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How sign-up bonuses work

Updated November 2026 · 6 min read

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Sign-up bonuses (also called welcome offers) are the most valuable part of many rewards cards: a lump of points or cash for spending a set amount soon after you open the account. They're worth having, as long as the spending is money you'd spend anyway.

How they work

A typical offer looks like this: earn a bonus after you spend a certain amount on purchases within the first few months. Miss the spending amount or the deadline, and you get nothing extra. Purchases usually count only after the account is open, and things like balance transfers, cash advances, and fees typically don't count toward the spend.

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A bonus is only "free" if the required spending is money you were going to spend anyway.

Hitting the minimum spend without overspending

1. Time it with big planned expenses, like car insurance, a holiday you've already budgeted, or a necessary purchase.
2. Move recurring bills (phone, streaming, utilities that accept cards without a fee) onto the new card for a few months.
3. Track your progress. Many issuers show it in the app; if not, add up purchases since the account opened.
4. Pay in full every month. Interest on the purchases can erase the bonus.

Issuer rules that limit who qualifies

Card issuers have rules about who can earn a bonus, and they're not always obvious:

• "New cardmember" limits: some issuers won't give a bonus if you've had the same card, or a card in the same family, recently or ever.
• Limits on recent applications: some issuers are widely reported to decline applicants who've opened many cards in the past couple of years. Chase's unofficial "5/24" rule is the best-known example.
• Pop-up notices: some issuers tell you during the application that you won't be eligible for the bonus.

Always read the offer's terms before applying, because they change.

What it does to your credit

Applying usually triggers a hard inquiry, which can lower your score by a few points for a while. A new account also lowers the average age of your accounts. For someone with solid credit, one new card is usually a small, temporary dip; opening many at once adds up. Avoid new applications in the months before a mortgage or car loan.

Is chasing bonuses a good idea?

Opening cards just for bonuses is a hobby some people enjoy, but it takes organization: tracking deadlines, fees, and when to cancel or downgrade. For most people, picking up one good bonus when you genuinely want a new card is the sweet spot.

Quick answers

Do purchases before approval count toward a sign-up bonus?

Generally no. Spending usually counts from the day the account is opened, and balance transfers, cash advances, and fees typically don't count. Check the offer terms.

Does a sign-up bonus hurt my credit score?

The bonus itself doesn't, but applying for a card usually causes a hard inquiry and a new account, which can lower your score slightly for a while.

Are credit card sign-up bonuses taxable?

In the US, bonuses earned by spending are generally treated as rebates rather than income. Bonuses that don't require spending can be different, so check with a tax professional if it matters.