A sign-up bonus is a reward a credit card issuer offers you for opening an account and spending a set amount within a set timeframe
The issuer — Visa, Mastercard, American Express, Discover, or a bank that issues cards on their network — gives you points, miles, or cash back if you meet the spending requirement, usually within three to six months. The bonus itself is free; you do not pay extra to receive it. But the card may carry an annual fee, and the bonus only arrives if you hit the spending target.
The real cost is not the bonus. It is whether you would have spent that money anyway, whether the card's ongoing rewards rate matches how you actually spend, and whether you will keep the card long enough for the rewards to outweigh any annual fee. A $200 sign-up bonus sounds large until you realize you spent an extra $3,000 to earn it, or you paid $95 a year for three years on a card you stopped using.
Key Takeaways
- Sign-up bonuses typically require you to spend between $500 and $5,000 within three to six months; if you do not hit that target, you receive nothing.
- The bonus itself costs you nothing, but many cards with large bonuses also charge an annual fee of $95 to $550, which you pay whether you use the card or not.
- The card's ongoing rewards rate — how much you earn on everyday purchases — matters more over time than the one-time bonus.
- You should only pursue a sign-up bonus if you were already planning to spend that amount in that timeframe, not if you need to change your spending to reach it.
- Timing matters: some cards require you to wait six months or longer between bonuses on the same card, and some issuers limit how often you can earn a bonus across their entire card lineup.
How the spending requirement works and what counts toward it
The issuer sets a dollar amount you must spend on the card within a window, usually three to six months from when you open the account. Common targets are $500, $1,000, $3,000, or $5,000. Once you hit that number, the bonus posts to your account — sometimes within days, sometimes within a billing cycle or two.
Not all purchases count. Most cards count regular purchases: groceries, gas, restaurants, online shopping. Most cards exclude balance transfers, cash advances, wire transfers, and fees. Some cards exclude certain categories entirely. Read the terms before you open the account; the issuer's website or the card agreement will list what counts.
If you do not hit the target by the important date, you receive no bonus. There is no partial credit. Spending $2,900 toward a $3,000 requirement earns you zero dollars in bonus value.
Annual fees and when they make sense
Many cards with large sign-up bonuses charge an annual fee: $95, $150, $250, or higher. You pay this fee once per year, every year you keep the card, whether you use it or not. Some cards waive the first year's fee, meaning you pay nothing in year one but owe the fee starting in year two.
The math is straightforward: if a card offers a $300 sign-up bonus and charges a $95 annual fee, you come out $205 ahead in year one — but only if you actually earn the full $300 bonus. In year two, you owe $95 with no bonus, so you need the card's ongoing rewards to cover that cost. If the card earns you $100 in rewards that year, you break even. If it earns you $80, you lose $15.
Cards with no annual fee exist and often have smaller bonuses — typically $50 to $200. These make sense if you plan to use the card long-term but do not want to commit to paying a yearly fee. Cards with annual fees make sense only if the bonus plus the card's ongoing rewards will exceed the fee by a meaningful margin.
The difference between points, miles, and cash back bonuses
Sign-up bonuses come in three forms. Cash back is the simplest: you earn a percentage of what you spend, and it appears as a credit on your bill or a deposit to your bank account. A $300 cash back bonus is worth $300. Points are issued by the card company and can be redeemed for purchases, gift cards, or sometimes cash at a set rate — often 1 cent per point, sometimes more or less. A 50,000-point bonus might be worth $500 if each point is worth 1 cent, or $250 if each point is worth 0.5 cents. Miles work the same way but are issued by airline or hotel partners and are typically redeemed for travel. A 50,000-mile bonus might be worth $500 in airfare or $250 depending on the airline and route.
The catch with points and miles: their value is not fixed. The issuer can change how many points you need to redeem a flight or hotel stay. You might earn 50,000 miles worth $500 today, but if the issuer raises redemption rates, those same miles might be worth $400 next year. Cash back does not have this problem — $300 is $300.
If you do not travel frequently or do not have a specific airline or hotel you prefer, cash back bonuses are usually simpler and more predictable. If you travel regularly and have loyalty to a specific airline or hotel chain, a miles or points bonus can be worth more because you will use the redemption regularly.
