If you’re interested in the world of travel rewards credit cards, you’ve likely heard about the highly lucrative welcome bonuses available when signing up for a new credit card.
In many cases, a person’s entire strategy may revolve around grabbing as many welcome bonuses as possible.
I know people with over 40 credit cards because all they do is chase after that next welcome bonus.
While it’s true that earning a welcome bonus can be a great way to boost your travel reward earnings with very little effort, that doesn’t mean it’s the only way to be successful.
I’ve been earning and redeeming points for travel since 2015 and it’s taken me a while to develop a strategy that works best for me.
In this post, I’ll explain exactly what a welcome bonus is and how it works, but most importantly I’ll help you decide how and whether you should implement it into your strategy in a way that works best for you.
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What’s so great about a Welcome Bonus?
If you’re on Instagram, countless accounts constantly talk about flying in business class seats or all-inclusive resorts for “free” all because they earned multiple welcome bonuses.
And there’s a reason for that.
One welcome bonus could indeed earn enough points to book things like:
- Roundtrip Business Class Flights to Europe.
- Multiple roundtrip flights in Economy to Europe.
- Spend the weekend at a luxury resort for $0.
- and much more!
A welcome bonus can jumpstart your earnings and get you traveling for a fraction of the cost pretty quickly.
What is a Welcome Bonus?
Some people see a welcome bonus as credit cards giving away “free” money.
But that’s only kinda somewhat true.
A welcome bonus, also known as a sign-up bonus or simply “SUB”, is an incentive offered by credit card companies to new cardholders to entice them to apply for and use a new credit card.
But there’s a catch.
Yes, indeed, the bonus you earn can essentially give you hundreds and even thousands of dollars in value but it’s not technically free.
Applying for and getting approved for a new credit card is only half the battle. If you want to earn the welcome bonus, you’ll need to meet certain requirements.
How it works
Here are some things to know about a welcome bonus and how it works:
Eligibility Criteria: A welcome bonus is generally only available to new cardholders.
Meaning, if you already have that specific credit card or one in the same family (rules vary by bank) you’re technically not eligible for the welcome bonus.
There are some ways to get around this but the rules vary by bank.
For example, Chase lets you earn the welcome bonus for some of their credit cards every 48 months (from when you earn it, not when you activate the card).
So if you’ve had the credit card over 48 months you may be eligible to get the bonus again.
However, you’d need to cancel your current credit card or product change (downgrade) to a different Chase credit card.
This may allow you to earn a welcome bonus for the same credit card more than once.
Criteria for Earning the Bonus
The most common criterion to earn the bonus is spending a specific amount of money on the card within a set period after opening the account.
This spending requirement can range from a few hundred to several thousand dollars, depending on the card.
We often refer to this requirement as the “minimum spend”, “min spend” or simply “MS”.
There is usually a time limit by which you must meet the spending requirement to earn the bonus. The most common is around three to six months from account opening.
Type of the Bonus
Not every welcome bonus is created equal. There are 3 main types:
- Points/Miles
- Cashback
- Free Night Certificates
Each holds a different value based on the type of currency.
Value
Welcome bonuses can be quite lucrative and greatly boost the value of your rewards to the point that even if the credit card has an annual fee it’s still worth it, especially for the first year.
Meeting the Minimum Spend
The biggest hurdle to earning a welcome bonus is meeting the minimum spend requirement.
The requirements can range widely from one transaction to $30,000 or even more. But it just all depends on the credit card.
The worst thing you could do is apply for a new credit card, get approved, and then fail to earn the bonus. That’s why it’s important to have a plan and a strategy.
Looking for tips?
I’ve got an entire post dedicated to helping you meet the minimum spend.
What about Annual Fees?
As you start to research travel rewards credit cards more and more you’ll start to realize that the best credit cards come with an annual fee.
I know it seems dumb to pay money to spend money. I get it.
But think about wholesale stores like Costco or Sam’s Club. If you pay their annual membership fee, you get access to amazing discounts and other perks that make it all worthwhile.
It’s the same thing with credit card annual fees. Now, some are more worth it than others. I’m not saying that every credit card annual fee will work for you.
But before you decide, you must know how annual fees work and figure out for yourself whether or not they are worth it.
What is an Elevated Welcome Bonus?
While welcome bonuses for travel rewards credit cards are standard it is also very common to have “limited time” elevated welcome bonuses available.
This is essentially when the credit card company “sweetens the deal”.
Personally, we usually only apply for one or two credit cards (each) a year (in player 2 mode), so when we do I like to start with the credit cards that have an elevated welcome bonus.
But I don’t just go for any elevated offer. It has to work for my specific strategy.
Important Note: Don’t wait on elevated bonuses!
Elevated bonuses are great, but if you have a specific credit card in mind I would not hold off while you wait for an elevated welcome bonus offer.
These offers are sorta random and there’s no guarantee when they will be available or for how long.
The sooner you can earn a welcome bonus the sooner you can use the points.
