Credit card companies offer some of the best signup bonuses right now to attract new users. Whether you consider yourself the competitive type, there’s a competition going on out there that you definitely can leverage to your financial advantage.
A credit card signup bonus, also known as a welcome bonus, can come in points, miles, or even cash back. Only new cardholders, or in some cases those who have not held a card for at least two years with the same bank, are usually eligible for these bonuses.
(There’s a subset of borrowers out there who sign up for a lot of these cards and use the bonuses to finance their world travels, but you don’t need to be a world traveler to take advantage of these deals. Often, your daily expenses can be covered with these cards to earn other great deals.)
The catch with these bonuses is you need to have very good credit and are required to spend a set amount of dollars over a set time to qualify for the bonuses. But suppose you plan wisely and don’t overspend your budget. In that case, you can easily qualify for the bonus and pay off the bills monthly to avoid interest charges —though many of the cards also include an opening interest-free period.
We’ll outline some of the best deals here, then give you some more information about how these opening bonuses work.
The Best Signup Bonus Credit Cards for 2020
With some 350 rewards cards out there and more than 100 offering signup bonuses, it will be tough to wade through and find the best card for your circumstances. But these are the best deals we found across the spectrum:
Chase Sapphire Preferred Card
The biggest bonus points for an affordable credit card
Pros: At a whopping 80,000 points, the Chase Sapphire Preferred Card offers the greatest startup bonus points unless you’re a big spender and want to go all out on some of the high-end cards. Plus, if you use the bonus points toward travel through Chase Ultimate Rewards, you get a 20 percent bonus, translating into $1,000 to spend on travel. Chase sweetens the deal with an offer of 5X points on Lyft rides through March 2022. You also get a 2X bonus on travel and restaurants worldwide, including eligible delivery and takeout service.
Cons: The Chase card does come with a $95 annual fee, which will need to factor into your decision, but that only chips into your $1,000. This Chase card’s spending requirement is $4,000 in the first three months, which isn’t too extreme considering the size of the bonus.
Blue Cash Preferred Card from American Express
An excellent bonus on a cashback credit card for your everyday spending
Pros: American Express is currently offering a $300 cash back bonus on your credit card, up from their normal $250 bonus. The card comes with an introductory $0 annual fee for the first year, then $95 after that. The card offers 6% cashback on purchases at U.S. supermarkets, up to $6,000 per year, then 1 percent. You also get 6 percent back on streaming services. You also get 3 percent back on transit services, including ride-share services and taxis, buses, parking, and more, plus 3 percent back at all U.S. gas stations. All other purchases provide 1 percent cashback.
Cons: If this can be considered a con, you need to spend $3,000 in the first six months to qualify. There’s also that $95 annual fee after the first year. The offer expires on December 10, 2020, so you need to do your assessment quickly.
Capital One Venture Rewards Card
Most signup bonus miles on a travel rewards card
Pros: If you travel a lot, this card could be your prime choice. Capital One is offering 100,000 miles in bonus rewards if you spend $20,000 in the first year. If you can’t hit that spending threshold, you still can earn 50,000 miles by spending $3,000 in the first three months. The card also features a 2X bonus on every purchase, every day.
Cons: You pay an annual fee of $95. And there is that big spend to get the full bonus miles.
Citi Double Cash Card
The simplest startup bonus to increase cashback rewards
Pros: Citi doubles your cashback simply by giving you 1 percent when you buy and 1 percent when you pay. If you pay your card off monthly, that’s a quick 2 percent back with no interest or fees. The card carries no annual fee.
Cons: The APR can vary from 13.99 to 23.99 based on your credit score. If you transfer other card debt for 0% APR for 18 months, you’ll be charged interest on purchases immediately.
Discover it Cash Back
Best cashback rewards credit card
Pros: Discover really wants those new cardholders. They offer to double your cash back rewards at the end of your first year, with no limits. So if you earn $200 in cashback, you get $400. If you earn $1,500, you get $3,000. Discover also offers a rotating 5X cash back on select purchases, with a different feature each quarter. This year, the deal applies to all purchases on Amazon.com, Walmart.com, and Target.com for the fourth quarter. All other purchases are automatic 1X cashback.
Cons: You must sign up each quarter for the 5X reward program. Also, that program is capped at $1,500.
Capital One Savor Cash Rewards Credit Card
Best cash rewards card for dining and entertainment
Pros: The Savor card comes with a $300 signup bonus and offers an excellent 4 percent cash back on dining and entertainment purchases. Plus, if you buy your sports, theater, or concert tickets through Vivid Seats, you’ll earn an amazing 8 percent back. You get 2% cashback on grocery store purchases and 1% back on all other purchases. This card has no annual fee for the first year.
Cons: The annual fee is $95 after the first year. You need to spend $3,000 in the first three months to qualify for the $300 signup bonus.
Ink Business Unlimited Credit Card
Small business cashback credit card with no annual fee
We’d be remiss if we didn’t throw in a card designed to give small businesses a boost at a time when so many are struggling. Small businesses are the backbone of our American economy, so we need to find ways to help them survive. Ink Business offers various cards that can benefit small businesses, but this one gets our best rating.
