It’s not hard to understand the appeal of rewards credit cards that give cardholders cash back, travel miles, and other perks in return for charging everyday purchases.
But credit card bonus offers can stretch those rewards even further for those who know how to take advantage of them.
How Do Credit Card Bonus Offers Work?
To understand how limited-time offers, sign-up bonuses, and other credit card promotions work, it’s helpful to first understand the basics about reward credit cards.
Whether it’s a cashback card, travel credit card, or some other type of rewards card, these credit cards reward customers with a small percentage of the value of their purchases.
There are many types of credit cards available to consumers. With rewards cards, account holders earn money, points, or miles on just about every dollar they charge (cash advances are usually exempt from accruing rewards). Let’s say you sign up for a credit card that earns 1% back and spend $1,000 on a new laptop. You’d get $10 back.
But many rewards credit cards and other credit card products layer limited-time offers atop the regular benefits. Some common types of credit card promotions follow.
Recommended: Understanding the Different Types of Credit Cards
Designed to help make a specific credit card more appealing than similar competitors, welcome bonuses can fuel returns in the first weeks or months after signing up for a new card.
How welcome bonuses work varies from card to card, but they generally provide increased reward earnings either up to a certain expenditure limit or for hitting a minimum spend.
The rewards may come in the form of flat-rate cash back or points, a better rewards rate, or other limited-time perk. For example, a card might provide a bonus for cardholders who charge at least $1,000 within the first three months of receiving their credit card.
Another offer might double the rewards rate for a set time period, up to a maximum rewards dollar value. In some cases, cardholders might receive a welcome bonus simply for signing up.
The annual percentage rate, or APR, is the rate of interest that is applied to credit card balances and transactions like cash advances.
The rate can depend on a number of factors, such as credit score and the type of credit card (for example, the APR is often higher for rewards cards than basic credit cards). But some credit card promotions offer a lower—or even 0%—APR for a limited time.
Other Limited-Time Offers
While welcome bonuses are nice, credit card promotions don’t always dry up after the introductory period. Some credit cards may offer additional periodic promotions, such as increased reward earnings during a specific time period or offers for spending at a particular retailer or partner.
You may want to look out for promotional emails or notifications on your statement or online account to stay aware of such offers.
What Limited-Time Offer Best Fits Your Needs?
Any credit card promotion that keeps more money in the cardholder’s wallet is likely an attractive one. But some offers are better suited to some financial situations.
If You Have a Big Purchase Coming Up
Whether it’s booking a big vacation, paying for a wedding or new appliances, or some other big-ticket outlay, timing a big purchase to a credit card promotion period may be beneficial.
It might be a stretch for some individuals to max out a welcome offer that requires $4,000 or more in spending within the first few months. But if a big planned expense is on the horizon, it could be a good time to take advantage of a welcome offer that requires a little more spending than usual. (Just make sure to pay off the balance to avoid interest charges and/or reward penalties.)
If You’re Carrying a Balance With a High APR
Although the best strategy to avoid paying interest on credit card charges is to pay off purchases in full by the statement date, that may not always be possible.
For those who are trying to pay down a balance, taking advantage of a 0% APR offer (or switching to a balance transfer credit card) may reduce or eliminate interest costs and help to pay down credit card debt.
To Optimize Everyday Purchases
The best type of credit card promotion for getting the most back from everyday purchases really depends on both the spender and the card. A credit card that provides a welcome bonus of 30,000 airline miles might be a great deal—but only for individuals who travel.
As such, finding the best credit card promotion for regular, everyday spending means taking time to look at your usual spending habits and then comparing limited-time offers to find the best personal fit.
Tips for Taking Advantage of Bonus Offers
Do Your Homework
There can be many credit card promotions to choose from, with more limited-time offers popping up all the time. Before choosing a new credit card, it’s always a good idea to do some comparison shopping, considering factors such as annual fees, the APR, and the specifics of any rewards programs.
For those who track their spending, these records can be helpful for gauging actual expenditures across categories in order to estimate the potential benefits of various cards.
Keep Track of Expiration Dates
The important thing to remember about limited-time offers? They expire. You may want to set up reminders for when offers will end in order to remember to meet any minimum spending requirements or get in last-minute purchases before bonus rates end.
Avoid Carrying a Balance
Most credit card purchases don’t incur interest—if the cardholder pays off the full balance by the statement due date.
Carrying a balance means interest charges, which are usually applied going back to the date of purchase. This can quickly add up and potentially outweigh the benefits of any credit card promotions.
Furthermore, before only paying the minimum, it’s a good idea to check the terms and conditions to ensure that the promotion still applies for those who carry a balance.
Think Before Canceling a Card After an Offer Expires
With so many attractive credit card offers on the market, it might seem like a good idea to open and close accounts in order to keep claiming new promotions. This may not be the best strategy for those concerned about their credit score.
For starters, each new credit card application results in a hard inquiry to check the credit score. Each time a lender conducts such a check, it results in a slight reduction in credit score—which can last up to a year (and remains on one’s credit report for up to two years). Applying for many cards to claim multiple offers can add up.
Furthermore, as much as 30% of your credit score is informed by your overall credit utilization rate, or how much you owe on all your revolving accounts, such as credit cards, compared with your total available credit.
Cancelling cards reduces the total amount of credit you have available—and if it’s a card with a big credit limit, can have a significant impact on your credit utilization ratio.
Whether it’s a welcome bonus, a low APR introductory rate, or a periodic promotion, credit card bonus offers can amplify rewards for those who know how to take advantage of them.
Limited-time offers are great, but the best credit card never stops helping you work toward your financial goals.SoFi cardholders earn 2% unlimited cash back when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back when redeemed for a statement credit.1
1See Rewards Details at SoFi.com/card/rewards.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s