If you want to earn as many points as possible with as little effort as possible, don’t waste your spend waiting on an elevated bonus that may never come.
It’s generally best to keep the train moving!
There’s no shortage of good welcome bonuses even if they aren’t elevated.
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Considerations Before Chasing Welcome Bonuses
I hear people say that credit card welcome bonuses are a scam and it’s just a way for credit card companies to get you deeper into debt and for some people that may be true.
So it’s important to evaluate your specific situation before jumping into the deep end.
Financial Impact: Don’t bite off more than you can chew. Always have a plan and a strategy.
Credit Score Implications: Although I don’t think you need 40 credit cards, the number of credit cards you have will have little impact on your score IF you’re being responsible.
- Don’t apply for too many credit cards at once. This is a major red flag to banks.
- Keep your credit score at least 700.
- Hard inquiries will temporarily ding your score, but it should bounce back.
- Always pay off your statement balance on time and in full. You shouldn’t be paying any interest on your purchases because that will negate any benefits from the welcome bonus.
Long-term Value: Don’t apply for the credit card solely for the welcome bonus. Take a look at the earning rates and benefits of the credit card. Is it a long-term keeper?
Don’t jump on Free Night Certificates
Another consideration before you jump on that credit card application is the type of bonus being offered.
We talked about the different forms of welcome bonuses, the most common being Points/Miles, Cashback, and Free Night Certificates.
I would recommend cautioning yourself against free night certificates whenever possible.
Here’s why:
Free Night Certificates usually expire after one year from when they are issued. You can see if they will grant you an extension, but there’s no guarantee. It would be a bummer to earn these and then lose them.
In contrast, points, miles, or cash back will usually not expire for as long as you have the credit card.
Free Night Certificates typically have to be booked separately. I’ve never seen it where you have (5) free night certificates and can book them on the same reservation.
I’ve always had to book separate nights and then ask the hotel to combine them. Not a deal-breaker, but a little extra pain in the butt.
Free Night Certificates typically are capped at a per-night value. They try to get you by saying the welcome bonus is worth 250K (for example), but it’s misleading.
If you have a free night certificate that is capped at 40K points per night and try to book a night that costs 60k points, you may not be able to use it or you’ll need to pay the difference in cash.
Some chains let you top off a free night certificate with points, but that’s usually capped too.
I think that this type of welcome bonus only makes sense if you have a specific plan.
You don’t want to waste the spend on something that you may not be able to use. Be strategic!
Are you ready for a Welcome Bonus?
Whether you’re ready for a new credit card welcome bonus is completely up to you.
Let’s look at some factors:
- When was the last time you applied for a credit card?
- Is your credit score at least 700?
- Are you under 5/24? Will this impact your status?
- Can you meet a minimum spend with minimum effort?
- What type of points and miles currency would you be earning? Does that make sense for your strategy?
It’s ok if you’re not ready for a new credit card or a welcome bonus.
There are many ways for you to maximize the credit cards that you already have. I’m a big believer in ignoring the FOMO. Don’t feel like you’re missing out.
The most important thing is that you do what’s right for you and your strategy.
Current Favorite Welcome Bonus Offers
If you are ready for a welcome bonus, I’ve got a running list of ones that I think are great for a laid-back or “lazy” approach to points and miles.
These are all travel rewards credit cards that earn “flexible” points and miles that can be redeemed for airfare, hotels, and more.
Personal Credit Cards
- Chase Sapphire Preferred® Card: Get up to $1,050 in Chase TravelSM value. Earn 60,000 bonus points after $4,000 in purchases in your first 3 months from account opening. That’s worth $750 when redeemed through Chase Travel. Plus, get up to $300 in statement credits on Chase Travel purchases within your first year.
- Chase Sapphire Reserve®: Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
- Capital One Venture Rewards Credit Card: Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening
- Capital One Venture X Rewards Credit Card: Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening.
Business Credit Cards
- Ink Business Cash® Credit Card: Earn up to $750 bonus cash back intro offer. Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening.
- Ink Business Unlimited® Credit Card: Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening.
- Ink Business Preferred® Credit Card: Earn 90,000 bonus points after you spend $8,000 on purchases in the first 3 months from account opening.
- Capital One Venture X Business: Earn 150,000 bonus miles after you spend $30,000 in the first 3 months from account opening.
Or Check out CardMatch™ for the best offers personally for you!
Looking for more tips?
I have a cluster of posts dedicated to points, miles, and travel reward credit cards. Check them out!
- Credit Cards vs. Debit Cards: Which is better and safer?
- 8 Points and Miles Myths Debunked
- 7 Free Award Travel Apps You Should Download Today
- Are travel rewards credit cards right for you?
- How to apply for business credit cards
- Once you’re approved there are some do’s and don’ts you should follow
Want to Travel More for Less?
Become a Budget Traveler! Head over to my start here page and grab my free budget travel cheat sheet – it’s packed with valuable tips to help you create your own winning budget travel strategy.
