Credit Cards

Should You Choose a Credit Card With a First-Year Introductory Bonus?

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Credit cards offer sign-up bonuses as a way to entice consumers to apply and use their new credit cards regularly. But while card issuers have traditionally provided an upfront bonus of cash, points or miles after just a few months, some are transitioning to incentives that encourage you to use the card consistently for an entire year.

Currently, more cards offer a three-month sign-up bonus than cards that offer a first-year introductory bonus. However, the yearlong bonus timeline could gain popularity, so consumers should be versed on how first-year introductory bonuses work, how to choose the right one and how to maximize the value available.

Why Credit Card Issuers Are Switching to First-Year Bonuses

Sign-up bonuses are effective incentives, but savvy credit card users can take advantage of the system to maximize the value of these offers at the credit card companies’ expense.

“If you understand how credit card bonuses and point reward systems work, you can apply for a number of cards, use them for the introductory period, get the bonuses and then use them rarely beyond that,” says Janet Alvarez, executive editor at personal finance advice site Wise Bread. This strategy is called credit card churning.

Alvarez believes that credit card companies are wising up to that reality. Enabling the behavior and footing the bill, some banks are finding creative ways to offer equally enticing bonuses that encourage consumers to use their credit cards for a longer period of time.

Lee Huffman, a credit card expert and travel blogger at, says, “From a business point of view, it makes complete sense. Banks spend a lot of money offering sign-up bonuses and too many applicants close their accounts soon after receiving the bonus.”

By switching to a bonus structure with a longer promotional period, credit card issuers may be betting that it will be more likely for you to keep the card in your wallet rotation going forward due to habit.

Credit Cards That Offer First-Year Introductory Bonuses

While there’s no telling how quickly this new approach to sign-up bonuses will catch on more widely, or whether it will at all, there’s a handful of credit cards that are leading the way.

Discover credit cards. What started out as a limited-time offer in 2015 is now the norm for the card issuer’s entire product line. If you get a Discover credit card, the card issuer will match all the cash back or miles you earn during your first year.

The Discover it Cash Back, for instance, earns you an effective rewards rate of 10% on up to $1,500 spent each quarter on rotating bonus categories and 2% on everything else during that time.

There’s no cap on how much Discover will match, and you’ll receive the match amount on your first anniversary with the account. However, remember that the card’s 5% bonus categories are capped at $1,500 spent each quarter.

Chase Freedom Unlimited. The Chase Freedom Unlimited normally offers 1.5% cash back on every purchase you make. But during your first year with the card, you’ll earn double that on up to the first $20,000 spent.

If you spend enough to max out the bonus offer, you’ll earn $300 in extra cash back – that’s $150 more than the card’s old sign-up bonus. Unlike Discover credit cards, which reward their match at the end of your first year, the Chase Freedom Unlimited gives you the bonus cash back as you earn it….Read more>>