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There have been absolutely huge – unprecedented, even – initial bonus offers for credit cards in 2021. Here are 8 offers worth flagging both for their extreme generosity and they’ll help to illustrate why we’re seeing such big offers, as I’ll explain below.
- Capital One Venture X Rewards Credit Card has an offer to earn 100,000 bonus miles when you spend $10,000 on purchases in the first 6 months from account opening, equal to $1,000 in travel. And for a limited time: Receive up to $200 back in statement credits for vacation rentals charged to your account within your first year. (Offer expired)
- United ClubSM Infinite Card which gets you access to United Clubs has an offer to earn 100,000 bonus miles after you spend $5,000 on purchases in the first 3 months from account opening. [Offer expired]
They’ve added some cool new features to the card including IHG Rewards Platinum status (starting in 2022), a 10% discount on coach saver awards, and 10,000 bonus miles for signing up for CLEAR by June 30, 2022. And 100,000 miles is huge.
- Ink Business Preferred℠ Credit Card has a 100,000 point signup bonus after $15,000 spend within 3 months. That can even be enough for a roundtrip business class award ticket between the US and Europe.
- The Platinum Card® from American Express has an offer to earn 100,000 Membership Rewards® points after you spend $6,000 on purchases on your new Card in your first 6 months of Card Membership. Apply and select your preferred metal Card design: classic Platinum Card®, Platinum x Kehinde Wiley, or Platinum x Julie Mehretu.
The card is clearly worth getting on the basis of this new offer alone. However I keep my card and consider it worth the annual fee (See rates and fees) based on the $200 annual Uber credit; $200 annual airline fee credit (Southwest has been my airline of choice for this, enrollment required); $100 annual Saks credit (enrollment required); and lounge access (Centurion, Delta, Priority Pass which cardmembers need to request, Plaza Premium) and Hilton and Marriott Gold statuses, which you can register for. Plus there’s a slate of new additional benefits.
- British Airways Visa Signature® Card back with an initial bonus offer to earn 100,000 Avios – with much more reasonable requirements. You earn this bonus after you spend $5,000 on purchases within the first 3 months from account opening. This was the first 100,000-level card offer I’d ever seen (in 2009) and it’s frequently been at this level.
These aren’t the only big offers we’ve seen, for instance Chase’s Sapphire Preferred product ran with a 100,000 point offer this year and American Express has run 90,000 mile offers on a co-brand Delta card, just to name a few.
A confluence of events drives such big bonuses.
Banks Need To Replenish Cardmember Numbers
Each year every card is going to lose customers. This frequently happens around card renewal (annual fee) time for cards with fees. Perhaps they shed 10% per year. During the pandemic they were poised to lose even more, which is why we saw banks aggressively waiving fees, offering statement credits, and funding alternate offers.
When customers aren’t spending on travel, they aren’t using double or triple points in travel categories. Accelerator categories are money losers for banks, meant to entice you to get and use their card and hoping you’ll also use the card in non-bonus categories. With customers not using existing accelerators, banks replaced those temporarily with things like restaurants and groceries and layered on statement credits for restaurant spend instead of airfare or for Paypal (shop at home generally).
Even though banks managed to ‘stop the bleeding’ of cardmembers in many cases, they still experienced at least normal levels of attrition. During regular times that’s fine because they’re replenishing their numbers with new customers. But the pandemic was different.
- At the start of the pandemic no one was applying for rewards credit cards
- And banks weren’t approving those who did, since it was hard to know who would have a job in a year – too much uncertainty
So banks lost customers without the normal replacement flow. Now they need to rapidly backfill.
They’re doing this against a backdrop of cheap money from the Fed and consumers with strong balance sheets (they spent less money last year, and there was plenty of government stimulus cash, plus the stock market and real estate has done very well). There’s also plenty of consumer spend to fight over right now.
Once you start seeing big bonuses, even new cards as well as products that wouldn’t normally be as aggressive start to make big offers just to compete for consumer attention. There’s a ratcheting up of expectations around what ‘normal’ looks like when bonuses start getting so high, and offering what used to be an attractive bonus stops working to garner consumer attention.
In some cases, such as with Marriott and Hilton, banks prepurchased their points and have access to those at a discount.
This Trend Will Reverse Itself
We saw the same thing play out during and after the Great Recession. Banks lost customers and used big bonuses to lure in new ones, armed with cheap credit and cheap miles from prepurchase deals. And while bonuses didn’t sink back to pre-recession levels, we stopped seeing as many 100,000 point offers as frequently.
When the Fed raises rates, consumers deplete their balance sheets, and cardmember numbers stablize the impetus for huge bonuses will recede. It’s not an instantaneous process as competition will keep bonuses high for a little while. When do you lower bonuses, especially when others haven’t done so yet? But with something of a lag we can expect to see the frequency of unprecedented offers begin to subside.