Credit Card Sign Up Bonuses: A Reason to Apply?

Credit card banks are masters of marketing; our household receives some kind of credit card junk mail several times a week. Banks are annoyingly persistent, but they’re also sneaky. One of the tricks? Credit card sign up bonuses.

You know the kind: 10,000 miles after your first purchase. A free airline ticket when you spend $1,000 in three months. Credit card application bonuses sound like money for nothing, but they can come at a cost. For example, banks often offer the same exact credit card to different people with entirely different terms, interest rates, and benefits:

• One flyer will feature a 0% balance transfer rate for 12 months.
• Another flyer will offer a $50 bonus for using your card the first time.

Two Current Credit Card Sign Up Bonsues

Let’s take a look at two current examples of credit card sign up bonuses:

The Chase Freedom® Visa — $100 Bonus Cash Back looks identical to the popular Chase Freedom® MasterCard. The difference? The Bonus Card gives you $100 cash back for applying after you spend $500 in your first three months.

Similarly, the Discover® More Card® — $100 Cash Bonus is identical in most respects to the Discover® More® Card. The Cash Bonus card gives you $75 after spending $500 in your first three months on the card. The difference? The Cash Bonus card only gives you a 0% APR for six months; the regular card gives you 0% for 15 months on balance transfers.

Watch the Rates

In both of these examples, the regular interest rates fall into the same range. But that’s not always true. The same credit card can come with very different interest rates. You may get an offer in the mail that offers a nice credit card sign on bonus but carries a higher interest rate than you would get if you applied for the same credit card online.

You can avoid this by always checking offers you receive in the mail against the credit card section on sites like this one. That’s because laws require Websites publishing credit card offers prominently display up-to-date interest rate and fee information.

Decide for Yourself

The lesson? Don’t fall for credit card junk mail and gimmicks like a cash bonus, a free airline ticket, or 10,000 points without doing your research first. If you choose a credit card wisely, you’ll carry that card for years, and its lifetime costs and benefits are more important than a small, one-time reward.

That said, if you find the card that’s right for you in the long run and it offers a sign-up perk: Dive in. The above examples are both popular credit cards; if you don’t need a 0% intro APR and can meet the spending requirements without buying something you don’t need, these sign up bonuses might just be the right reason to apply.

What about you? Have you ever applied for a credit card because of a sign-up bonus and later regretted it?