Credit cards are the rare product that companies actually pay consumers to use. These payments start off in the form of sign-up bonuses and continue as spending rewards. Rewards, both for initial sign up and for spending, can take the form of cash back or loyalty points such as frequent flier miles or hotel points. Now more than ever, it is time for cardholders to examine which products they currently use and to find cards that offer as much rewards as possible.
The types of sign up bonuses
The simplest type of sign up bonus is a cash reward offered on many cash back credit card offers. For example, the Blue Cash Preferred card from American Express currently offers $150 in cash back to new applicants. The next type of sign up bonus is in the form of loyalty points issued by the bank. These points can then be redeemed for rewards such as cash back, merchandise, or travel rewards. For instance, the Citi ThankYou Preferred Rewards Card currently offers 25,000 of their ThankYou points as a sign up bonus. These points can be redeemed for $250 in gift cards or an even greater value if redeemed for an airfare purchase. There are also the cards that offer points or miles directly with a travel provider. The United Airlines MileagePlus Explorer card from Chase currently offers 40,000 miles as a sign up bonus.
Conditions of sign up bonus offers
As wonderful as these credit card offers are, they do contain terms and conditions that must be adhered to. The most important one is the minimum spending requirement. For instance, with the Blue Cash Preferred card from American Express, new applicants must spend $1,000 on eligible purchases within the first three months of opening an account. In general, eligible purchases exclude balance transfers, cash withdrawals, and the use of convenience checks. It is also important to note that most banks will begin the eligible spending period when the application is approved and the account is opened, not when the cardholder receives the card or opens the account. Finally, the most sign up bonus offers exclude cardholders who have recently received a sign up bonus on the same product. In practice, cardholders often receive these bonuses if at least 18 months has elapsed since their last application for the same card.
By finding the best sign up bonus and carefully complying with terms of the offer, there is a lot of money to be made by cardholders who are willing to give banks a chance to earn their business.