Signup Bonus Math: The Best Return on Credit Card Spend

Introduction

Credit card signup bonuses offer the most efficient and cost-effective way to earn miles, points, or cash back. As a followup to my post 66 Credit Card Approvals in 3 Years, I break down the return you can expect from new accounts associated with each type of rewards currency, and show how I earned a 21.4% return on signup bonuses for these new accounts! Hopefully this post can provide some data to those of you looking to maximize your return.

Miles and Points Valuations

Any post based on miles and points valuation needs to have this disclaimer: the value of an individual mile or point is highly speculative and comes down to your own redemption strategy! The valuations in the table below are based on my own individual redemption strategy and history. I am a working man that is (international) travel-limited by time-off from work and other life goals. For that reason, I find added value in redeeming some rewards currencies (e.g. Amex Membership Rewards) at a value below what I would receive by flying first class. I have plenty of other miles that can be used for that.

The least valuable mile is the one you never redeem.

Return on Sign-up Bonus Spend

Below is a table compiled from the information in my previous post. You will notice the total number of accounts is equal to 63, not 66. This is because I signed up for 3 cards that I had previously held and was not eligible for the signup bonus again.

Point Type# of Credit CardsPoints TotalTotal Min SpendPoint Value (cpp)Value of Signup BonusesAnnual FeesReturn on Spend
SUMMARY632,585,000 + $2,000$151,7501.3$35,596$3,40921.4% (avg.)
Chase UR7390,000$22,5001.8$7,020$45029.2%
Amex MR12580,000$42,0001.4$8,120$1,99514.6%
Citi TYP3130,000$8,0001.5$1,976$35020.3%
Cap 1 Miles290,000$9,0001.0$900$010.0%
Barclay Miles290,000$6,0001.0$900$015.0%
Merrill+ Miles3150,000$9,0001.5$2,250$025.0%
American Airlines5225,000$9,7501.5$3,375$8933.7%
United2100,000$6,0001.7$1,700$028.3%
Alaska6155,000$6,0001.7$2,635$45036.4%
Delta150,000$1,0001.5$750$075.0%
Hilton7420,000$10,0000.4$1,848$018.5%
Marriott170,000$3,0000.7$462$015.4%
IHG180,000$1,0000.7$560$056.0%
SPG255,000$8,0002.0$1,100$013.8%
Cash Back9$2,000$10,5001.0$2,000$7518.3%

Explanation and Assumptions

  1. Calculations do not include points earned from the spend required to acquire the signup bonus.
  2. Calculations do not include travel credits or other benefits that come with individual credit card products (e.g. lounge access). The calculation for Return on Spend is therefore conservative.
  3. Calculations for Return on Spend completed after taking into account annual fees.
  4. Calculations do not include signup bonuses that include free hotel nights, such as the Chase Hyatt.
  5. cpp = cent per point
  6. Point valuations are based on my individual redemption history.
  7. I cash-out the bulk majority of my Amex MR via the Amex Schwab Platinum card at 1.25 cpp. I do occasionally transfer MR to travel partners when there is a bonus.
  8. Cash back cards include those with statement credit, such as the Alaska Air 25,000 mile + $100 offer.
  9. Miles earned from the Bank of America Alaska Airlines cards include the annual fee. The $100 statement credit from these cards, where applicable, was applied to the “Cash Back” row without the annual fee.

Summary

The average return on sign-up bonus spend was 21.4% before taking into account the points earned in meeting the spend requirements, travel credits, or other perks like lounge access, primary rental car insurance, hotel status, etc. Even on credit cards with the best category bonuses, you only expect to receive 3 to 6 percent return on your everyday spend. For this reason, credit card signup bonuses offer the most efficient and cost-effective way to earn miles, points, or cash back.

Additionally, if you have received the best signup bonus offers and are stretching for additional ways to increase your points and miles balances, Frequent Miler has some ideas that might be useful.

If you have questions or can share your story on amassing a large number of miles, points, or cashback through signup bonuses, please let me know in the comments!


Share this post with friends

If you like this post, don't forget to give it a 5 star rating!

[Total: 2    Average: 5/5]
Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.