Worked Examples and Checklists
Credit card sign-up bonus points: is the bonus worth it? (worked example)
How to value a credit card sign-up bonus in Australia: minimum spend, deadlines, first-year fees, eligibility exclusions and the cost of holding the card afterwards, with illustrative numbers.
A sign-up bonus is worth what the bonus points would buy you, minus the annual fee for every year you keep the card, minus anything you spend only to reach the minimum spend, and only if you meet every condition. Value it the same way as ordinary points, in cents per point for the redemption you would really make, and spread it across the years you will hold the card. A large bonus on a high-fee card can be good value in year one and poor value from year two. Also check whether you qualify: many offers exclude people who held a card with the same issuer or program recently.
This guide belongs to the rewards card worked examples. Bonus sizes, fees and spending targets below are illustrative, not current offers.
The conditions that decide whether you get the bonus
| Condition | What it usually means | What to check |
|---|---|---|
| Minimum spend | Eligible purchases above a set amount within a set period from approval | Which transactions count; whether it is from approval or card activation |
| Deadline | Often a few months | Exact dates, and when purchases "post" rather than when you make them |
| New customer rule | No card with that issuer or brand in a recent period | How long since you last held one; whether supplementary cards count |
| Timing of credit | Bonus points credited after the deadline, sometimes weeks later | Whether you must keep the account open until the points arrive |
| Annual fee | Charged on approval or the first statement; sometimes discounted in year one | The full fee from year two |
Missing one condition usually means no bonus at all, not a partial bonus.
Worked example: one bonus, three holding periods (illustrative)
Offer: 80,000 bonus points after $3,000 of eligible spending in 3 months. Annual fee $375 (no first-year discount). Ongoing earn 1 point per dollar. Your redemption value: 0.9 cents per point. Your normal eligible spending: $25,000 a year, which comfortably meets the minimum spend.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Bonus value (80,000 × 0.9c) | $720 | – | – |
| Ongoing points (25,000 × 0.9c) | $225 | $225 | $225 |
| Annual fee | −$375 | −$375 | −$375 |
| Net for the year | $570 | −$150 | −$150 |
| Cumulative | $570 | $420 | $270 |
Year one is strongly positive. From year two, at this spending level the card loses $150 a year, so the bonus is gradually used up. The decision is therefore not only "is the bonus worth it" but "what will I do at the first renewal": keep, downgrade to a cheaper card, or close. Use the rewards value vs annual fee calculator for each year.
When the minimum spend is a stretch
If your normal spending would not reach $3,000 in three months, the bonus can become expensive:
- Bringing forward purchases you would make anyway is fine, if you can pay in full.
- Buying things you do not need turns the bonus into a cost.
- Prepaying bills or buying gift cards may not count as eligible spending, and some cash-like purchases are treated as cash advances with fees and interest. See cash advance costs.
- Carrying a balance to reach the target: $3,000 carried for two months at 20.99% costs about $105, which removes a meaningful share of the bonus.
Bonus points and your credit file
Each application normally records a credit enquiry, and each new card adds a limit that other lenders take into account when they assess your capacity. Opening and closing cards often for bonuses can:
- add several enquiries in a short period,
- reduce what you can borrow for a home loan while the cards are open, because lenders assess the limits, not the balances, and
- trigger the issuer's new-customer exclusion on future offers.
If you plan a home loan application in the next year, weigh this carefully. See credit cards and your credit report and how card limits are assessed.
Questions to answer before applying
- What will the bonus points be worth to me, at a realistic cents-per-point value? See valuing frequent flyer points.
- Will my normal spending reach the minimum within the deadline without extra purchases?
- Do I meet the new-customer condition?
- What is the full annual fee from year two, and will I review the card before it is charged?
- Am I confident I will pay the full balance every month?
- Am I planning any major credit application soon?
If the answer to 2, 3 or 5 is "no", the bonus is unlikely to be worth it.
After you get the bonus
- Check that the bonus points have been credited before changing or closing the card.
- Redeem or transfer points before closing, as they are usually forfeited on closure. See points expiry and cancelling a card.
- Diarise the renewal date and rerun the numbers a month before.
Frequently asked questions
Do supplementary cardholder purchases count toward the minimum spend?
Often yes, but not always. The offer terms say which cards' purchases count.
Can the issuer refuse the bonus after I meet the spend?
If you met all the published conditions, the issuer should credit the bonus. If not, complain to the issuer and, if unresolved, to AFCA. Keep copies of the offer terms when you apply.
Is a first-year fee waiver worth more than bonus points?
Compare them in dollars. A waived $375 fee is worth $375; bonus points are worth their cents-per-point value to you.
Are bonus points taxable?
For personal cards they are generally not treated as income. For business cards, ask the ATO or a tax adviser.
Sources and where to check
- ASIC Moneysmart — rewards credit cards
- Australian Competition and Consumer Commission — misleading offers and consumer rights
- Australian Financial Complaints Authority — disputes about bonus points
- Office of the Australian Information Commissioner — credit reporting rights