Spending requirements you should avoid
The most common mistake is spending money you would not otherwise spend just to hit the requirement. A $3,000 spending target sounds manageable until you realize you normally spend $1,500 in three months. To hit $3,000, you would need to spend an extra $1,500 — on what? Buying things you do not need, paying bills early, or using the card for someone else's expenses. None of these are worth a $300 bonus.
One legitimate way to hit a requirement without changing your behavior: if you have a large planned expense coming up — a car repair, a home improvement project, a medical procedure — and you can time it to fall within the bonus window, use the card for that expense. You were going to spend the money anyway; the bonus is a genuine gain.
Another legitimate approach: if you have regular bills you already pay by card — insurance, utilities, subscriptions — and you can move them to the new card temporarily, that counts toward the requirement without changing your actual spending. Just remember to switch them back after the bonus posts, or you will pay the annual fee on a card you are not using.
Bonus restrictions and timing rules
Most issuers have rules about how often you can earn a bonus on the same card. The most common rule is the 24-month rule: you can earn a bonus on a card only once every 24 months. If you earned a bonus in January 2023, you cannot earn another bonus on that same card until January 2025. Some issuers use a 48-month rule (four years) or a 12-month rule (one year).
Some issuers also have rules across their entire card lineup. American Express, for example, has a rule that you can earn a bonus on any American Express card only once every 12 months, and only once per card in your lifetime (with some exceptions). This means if you earned a bonus on one Amex card, you cannot earn a bonus on a different Amex card for 12 months.
These rules are not negotiable and are not waived. If you do not meet the timing requirement, you will not receive the bonus, even if you hit the spending target. Check the card's terms before you open the account to understand the restriction.
How sign-up bonuses compare to ongoing rewards
A sign-up bonus is a one-time event. The ongoing rewards rate — how much you earn on everyday purchases — is what matters over the long term. A card might offer a $500 sign-up bonus but earn only 1% cash back on all purchases. Another card might offer a $100 bonus but earn 2% cash back on all purchases. If you use the card for five years, the second card will likely earn you more total value, even though the first card's bonus was larger.
When comparing cards, calculate the total value over the time you plan to keep the card. If you plan to use the card for one year, the sign-up bonus is the dominant factor. If you plan to use it for five years, the ongoing rewards rate matters much more. If the card charges an annual fee, subtract that from your calculation every year after the first.
Example: Card A offers a $500 bonus, charges $95 annually, and earns 1.5% cash back. Card B offers a $100 bonus, charges no fee, and earns 2% cash back. If you spend $10,000 per year on the card for three years, Card A earns you $500 + ($150) + ($150) + ($150) = $50 total (bonus minus three years of fees, plus rewards). Card B earns you $100 + $200 + $200 + $200 = $700 total. Card B wins despite the smaller bonus.
Frequently Asked Questions
Can I get a sign-up bonus if I already have a card from that issuer?
Usually not on the same card, but sometimes on a different card from the same issuer. Most issuers allow you to earn a bonus on multiple cards in their lineup, but each card has its own timing restriction. Check the specific card's terms. Some issuers, like American Express, limit bonuses across their entire lineup, so you may have to wait 12 months between any bonus from that issuer.
What happens if I close the card before the annual fee hits?
If you close the card before the annual fee is charged, you will not owe it. Most issuers charge the annual fee on your card anniversary — the date you opened the account. If you close the card before that date, you avoid the fee. However, closing a card can lower your credit score slightly because it reduces your available credit and may shorten your average account age. Only close a card if the fee outweighs the benefit of keeping it open.
Do sign-up bonuses affect my credit score?
Opening a new card will cause a small, temporary dip in your credit score because the issuer will run a hard inquiry on your credit report. This dip usually recovers within a few months. The bonus itself does not affect your score. However, if you spend more than usual to hit the spending requirement and carry a balance, that higher credit utilization can lower your score temporarily.
Can I use someone else's card to help me hit the spending requirement?
No. The card must be used by the person whose name is on it. Using someone else's card or having someone else use your card to hit the requirement violates the card's terms and can result in the bonus being clawed back — meaning the issuer removes the bonus from your account and you owe them the value.
What if the bonus does not post after I hit the spending requirement?
Bonuses typically post within one to two billing cycles after you hit the spending target, though some take longer. If it has been more than two months and the bonus has not appeared, contact the issuer's customer service with proof of your spending. Keep your statements and transaction history. If the issuer made an error, they will usually add the bonus to your account once you provide evidence.