Pros: No annual fees. 0% APR on purchases for 12 months. $500 cashback if you spend $3,000 in the first three months. That amounts to a 16.67 percent savings on what could likely be vital business expenses, and what small business couldn’t use that savings right now.
Cons: The APR will jump from 13.24% to 19.24% after the initial 12 months. If you can survive through the pandemic and get your business back on its feet by then, the 0 percent could be a business-saver. You’ll need a strong personal credit score of at least 690 to qualify.
Types of Credit Card Welcome Bonuses
There probably are as many forms of welcome bonuses as there are cards, but they come in three primary forms:
- Points: General cards offered by banks or other financial entities normally give points that can be redeemed for purchases through affiliate companies. For instance, a bank might have a deal where you can use the value of your points for purchases at Amazon. Bonus points for these cards can vary by the issuer, but often give extra points for such things as groceries or restaurant purchases, etc.
- Miles: These are normally cards issued by airlines, hotels, rental car agencies, and banks affiliated with the travel industry. Miles can then be converted into tickets, hotel stays, etc. Companies typically offer bonus miles when you book your travel expenses through the card.
- Cash: Cash-back cards, Discover being the most famous, normally offer a penny back for each dollar that you spend on the card, despite where the purchases are made. Sometimes the signup bonus includes a greater return on all purchases for a set period of time or even a great return, like 5 cents on the dollar, for groceries.
How Credit Card Bonuses Work
Credit card intro bonuses generally require you to spend a certain amount of money during a set period from when the card is issued. For example, a card requires you to spend $3,000 in the first three months. Then you receive say 50,000 bonus points. Those points could mean you’d have $500 you could apply toward a qualifying purchase, be that through a travel service or at an affiliated retailer. Ideally, that $3,000 would come from your normal monthly budget expenses. You just need to transfer those costs to your new card. However, you want to make sure those expenses are qualifying expenses on the new card. You also want to make sure the provider you are paying doesn’t require a fee for using a credit card versus a debit card. For example, you want to pay your dental bill on the card, but your dentist might add a 2 percent or 3 percent fee for using a credit card.
Often the bonuses need to be used within a set period of time, or the bonus value can go down as the time stretches, so you’ll want to make sure you are timing the card application with your plans for how to spend the bonus.
Companies frequently change their startup bonus offers, and many will go ahead and give you a better deal when you meet your obligation at the end of the introductory period.
If you are a socially conscious consumer, keep in mind that credit card companies charge retailers a slightly higher fee for rewards cards than regular credit cards and even higher than for debit cards. You may not care if Wal-mart has to pay a higher fee, but those higher fees could adversely affect your locally owned pizza joint.
How to Collect Your Signup Bonus
Once you meet your minimum spend requirements, the bonuses will be reported on your monthly card statement or in your online account.
Remember, the signup bonus is on top of your regular rewards you build up for using the card. Most cards will offer better rewards on certain categories of purchase, so you want to keep that in mind as you’re choosing which purchases to make on your rewards card. A travel card won’t net you too many gains if you’re using it only for grocery purchases.
How to Use Your Startup Bonus
Again, how you use your bonus will depend upon the type of cards and the requirements for using the bonus points or miles. Of course, a cashback card is just giving you the cash, so no worries there.
For the other cards, you’ll need to consider how you can use your bonus. The Chase Sapphire Preferred Card gives you a whopping 80,000 bonus points plus an extra 25 percent credit when spent for travel through Chase Ultimate Rewards. That means you get $1,000 to spend, but it must go toward travel through the rewards program. If you plan a trip within the next year, it’s a great deal, but if you’re more likely to stay close to home, you’ll miss out on the reward.
Other cards may offer the spending with an affiliate retailer or through their own rewards programs that offer limited items for sale, so you want to make sure there’s really something worthwhile to you before you sign on for the card.
Choosing the Best Rewards Credit Card Signup Bonus
As with any financial decision, choosing the best rewards card for you and/or your family will depend upon your personal situation.
If you often travel, either for business or personal reasons, a travel reward credit card could offer you the greatest advantages. And you can’t always place a dollar figure on these rewards as some may include ticket upgrades, a hotel suite rather than a regular room, access to VIP rooms at airports, and more.
On the other hand, if you’ve been eying a big online purchase, a startup bonus that links to the online retailer could give you a pot of free money to apply to that purchase.
If you just want to get money back for your day-to-day purchases, a cash rewards card could be the best option.
You’ll want to factor in annual fees and APR (annual percentage rate) as you make your decision. Paying an annual fee isn’t necessarily a problem if the rewards a great enough to make up the difference. A higher APR could be a sign the company is likely to charge other higher fees, but if you pay your card monthly, the APR shouldn’t make a difference.
Should you apply for multiple cards to get multiple signup bonuses? That’s probably not a good idea. First, you’ll need to spend a bunch more money to meet each of the reward requirements, and if you’re spending that kind of money each month, one of the higher-end cards might offer you the better deal. Second, each time you apply for a new credit card, your credit score drops a little. Remember, the point here is to cash in some free money, so you don’t want to overextend yourself with a bunch of credit you can’t payback.