Why Big Credit Card Initial Bonus Offers Matter — To The Banks

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When Barclays introduced a new card earlier this year with points transferring to airline miles and bonuses for spend each year, the rest of the industry waited with baited breath to see what would happen.

There was no sign up bonus. And even Barclays’ competitors were rooting for them to succeed. After all banks spend a lot of money acquiring customers, and many of them don’t turn out to be good customers. In order to make back the up front investment a card’s initial bonus offers, the bank needs to retain that customer and keep them spending on the card for several years.

Is it possible to get consumers to adopt a rewards card without a big up front bonus? Did Barclays have something to teach the rest of the industry? Unfortunately for the banks consumers didn’t take to the product and it was withdrawn from the market for new applications.

As much as card bonuses may be important to consumers they are also important to banks that want to acquire customers for their products.

  1. Excitement. A big initial bonus generates excitement and buzz. It’s focal for consumers, they see a simple task (applying for a credit card) having a big and almost immediate payoff (rewards). That’s necessary to motivate action when there so many things fighting for consumer attention.

  2. Fear of loss. A limited-time (or ‘pulse’) offer is even more power than merely a big offer. That’s because a customer may see a big bonus as good, but is it really the most important thing to do today? A limited-time offer can move signing up for a card from #15 on the list up to #1 or #2 — in other words, actually get it done.

    What’s even more effective than launching a new offer is ending that offer. When consumers see an opportunity that’s going to go away they will act because they don’t want to lose out.

    Several years ago the Chase Sapphire Preferred Card was reducing its initial offer from earning 50,000 points down to 40,000 points. There were still some links out there with the 50,000 point offer. I’ve often described the frenzy that ensued over the last few days 50,000 points were available as being like the End Times. Anyone who didn’t apply for that card was going to get left behind.

    By the way they brought back 50,000 points as an initial offer on the card (after $4000 spend within 3 months of cardmembership, and it’s a $0 the first year card then $95).

  3. Trust. Loyalty programs are all about trust. Consumers are increasingly skeptical. How do you show them that they’re making a good decision by putting spending on a card? You front the rewards to them. By offering a big bonus consumers see rewards quickly.

    In the early days of airline frequent flyer programs it was common for members to be given 5000 miles when they depleted their accounts, so that they never went down to zero — they might get off the treadmill and move to a competitor if they did. However programs quickly learned that once members redeemed their accumulation actually sped up, having proven to themselves they had made a good decision pursuing the rewards in the first place.

    By giving members points they can use, they redeem more quickly, and value the card more — making it more likely the average consumer will keep the card and keep spending on it. Without the bonus the payoff seems too far off in the future, redemption too far off to get consumers to ramp up their spending as well.

  4. Arms race. 30 years ago 5000 mile signup offers were common. It wasn’t until 2003 that I saw my first 20,000 mile offer for a United credit card. Consumers were enamored simply with earning miles. But as reward costs have gone up, and competition has heated up, we’ve seen bigger and bigger offers — and have come to expect them. Banks that don’t offer them cede a market to those who do.

Card signup offers have become a key element of the value that cards bring to consumers. Right now the strongest offer I know of is for the Ink Business Preferred℠ Credit Card which offers 80,000 points after $5000 spend within 3 months. (Chase points are super valuable because they transfer directly to a variety of airlines and hotels.)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Editorial note: any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Comments made in response to this post are not provided or commissioned nor have they been reviewed, approved, or otherwise endorsed by any bank. It is not the responsibility of advertisers Citibank, Chase, American Express, Barclays, Capital One or any other advertiser to ensure that questions are answered, either. Terms and limitations apply to all offers.


  1. You mention that “30 years ago 5000 mile signup offers were common” while also noting that over those 30 years, “reward costs have gone up”. I’m curious if you know just how much they’ve gone up? For example, how much was a US to Europe business class award in 1988? It’d be interesting to approximate what 5000 miles in 1988 would be equivalent to today.

  2. I recall that the best credit card signup of the 90’s for me was a free companion ticket on Delta, anywhere they flew. It was in Y, but it still got me to Europe!

  3. @Craig.

    In the 1990’s, United had business class tickets USA/Europe for 80,000 miles R/T.

    First class was 100,000 miles R/T. They also had the deal of the century >>> cash in for 2 first class tickets for 160,000 miles. This was like getting first for free. First worked out to 80,000 miles per person when two flew.

  4. In 1988 I cashed in 170,000 miles from Onepass (Continental) for 2 first class tickets from US to Australia, which I was able to use myself for 2 separate trips. In those days you got a certificate good for one year, and then once you converted that to a ticket, it was good for another year, so I had 2 years to travel. The award also included 7 nights at a Marriott hotel and a one week car rental. Shortly after that the 2 ticket awards were discontinued. By 1995 a single business/first round trip ticket to Europe on Continental was 100,000 miles for a Standard award and 200k for an EasyPass ticket. (coach was 50k / 80k ).

  5. That should be “bated breath,” as in abated. “Baited breath” could conceivably exist, although I am not sure I want to imagine the circumstances.

  6. In 1988 50000 TWA points got me a systemwide free F class RT + a systemwide RT upgrade to F from any published coach fare. The upgrade could be used at another time.
    I used the free ticket LAX to TLV F class and paid $490 for F class LAX to LHR return with the upgrade. The LAX-LHR earned 2x miles (21000)
    for a total net cost of 29000 miles.
    Could be why TWA is no longer with us.

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