Initial Travel Credit Card Reward Promotions On the Rise

To some, credit cards just mean high-interest rates and tons of debt. However, to others, credit cards are useful tools for earning rewards and racking up travel points. As those in the latter camp likely know, one of the big ways to score with a rewards credit card is to take advantage of the initial spending bonuses many cards advertise. In fact, as a new study by MagnifyMoney has found, the size of these offers is growing significantly.

For their study, MagnifyMoney looked specifically at travel rewards credit cards and the number of miles they offered as a sign-up bonus. While they discovered that the value of these offers had nearly tripled over the past decade, it also determined that the average annual fee for such cards had risen as well.

According to the report, the average initial spending bonus was 16,050 points. That more than doubled by 2013 as the average hit 34,327 points. However, for 2018, the average now sits at a whopping 40,556 points. That figure goes even higher among hotel-branded cards, with that average climbing to 60,000 (versus 21,250 in 2008). Meanwhile “cash for travel” cards have seen the biggest lift overall, climbing from 10,000 points in 2008 to 30,455 today, marking a 3x gain.

One of the big reasons for this trend is that the market for travel credit cards has become increasingly competitive. As Brian Karimzad of LendingTree explains, “More and more cards are offering travel rewards without being tied to one airline. We wanted to see what that competition has done to intro bonuses.” Unfortunately, while issuers are raising their offers to lure customers, they also appear to be hiking their fees.

In 2008 the average annual fee for a travel rewards credit card was $74. According to MagnifyMoney’s latest study, that average now sits at $120. Although that’s not great news, it is worth noting that the 66% increase is dwarfed by the 250%+ gains the initial bonuses have experienced. Then again it’s hard to say whether these points have kept their same value. Moreover different cards may have different redemption rates.

Despite some of the inherent flaws in this latest study, the trend of increasing bonus offers for travel credit cards is true. That said it’s important for potential applicants to carefully research their options and things like redemption rates that can prevent them from making true apples to apples comparisons. Of course would-be cardholders should also consider that, even after the initial bonus is gone, the annual fees for such cards will continue. Therefore be sure to evaluate the value of any given credit card and ensure that you’ll still come out ahead.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Rocket Companies Introduces Rocket Visa Card for Homebuyers

Rocket Companies — the parent company of Rocket Mortgage, Rocket Homes, Rocket Loans and Rocket Money — is now adding a branded credit card to the mix. This week, Rocket introduced the Rocket Visa Signature Card. Not only will the new offering integrate with Rocket Money but will allow cardholders to earn up to 5% back. With the Rocket Card, customers can earn 5 Rocket Rewards on every purchase they make....

Robinhood Partners with Capitalize for IRA Rollover Feature

In January, the popular investment app Robinhood officially introduced its IRA program Robinhood Retirement. Now, ahead of this year's tax deadline, the company has announced a partnership with Capitalize that will make it easier for customers to transfer their existing IRAs and 401(k)s over to the platform. As a result of the partnership, Robinhood Retirement users will be able to find legacy 401(k) accounts and roll them over into a...

Survey: Consumers Want Financial Recommendations from Banks

Since the advent of online banking, it's been easier for customers to check their balances, make transfers, and conduct other transactions from their computer or smartphone. However, a new survey highlights the fact that banks could be doing more with their digital platform to please customers. According to a Sopra Steria and IPSOS report, nearly 70% of banking customers want their institutions to provide more personalized financial recommendations that can...