Are These “$200 Cash Back” Credit Card Bonuses Worth It?

There is no question that the sign-up bonus amount can play a big role in whether or not you sign up for a new credit card. While the cash-back percentage and other benefits also play a significant role, the sign-up bonus is the primary way to earn “free” money, so the amount can make a substantial difference. 

Speaking of this topic, one Redditor is taking to r/personalfinance and asking if these offers are truly legitimate. They want to know if these deals really encourage people to open new credit cards and if doing so is actually detrimental to their credit score. It’s totally understandable to be skeptical, but the good news is that these bonus amounts are available on just about every new credit card. 

This Is A Real Thing

First and foremost, it’s essential to know that this is a very real thing and offers are getting increasingly competitive. Whether it’s earning $250 for spending $3,000 in the first 3 months or something along those lines, these offers are very legitimate. 

In the increasingly competitive world of cash-back credit cards, offers like these sign-up bonuses might be the reasons someone comes to your bank over another. If you have two credit cards, both of which offer the same 2% cash back, but one provides a $500 sign-up bonus while the other offers $250, it seems pretty obvious which one people are going to look at first.

What’s more notable about this is that it has become a hobby, as people treat sign-up bonuses as a sort of side hustle. If you visit r/Churning on Reddit, you can quickly learn a bunch of strategies to take advantage of sign-up bonuses without dramatically impacting your credit. Some people in the comments of this Redditor’s post indicate that it’s not unheard of to make $30,000 to $40,000 a year in income just through bank account and credit card sign-up bonuses. 

In fact, there are several people in the comments on this post who open new credit cards for every major purchase. These individuals likely do so because they can obtain a 0% interest rate and also take advantage of the sign-up bonus offers. The caveat is that you have to be disciplined enough to pay off your balance every month. 

Are Credit Card Sign-Up Offers Worth It? 

Knowing that sign-up offers are the real deal, the question then becomes whether or not they are worth it. One of the best ways to determine if a sign-up bonus is worth it is to consider whether you have a credit card with an annual fee. 

The prevailing theory on Reddit is that cards with a bonus that offers at least three times the annual fee are super attractive and well worth it. For example, if you are considering a cash-back credit card with a yearly fee of $95, the bonus would need to be at least $285 or more to make it worthwhile. 

Better yet, ensure you can meet the sign-up bonus requirements before signing up. Most cash-back cards ask you to spend a certain amount of money within the first three months. Can you afford to spend and hopefully pay off this amount within a limited timeframe? If so, then there is every reason to think this is a good opportunity. 

Red Flags to Remember

Every new credit card sign-up bonus you see is indeed going to require a hard hit on your credit, so that can, and will, impact your credit score. The same applies to not paying off your balance on time, which can result in a higher-than-usual credit utilization ratio and negatively impact your credit score.

Unless you really want to jump on the side income train, make sure to choose a card that offers both good rewards and a strong sign-up offer. Otherwise, it’s just likely to sit in a drawer and remain unused, potentially even tempting you to spend more.