often 90 days. Check the terms before you open the account so you know what that window is.
One bonus per card, per person, per timeframe
You can earn a sign-up bonus only once per card product. If you earned the bonus on a Chase Sapphire Preferred card in 2022, you cannot earn it again on that same card. However, you can earn the bonus on a different card from the same issuer — for example, the Chase Sapphire Reserve is a separate product with its own bonus.
Most issuers enforce a waiting period before you can earn the bonus again on the same card. Chase's rule, for example, is 24 months from when you received the last bonus on that card. Other issuers have different windows, ranging from 12 to 48 months. These rules change, so check the issuer's website before you open an account.
The issuer also checks whether you are the same person. If you have a spouse or family member with a different Social Security number, they can earn the bonus on the same card separately. If you try to earn the bonus twice under your own name within the restricted period, the issuer will deny the bonus or close the account.
Tax treatment of bonuses
The IRS treats credit card bonuses as taxable income. In theory, you owe income tax on the full value of the bonus. In practice, most issuers do not send you a tax form (Form 1099-MISC) unless the bonus is $600 or more, and even then, the threshold varies by issuer and state.
If you do receive a Form 1099, report the bonus as miscellaneous income on your tax return. If you do not receive a form but earned a large bonus, you are still required to report it. The IRS does not actively pursue people for small bonuses, but keeping records of what you earned is wise.
Some people offset the bonus income by deducting business expenses or other deductions, but the bonus itself is income. Talk to a tax professional if you earned multiple large bonuses in one year and want to understand the impact on your tax bill.
Comparing bonuses across cards
A higher bonus number does not always mean a better deal. A card offering 50,000 points is only valuable if you know what those points are worth. Some programs value points at 1 cent each, making 50,000 points worth $500. Others value them at 0.5 cents, making the same 50,000 points worth $250.
Cash back bonuses are simpler to compare: $200 cash back is $200, regardless of the card. Points and miles require you to research the issuer's redemption rates. Check the card's website or call the issuer to ask what the average redemption value is, or look at third-party sites that track point values.
Also factor in the spending requirement and the annual fee. A $500 bonus with a $5,000 spending requirement and a $95 annual fee is worth $405 in net value if you would spend that $5,000 anyway. A $300 bonus with a $3,000 requirement and no annual fee is worth $300. The second card is the better deal if the spending requirement matches your habits.
Frequently Asked Questions
Can I meet the spending requirement by paying bills or making transfers?
Regular bill payments and purchases count toward the requirement. Balance transfers, cash advances, and fees do not. Some issuers exclude certain categories like gambling or government payments. Check the card's terms before opening to see what counts.
What happens if I do not meet the spending requirement?
You straightforward do not receive the bonus. The card remains open and active, and you can continue using it and earning regular rewards. You can meet the requirement later if you want, but most issuers do not extend the important date or offer a second chance.
Can I earn multiple bonuses from the same issuer at the same time?
Yes, if the cards are different products. You can open a Chase Sapphire Preferred and a Chase Freedom Unlimited in the same month and earn both bonuses, as long as you meet each card's spending requirement separately. However, you cannot earn the same bonus twice on the same card within the issuer's waiting period.
Do I have to keep the card open after I earn the bonus?
You can close it, but check the issuer's terms first. Some issuers claw back the bonus if you close the account within 90 days of earning it. After that window, you can close the card without losing the bonus. Keeping the card open costs nothing if there is no annual fee, so many people keep cards for the ongoing rewards.
Will a sign-up bonus hurt my credit score?
Opening a new card causes a small, temporary dip in your credit score because the issuer runs a hard inquiry and your average account age drops. The impact is usually 5 to 10 points and recovers within a few months. The bonus itself does not affect your score.