If you’ve ever booked a hotel online, visited a department store, taken a flight or browsed around on Forbes Advisor, you will no doubt have seen some compelling credit card welcome offers.
“Earn $300 cash back.” “Double rewards in your first year.” “Up to 60,000 points.”
Offers like these are one way that credit card issuers and their co-branding partners motivate people to apply for new credit cards. These extras can increase the value you get from a credit card in the first year.
A credit card welcome bonus is an incentive that banks offer to entice new customers to sign up for their credit cards. Often, welcome bonuses come in the form of additional points or cash back after meeting a certain spending threshold in a limited amount of time. Sometimes welcome bonuses include additional perks, reduced annual fees or merchandise.
Like many financial products, you should be aware of the fine print and the eligibility requirements before signing up for a credit card. If you want to take advantage of welcome bonus offers, understand the type of bonus you can receive, what you need to do to earn the bonus and the eligibility requirements.
Types of Bonuses
Welcome bonuses come in all shapes and sizes, from bonus cash back to frequent flyer miles to merchandise. In theory, any incentive a credit card issuer could offer can be included as part of a welcome bonus, but the following are the most common types of bonuses:
Cash Back or Bonus Points
This type of welcome bonus is your standard, “60,000 points after $3,000 in purchases” or “$150 statement credit after first purchase” offer.
While it is common to earn the entire welcome bonus at once, some cards offering large sign-up bonuses will split the welcome bonus into multiple parts with different eligibility requirements.
Discount on a Current or Future Purchase
If you’ve ever had a cashier at a department store offer you “10% off your purchase today” if you sign up for an in-store credit card, then you’ve seen this type of welcome bonus. Many co-branded retail credit cards offer a discount as a welcome bonus. The bonus can come as an immediate discount upon approval, a coupon or discount code provided later or a statement credit after your first purchase. This is most common on co-branded credit cards offered at brick-and-mortar stores, but it also applies to online retailers.
Annual Fee Waived in the First Year
Many co-branded travel and premium rewards credit cards charge annual fees to cover some of the costs of the rewards they offer. Sometimes these credit cards waive the annual fee for the first year as part of a welcome offer.
Additional Bonus Rewards for Spending
Sometimes banks offer additional rewards for purchases made within the first year of card membership. This type of bonus provides an incentive for charging purchases to the card and is usually limited by a period after account opening or a dollar amount.
One of the longest-running welcome bonus offers like this is Discover’s Cashback Match, which matches all rewards earned, dollar for dollar, during the first year of new card membership.
How To Earn the Rewards
You generally must do something to earn the advertised welcome bonus. Usually, this will involve spending a given amount of money on a card within a certain time, making a purchase at a specific merchant or spending in bonus categories. Requirements will vary by credit card, so check the terms and conditions of your welcome bonus offer for exact details.
Reward After Your First Purchase (or Application Approval)
This is the simplest welcome bonus. Some credit cards will award a welcome bonus after your first purchase or upon approval of your application.
It’s common to see welcome bonuses offered upon account opening at smaller banks or when the welcome bonus is relatively small.
Purchase at a Specific Merchant
Most co-branded retailer credit cards will require a purchase at a certain merchant on your new card to earn part of the signup bonus.
Spend a Certain Amount Within a Period
It’s likely that larger offers will require spending on the card within a period of time to earn the welcome bonus.
Usually, the amount you must spend is clear, but be aware that time can be measured in many ways. For example, there can be variations on when the clock starts. It could be three months from the date of application, which is not the same as three months from the date of approval or the date your card was opened. Make sure you understand the deadlines to meet spending requirements.
In every case, don’t wait until the last minute. A charge that posts late and hits the next statement cycle or is posted 91 days after your application may ruin your chances of earning a welcome bonus. If you are in doubt, you can send a secure message or call the bank to confirm your progress toward your minimum spending and the deadline for earning the bonus.
Ongoing Rewards
If a credit card offers bonus rewards for spending as part of its welcome offer, those rewards will be earned as you use the card for purchases. Before applying for a card with a welcome bonus that includes ongoing rewards, make sure that your spending patterns will enable you to actually earn those rewards.
When Can You Earn a Welcome Bonus?
Perhaps the most confusing part of welcome bonuses, especially if you are someone who applies for a lot of credit cards, is determining if you are eligible to earn an advertised welcome bonus.
Each bank has rules restricting who is eligible to earn a welcome bonus. Often these rules vary by issuing bank, rewards program, credit card or credit card family. Sometimes those rules can become complicated.
Your credit score will also play a role in your eligibility. If you don’t have many credit cards and have an excellent credit score, you’re in luck. You will probably qualify for most welcome bonuses, as the eligibility restrictions imposed by most banks are meant to prevent people from continuously applying for new credit cards—also known as churning—to earn a welcome bonus.
Examples of Restrictions on Welcome Bonuses
Every bank has its own rules about who is eligible to receive a welcome bonus. Those rules can usually be found in the terms. Here are a few examples to give you an idea of the types of restrictions that banks place on welcome bonuses:
- Citibank: Generally the issuer only offers a welcome bonus to applications who have not received a new cardmember bonus or closed any account in the previous 48 months.
- American Express: This issuer does not allow applicants who have ever had a particular credit or charge card to earn a welcome bonus for that product, known as the “once in a lifetime” rule. Amex will also prevent customers who have received multiple bonuses in a short period from continuing to receive welcome bonuses for any card. Amex does provide a pop-up warning that you won’t receive a bonus and allows you to cancel your application before the credit check.
- Chase: The bank will restrict the number of welcome bonuses that you can earn largely by limiting card approvals. Chase will automatically deny any credit card applications when you have opened five or more credit cards, from any bank, within the previous 24 months (also known as 5/24).
Bottom Line
Welcome bonuses are a fantastic incentive for both banks and consumers. For banks, they offer a compelling chance to drive credit card signups, but for consumers, they are a highly valuable way to directly benefit from a bank’s marketing budget. If you are shopping for a new credit card, you should absolutely make welcome bonus offers part of your calculation.
