Are Cash Back Cards With One Time Bonuses Worth It, Or Just A Marketing Ploy?

A Reddit poster asked a good question about cash back credit cards recently. The poster said he sees a lot of offers for free money if you sign up for a new card and charge a set amount, such as $200 cash back if you spend $2,000 in six months. He’s wondering if the cards are worth applying for or if the offers are just a marketing ploy. He’s also concerned about whether it would be bad for his credit score to open up the cards to get the bonus. 

So, should you take advantage of these offers, or is there a better approach to making money with cash back cards?

Are new bonus offers worth taking advantage of? 

New cardmember bonus offers for credit cards can be very attractive and are worth taking advantage of if:

• You are in the market for a new credit card
• You’re confident you can meet the spending requirements
• The card is one that you are interested in keeping in your wallet for the long term.

You’ll want to make sure all three of these caveats are met because you don’t want to just open up new credit cards all the time. If you do, you’ll get too many inquiries on your credit record, as each inquiry stays on your report for two years. Multiple inquiries will hurt your credit score because of lender concerns that you’re getting in over your head in debt.

Opening up new cards all the time also reduces your average age of credit, which is another factor that could hurt your score. Plus, it puts you at risk of accidentally missing a payment due to all the cards you are juggling, potentially ending up with too much debt if you’re charging stuff on all of them, and struggling to keep track of which card to use for which purchase to maximize your cash back. 

Of course, you also definitely don’t want to spend more on the card than you otherwise would have just to earn the bonus, as you would be spending money (and potentially trapping yourself in debt) just to get a one-time bonus that might not be enough to offset the extra spending and any interest costs you incurred over time.

Credit card companies also typically don’t like it if you keep opening and closing cards all the time, so they may very well put a stop to this behavior and stop approving you for credit cards if you’re applying for them too often.

There’s a better way to make money with cash back cards

While there is nothing wrong with taking advantage of a new cardmember bonus if the above three criteria are met, chasing new cardmember offers is actually not the best way to make money with cash back cards. Instead, the better option is to find a really great card that provides the most generous rewards for the spending you’re doing.

By finding a card that rewards you for your purchases and that you can use for the long haul, you’ll make every purchase cheaper for years to come. You can usually claim the cash back as a statement credit or have it deposited into your bank account, and continue to reap those rewards without hurting your credit if you stick with the same card for a while. 

The good news is, there are some really great cards out there. Some of them may happen to have a bonus you can take advantage of, and that’s all the better — but regardless of whether they do or not, you can find a card that will earn you a lot of cash back over time. Check out our top picks for cash back cards to explore your options and find the best fit.