Introduction
Last week for Prime Day (which spans multiple days obviously), the American Express Amazon Business Prime card had a $200 sign-up bonus. That shouldn’t have been news unless there were referral or resurrection shenanigans afoot, but somehow it still was. The Chase Amazon Prime Visa had a sign up bonus of $250 too, but shouldn’t have been news either. Given that context, what sign-up bonus is news? Or, even better, when is it worthwhile signing up for a card?
The Factors
The calculus of a new card for a churner are mainly:
- A hard pull on your credit report (cost)
- A new credit line on your credit report (cost)
- Taking up a credit card slot at a bank (cost)
- Sign-up bonus (benefit)
- Ongoing card benefits (I mean, it’s in the name)
- Good bonus category multipliers for manufactured spenders
- Impressing your friends and waitstaff when you pay for dinner with a Toys R Us cobranded credit card (benefit)
Turning that into the Value Equation
The best bonuses at AmEx, Capital One, and Chase will be worth ~$2,000-$3,000 after annual fees with hand waivey math. For Citi, Bank of America, US Bank, and your average credit union $750 – $1,250 are typical.
The best unlimited category bonus cards give a cash out value of ~3% – 6%+, and much more with category capped or spend limited bonuses.
The type of game you play makes one of these two factors matter a lot more than the other, but both provide a basis for when you should get a card:
- If sign up bonuses are the bigger part of your earn, make sure you’re getting a value of at least
- $750+ for US Bank, Citi, Bank of America, or a random credit union personal card
- $1,250+ for AmEx, Chase, or Capital One
- If manufactured spend is the bigger part, shoot for
- 3x or 3% minimum return
Back to these Amazon cards that led the story – it’s really not hard for most people to get Amazon gift cards at a discount of at least 5%, even more so if you have easy access to a Kroger. So, I’m not sure the earn argument is valid either. But you do you, I’m sure there are angles out there that I don’t see.
Happy Wednesday!
“Shouldn’t have been but still was” news isn’t new.