How To Evaluate Welcome Offers

There has been something that I have been wanting to address for a while now, an elephant in the room so to speak. It came to a head yesterday with the new Venture Business X and Spark Cash+ welcome offers. These are offers that come with a large amount of points, but also require a ton of minimum spend. It ended up driving a lot of flawed logic on how to evaluate welcome offers. There are two main issues at work here. The first is thinking that everyone is you, or that you are everyone. You are not, so we need to stop thinking that way. It also helps you evaluate things for yourself when you think bigger picture. The other one is the flawed logic of comparing all offers to one individual offer. Saying I could just get 6 of these instead with that spend is not the proper way to evaluate a welcome offer. Hopefully after reading this you get a little more perspective on why both of those things are working against you.

Comparing One Offer To Another

Does it make sense to compare one card's offer to another? Yes, 100% it does. That is if you are trying to decide between a few offers and decide which card is best for you. If you are just trying to decide whether a card's particular offer is good then it becomes a flawed exercise. For example, saying I could get 3 of these welcome offers for that same $20,000 in spend is flawed. Why? Because these offers are not infinite, they are finite, no matter what some people on Instagram say.

While that may work for a spell, at some point the bank will say no soup for you. Whether that is because of application rules, credit limit caps, card limit caps, getting the pop-up etc., you will eventually come up against this resistance. Early on it may seem like everything is sunshine and rainbows, but at some point, as you progress in this hobby, you will run into this buzzsaw. That is why it is important to correct your thought process now. You don't want to get to the end of the line and be comparing everything to something you can not get any more.

If we used this logic do you know what the best offer on the market is? It is the Freedom Flex when they offer 20,000 points for $500 in spend. It beats the Ink Cash, Ink Preferred, Amex Business Platinum and everything else in between. HANDS DOWN! Why? Because it is a 40% return on your spend … and that is if take the 20,000 points as cash back at 1 cent a piece. If you make them transferrable points, and value those at 2 cents per point, then it is an 80% return. If I could get 205 of these every year I would. Spoiler alert, I can't. It is why no one touts this as the best offer on the market, because things are more nuanced than that. Everything has its limits, you just may have not reached them yet.

Your Spend Level Is Not My Spend Level And Vice Versa

The flaw that is next in line is the thinking the I am everyone and everyone is me society we live in. We find ourselves somewhat incapable to consider that there are others with completely different situations and abilities than us. It is something that many struggle with, myself included. I think this job has helped me in that aspect some, because it requires me to think of all possibilities to ensure I cover all my bases while writing.

Saying I don't see how anyone could spend $100,000 in 6 months is really saying, I don't see how I could spend that much. Maybe that is true, which is totally fine. There are plenty of people and businesses out there where that isn't true. People that do that level of spend in a day, week, month or 6 months. If you just sit back and think about it for a bit it isn't hard to imagine.

Some of this is just the luck of your situation. My friend gets to put his company's licensing fees on his personal cards and they reimburse him. That can be $50,000 a pop multiple times a year.

Having that ability changes your thought process over time too. If you have a higher level of spending available to you then you need different options to fit your expanding needs.

How to Properly Evaluate Welcome Offers

Now that we know what not to do, how should we evaluate welcome offers? We should look at them a few different ways.

How Does this Offer Compare to the Norm & All Time High?

First up, we want to look at how the welcome offer compares to previous offers for the same card. Is this the best it has ever been? If it is, then it is instantly something worth digging into deeper. If not, then you have to consider other variables.

• Is this card needed to unlock other perks or earning levels?
  • An example would be the Sapphire Preferred or Reserve. Those cards unlock transferability of the no fee earning cards, assuming you do not have the Ink Preferred.
• Does this card offer perks that would be extremely valuable to me?
  • Like spending towards Globalist status with the Hyatt Business card or the Priority Pass membership of the Bank of America Premium Rewards Elite.
• Does getting this card start a clock?
  • If there is a built in timeline on when you get a card that could be the defining reason, like a once every 24 month application rule. (This is why we recommend not waiting around for a higher offer for the Sapphire Preferred or Reserve.)

All of these situations could weigh even more heavily than the current level of the welcome offer depending on your situation. They should all be considered in conjunction with how the card's current welcome offer compares to historical norms.

Do these Points Work for Me?

Another thing to consider is whether these points work for me? If they don't, then it may be a pass no matter how good the offer is. That is something we mentioned with the Bank of America Alaska Business increased offer right now. Alaska's best value is in partner awards, particularly to Asia. If you just want to go to Europe, then this card may not be the best fit for you.

You also need to call yourself out a bit here. Does it not work for you because you know it doesn't, either via previous experience or research? Or, is it because you just don't know how to use the currency and some studying is needed?

Saying Capital One miles aren't worth getting because they don't have domestic partners is one such example. For example, you can use Turkish and Lifemiles to fly United, British Airways to fly American and Virgin or Flying Blue to fly Delta. Plus, the partner bookings will often be at better prices than booking direct with the airlines' own miles. There are even more examples of this and it can take a little more work / effort, but it is possible.

When it isn't possible, you just use the airline's own miles. However, the times you do find partner space means you were able to hold onto the legacy airlines' miles which you can now use when they are the best option.

Does this Work for My Application Path?

Following your application path is very important early on. It is easy to get distracted by shiny objects. Remember to get your foundation set first, and then over time grow your options. That means understanding the Chase 5/24 first and foremost. Because without understanding that you can dig yourself into a deep hole.

Can You Handle the Spend & Does it Make Sense?

Another consideration of a welcome offer is whether you can handle the spend required. Not how the spend compares to other offers, since we don't live in an infinite credit card offer world. If you can meet the spend requirement, then it is something worth considering a bit more. If it is completely out of the realm of possibilities then move on to something else that works better for you. Remember, just because it isn't possible for you doesn't make it impossible for everyone else.

You also want to make sure the spend gives a good enough return for the effort. For the most part, any welcome offer is going to beat out what you could earn via regular spend and bonus earning. Some of this depends on where you are at on your path through the miles and points world and what cards you already have. Some offers will make sense to seasoned vets when it wouldn't make sense to someone in their first year of two (see the point directly above). That could be dictated by the bank offering the card and because of what they already have, or don't have, in their wallet.

Do I Need to Branch Out or Slow Down?

The next thing to look at is if you need to put a natural buffer into place. Are you getting denied for new welcome offers more often, or have you been focusing on one or two banks too much? Sometimes a large spend offer can make sense to give you a mini timeout and break you away from certain issuers. This usually comes up when you are around two years into your journey. The big spend offers are a way to get your cake and get to eat it too.

This could also open you up to new points currencies. It is important to realize that these points can sometimes work in conjunction with each other. Maybe you love using Ultimate Rewards for Hyatt but find yourself transferring out to Flying Blue and Aeroplan at times too. By getting Capital One miles you could then use those for Flying Blue and Aeroplan, which then in turn saves your Ultimate Rewards for Hyatt. It can make points kind of fungible, and almost make it like earning point A is the same as earning point B. That is because point A lets you save point B for the unique travel partners.

How to Evaluate Welcome Offers: ToP Thoughts

Hopefully this gives you some things to think about next time you go to evaluate a particular welcome offer. This will become more and more important as you progress through your miles and points journey. Because of that we might as well focus on best practices starting now, versus trying to change on the fly down the road. If nothing else, try to look at every offer and consider who it could work well for. That should help you understand outside perspectives, as well as, see if those points line up with your situation and needs.

Let me know your thoughts on how to evaluate welcome offers over in the ToP Facebook Group.