Credit Cards (US)
What is a Signup/Welcome Bonus?
What is a Signup/Welcome Bonus? Find out everything about it now, including how it works, types, rules, advantages, disadvantages, and more!
Signup/Welcome Bonus: rewards, discounts, and other perks
What is a Signup/Welcome Bonus? Although many are probably used to those terms, especially those who regularly apply for credit cards, it is important to understand how a signup or welcome bonus works to get the best of it.
Many types are available, and not all cards or banks provide them.
In fact, some financial institutions even offer a limited edition when the welcome perk is incredible, so you can fastly apply to get it.
But it is essential to stay tuned to avoid making a bad decision.
What is a Signup/Welcome Bonus?
A signup or welcome bonus is a way of incentive that credit card issuers do so you apply for a card or open an account.
Sometimes, the welcome bonus is applied right after you qualify for the card and get approval.
On the other hand, most times, issuers input a condition for you to get a signup bonus.
For example, for you to earn 50,000 bonus points, you must spend at least $2,000 within 90 days of account opening.
As shown in this example, a certain amount of bonus is settled. But you must spend a minimum amount in a certain period of time to receive the bonus.
Usually, welcome bonuses are worth considering.
However, you must define your objective to find out if the bonus is suitable for you.
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How does it work?
In essence, getting a credit card with a welcome bonus is good. In fact, most cards that offer a welcome or signup bonus also offer rewards and other perks.
Furthermore, it is crucial to mention that even if you get a fantastic credit card with a robust reward program, you won’t be able to use your rewards right away or even gather enough rewards to redeem what you need.
So, a signup bonus allows you to earn a number of rewards faster and easier.
Then, you can work on building your rewards while redeeming the bonus you have just got as a welcoming perk.
Shortly, a welcome bonus works like an extra reward you get after meeting some requirements.
The question is: how to know if it is good enough?
Well, that’s a question only you can answer. On the other hand, this article can help you with that.
Thus, it is essential to learn the types of welcome bonuses and when to use them to get the best from them in order to increase rewards while balancing expenses.
What are the main types of a Signup/Welcome Bonus?
Basically, there are three main types of signup or welcome bonuses.
But credit card issuers may also provide discounts or other perks you may find interesting depending on your goals and needs.
Now, take a look at the main types of bonuses.
1. Cash Back
One of the main types of a signup bonus or welcome bonus is receiving cash back after spending an amount of money on purchases through the card.
Typically, you need to follow some rules, such as spending that amount on purchases in a certain period of time.
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Moreover, this period usually does not exceed six months.
So, it is best if you have financial planning and know how much you generally spend over a month so you will realize in advance if you can meet the requirements to receive a signup bonus.
Otherwise, you won’t get the cash-back offer.
2. Points
Another type of signup or welcome bonus is in the form of points.
Usually, the points can be redeemed for gift cards or even for paying travel expenses.
For example, there are cards that are featured by banks in partnership with Airlines. Thus, points earned can be redeemed for seats and other benefits offered by the flight company.
3. Miles
Of course, you may be able to find great credit cards that offer miles as an incentive for you to apply for them.
In this case, choosing a credit card with a mileage bonus is suitable for those who regularly travel or those who plan to go on a trip.
But as happens with other types of bonuses, you may need to follow some rules to get the miles offered.
How to get airport lounge access?
Are you looking for a way to make your travel experiences easier and more comfortable? If so, read our post to learn how to get airport lounge access!
4. Discounts
Not usual, but some card issuers feature discounts as a first offering.
Typically, the credit cards that provide discounts as an incentive are partnered with stores.
For example, a credit card issued by a bank and a company that owns famous clothes brands usually offers special discounts for clients that are eager to apply for them.
5. Other perks
Lastly, there might be some other perks offered as welcome bonuses such as free memberships for a period of time, access to higher tiers like a Silver or Gold package of benefits, and more.
In essence, the idea is to let you taste being a member or even access fantastic services for a while so you can sign up for your own after the period of welcome bonus ends.
When to use a Signup/Welcome Bonus and how to get the best of it?
As shown before, each card issuer has its own rule on how a signup bonus works.
So, before applying for the card, it is important to carefully read the terms and conditions.
Furthermore, you will only get the best of a welcome bonus when meeting the specific requirements.
For instance, if a card features a $900 cash bonus if you spend at least $5,000 within two months, you will only get the bonus after spending that amount in two months of account opening.
Otherwise, you won’t receive the bonus.
Recommendation: How to Choose a Credit Card?
In sum, it is usually good to choose a credit card that offers a welcome bonus. However, it won’t work if you choose the wrong card.
Therefore, the first crucial step is to define your personal financial planning as well as your goals.
Keep reading about how to choose the right card for you on the following post!
How to Choose a Credit Card?
Do you know how to choose a credit card? We have prepared an easy step-by-step so that you can pick the best credit card for you according to your profile.
About the author / Aline Augusto
Reviewed by / Aline Barbosa
Senior Editor
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