Measuring signup and retention offers with an X


Its no secret that the easiest way to earn frequent flyer points & miles quickly is by signing up for a few credit cards.  Many cards standardly offer 40,000 to 50,000 point bonuses.  In almost all cases, though, there is a catch.  You must spend a certain amount of money in a certain amount of time (typically 3 months) to get the full bonus.  A 50,000 point offer that requires $1K spend is much better than a 50,000 point offer that requires $5K spend.  But, what about a 75K offer that requires $5K spend?  How does that compare?

Let’s set aside for a moment the fact that the value of points vary tremendously from one program to another.  For example, Starwood points are worth waaaaay more than Hilton points.  We’ll come back to that.

Signup Offers

When I look at new sign-up offers, I find it helpful to calculate the “X”.  What I mean is that I calculate how many points per dollar I would get from fulfilling the spend requirements to get the full signup bonus.  Let’s take an example…

One of my favorite cards is the Chase Sapphire Preferred.  For the past year or so, it has had a standard signup bonus of 40,000 points after $3K spend.  If we assume, conservatively, that all $3K spend will be for things that earn 1 point per dollar then we can calculate that we will have 43,000 points after spending $3K.  That comes to 14.3 points per dollar, or 14.3X.  If, instead, we spend all $3K in 2X categories (travel and dining), then we would end up with 46,000 points, which comes to 15.3 points per dollar.  So, the “X” for this offer ranges from 14.3X to 15.3X.

Looking at a few other current signup offers, we have:

  • Chase Ink Bold / Ink Plus. 50K after $5K spend = 11X to 15X
  • Chase British Airways. 50K after $1K spend = 51.25X to 52.5X
  • Chase Southwest. 50K after $2K spend = 26X to 27X
  • Amex Business Gold.  50K after $5K spend = 11X to 13X
  • Amex Gold Delta.  45K after $5K spend = 10X to 11X
  • Amex Gold Delta (2).  30K after $500 spend = 61X to 62X
  • Amex SPG. 10K after first purchase (= 10,000X for a $1 purchase), then 15K after $5K spend = 4X to 5X
  • Citi AAdvantage.  40K after $3K spend = 14.3X to 15.3X
  • Barclay Arrival. 40K after $1K spend = 42X
  • Barclay Lufthansa Premier. 50K after $5K spend = 11X to 12X


Why is this interesting?

What I find interesting about this way of looking at things is that while several of the offers are off the charts at over 50X, most are in the 10X to 15X range.  This is still better than earning 5X everywhere, but not by orders of magnitude.  In other words, if you’re not into churning credit cards (or you’ve already signed up for all of the good cards), you can still do very well just by using the right card for the right job.  See, for example, these posts:


Retention offers

Often, when you call to cancel a credit card, the credit card company will offer you points or cash to keep the card.  Often, though, those offers come with spend requirements.  For example, a reader recently told me that when he tried to cancel his American Airlines card, he was offered a retention package of 10,000 miles contingent upon $5K of spend.  Since this card automatically earns 1X for most spend, this means that he would earn a total of 15K after spending $5K on that card.  In other words, his card has temporarily become a 3X earning card.  While that’s nice, it’s certainly not amazing.

The value of points

There’s no doubt that the value of points vary tremendously from one program to another.  Unfortunately, it’s impossible to say exactly how much each point is worth (see “Impossible point valuations and the joy of free“).  You can, though, estimate the usual price at which people “buy” points through credit card spend.  See “Fair Trading Prices.”  While these fair trading prices will not tell you how much value you’ll get from your points, I’d argue that they are a fair way of estimating the rebate value you get from spend.  Take, for example, the fair trading price of Ultimate Rewards points, which is 1.31 cents per point.  You could plug that number into the calculated “X” above for the Sapphire Preferred card and come up with a rebate % like this:

Sapphire Preferred = 14.3X.  14.3 * 1.31 = 18.7%.

So, you could estimate that the rate of return on your Sapphire Preferred’s $3K spend is 18.7%.  Personally, I don’t bother going that far with the calculations.  If a signup offer or retention offer will give me 10X or more on my spend and will result in highly valued points, I’ll consider going for it (to me, highly valued points include Ultimate Rewards, Membership Rewards, SPG, Hyatt, or just about any airline miles).  With some lesser value points (Hilton, IHG, Marriott, Club Carlson) I’ll look for 20X or more.


I’m not trying to argue here that measuring the “X” is the best way to evaluate signup and retention offers.  I’m simply presenting a way of looking at offers like these that’s a bit different.  It’s a tool to use to help evaluate the quality of an offer, but it is by no means enough, in itself, to say whether an offer is right for you.

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[…] per dollar are excellent earning rates, but not necessarily “signup bonus” size rates (see “Measuring signup and retention offers with an X”).  2.25 miles per dollar is only attractive if you value these miles significantly more […]


Actually, a better way of looking at spend requirements is opportunity cost. Minimum opportunity cost is 2% (the payoff you can get from a 2% cash back card), so a $1K spend requirement has an opportunity cost of $20 for the points earned (excluding the bonus points). At the end of the day it reduces to fair trading value concepts, assuming fair trading value has be calculated properly, or stated another way, the opportunity cost is the fair trading value of the points earned from spend (excluding the bonus points which have their own opportunity cost).

Andrew C

I think this discussion is moot – manufacturing a few thousand dollars in spending is so easy these days via so many different methods that a requirement of $1000 is really no different than $5000. Now, if you’re one of those going after 6 cards at once, it gets trickier… but if you’re in that crowd, then you’re probably also up on the more advanced manufactured spend patterns (or certainly should be), so it’s again really no problem.

[…] has a different way to look at credit card signup bonuses. Rather than thinking of it as a bonus, you can think of it as earning X points per dollar in spending. I generally like this idea, but remember that signup bonuses are still an all-or-nothing […]


Not really that meaningful. For example, first penny spend bonuses like the 35K US airways offer would have an X approaching infinity. What would be more interesting is to compare affiliate commissions to the number of times a card is mentioned on BoardingArea. 😀


No accounting for the value of the points being accumulated in the formula? That seems to be missing a huge part of the equation.


@Globetrotter, the phrase “hang up, call back” also applies to retention bonuses. The ink reps were much harder than the united reps. I called the ink reps 3 times and got 2 “sorry there is nothing we can offer you” and then the third guy said he could give me 5K UR points or $47.50 statement credit. It pays to be persistent and to call at the 9-10 month mark, not a week before the annual fee is due.


@Grant: Did you squeeze more juice out of them or was it their first offer that you accepted? When my Ink Bold was up for renewal three months ago, Chase refused to offer me any retention bonus but I kept it. I will cancel it next year if they give me the same attitude and wait for better sign up offer for Ink Plus like last week and last May of 2012.


@FM, I think the Chase SWA CC has a $2K min spend, not $1K.
@Sean, same here. I got 10,000 united mile + 2 extra United club passes in 2 retention calls.
Ink Bold = $47.50 statement credit (half the $95 annual fee) or 5,000 UR points.
Marriott Card = make 15 purchases and get 5,000 bonus Marriott points (bought 15 $1 amazon gift certificates)


Grant: Thanks, I fixed the SWA line. FYI, I received 20K retention offer for Ink Bold


I was offered 10,000 miles for threatening to cancel my United Explorer card. I immediately accepted the offer.


OK that is one way of looking at it but then again what happens when you manufacture the spend requirement. That does make this way of looking at it a bit useless with the exception of the length at which you need to manufacture. But I did enjoy the read as always.