Recently I asked Dough Roller newsletter subscribers (you can subscribe here and get a free copy of 99 Painless Ways to Save Money) whether a bonus deal on a product would affect their buying decision. Here’s some background.
A lot of financial products are marketed by offering bonus cash to new clients. This is especially true with credit cards, bank accounts, and brokerage accounts. Let me show you a few examples.
In the world of credit cards, arguably the most lucrative bonus comes from the Chase Sapphire Preferred card. Spend $3,000 in the first three months, and you’ll receive 40,000 bonus points worth $500 if spent on travel.
ING Direct offers a $50 bonus for those that sign up for its online checking account. And not to leave brokerage accounts out, OptionsXpress offers a $100 bonus to new clients who fund the account with $500 and execute three trades in the first 12 months.
So why do I bring this up? This month American Express brought back its $25 bonus for those that get its new prepaid card. They ran this offer in June, reduced it to $10 in July, and for August have raised it again to $25.
And this made me wonder, to what extent do people base their decisions, even in part, on bonus cash? I can say that I’ve gotten a few credit cards based on bonuses (although mine were primarily for 0% balance transfer offers). So do bonus cash deals affect your decisions?
Readers of my newsletter had some very interesting responses to this question.
Geoff based his decision on the amount of the bonus, with $100 the minimum amount required to get his attention:
I responded to a Chase card offer of $250.00 if the card was used just once. I used it paid it in full and “retired” the card. I got the $250. I will only do this if the incentive is meaningful $100+.
Some readers, like Thomas, take the money and run:
I opened a ING Direct account for the $76 they would pay me for making 5 card purchases, and the additional $76 ING would deposit for making 2 direct deposits of $250 or more by a set date.
Purchases done. 1 direct deposit left and cash out.
Fred says no to the cash, but yes to the rewards: “Bonus cash….No! Rewards….. Yes!”
One reader who signed up for the American Express Prepaid Card bonus was looking for a debit card anyway:
I actually did sign up for the amex prepaid card after reading your aricle about the $25 bonus. I wanted to try out the amex debit, anyway, since I figured I would use it as a gas card but the $25 bonus was what initially enticed me to sign up for the card.
Many readers, like Brenda, take a very practical approach to bonus cash:
My son-in-law worked for Chase last year, and he had me get their checking account, which had $100 deposited in it by Chase. That was worth the trouble; even though I don’t use the checking, except to do the online bill pay for my home mortgage. I would do the $25, if it were for something I use or would start using. I will look into the Chase Sapphire Preferred Card. It is certainly worth that credit.
And some readers, like Randy, view many of the bonus offers as rip-offs:
It’s all BS to hook you. In many cases, the APR is a variable rate (based on your credit worthiness) of between 18.99 to 24.99%, a true rip-off. It might be worth it for airline miles, if you travel a lot for your company and they let you use your ‘personal’ card to book trips and pay for business expenses. Not many companies allow this any longer, we are issued Corporate cards.
And finally, my favorite response came from a reader named Marcia. Her response to whether she would be persuaded by bonus cash got right to the point:
So do bonus deals affect your buying decisions?