Finance

Excited by Credit Card Sign-Up Bonuses? Beware the Bait-and-Switch (Trap 2)

April 14, 2025
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Note: This is part of our series on credit card rewards traps. Check the end of this article for links to more pitfalls.

Did the last article shake you up?

Think You’re Winning at Credit Card Rewards? You Might Already Be Trapped

Good, because we’re just warming up. Let’s talk about another shiny lure banks dangle—the ever-so-tempting sign-up bonus. Sounds amazing, right? Just swipe, spend, and earn a huge reward. But not so fast—banks often hide tricky terms and conditions designed specifically to trip you up.

“Earn 100,000 points, worth $1,000 in travel, just for signing up!”

Sounds like a dream deal, right? Sign-up bonuses are the credit card industry’s big handshake – issuers use them to motivate you to apply and spend heavily, quickly. But behind many jaw-dropping offers lurk conditions that can make that bonus harder to actually get (or keep) than you’d think. Issuers design these programs hoping to hook new customers while minimizing payout to those who don’t dot every i and cross every t in the fine print.

How it works:

Big banks splash seductive bonus ads everywhere – “Spend $4,000 in 3 months to get 60,000 points!” . However, they often sprinkle in complex terms to protect themselves. Common tactics include: requiring the spending to be within a tight timeframe, excluding certain purchases from counting, or even offering different bonus amounts depending on how you apply. (Yes, really – sometimes the online offer differs from the in-branch offer, a fact only revealed in the tiny asterisk text .) Some issuers have been caught running “bait-and-switch” sign-up promos: the headline promises one thing, but due to obscure terms, you receive much less . In one case, a major bank failed to clearly disclose that an advertised bonus was only for online applications, and people who applied in person got denied the rewards. The fallout? The bank had to pay roughly $23 million back to frustrated cardholders . Ouch.

Another implementation of this trap is setting a high spending hurdle that tempts users into unwise spending. A college student or recent graduate might stretch their budget to hit that $1,000 or $3,000 in required spend, not realizing they’ll be slapped with interest if they can’t pay it all off. The issuers count on the fact that many will overspend or slip up – turning what should’ve been a reward into either debt or a missed opportunity.

Why it’s hard to detect:

Consumers often see the big bonus in bold print and gloss over the page-long terms and conditions. Those terms are written by attorneys and psychologists (yes, they have those too) to be vague or confusing, so that a good chunk of people won’t meet every requirement. For example, you might need to make three transactions of a certain type, or the bonus might not apply if you’ve had any card from that issuer in the last 24 months (catching many seasoned card churners off guard). Many users also forget timing – you have to hit the spend exactly within 90 days, not a day over, or you lose the bonus. And if you miss it, the issuer isn’t obligated to remind you; it just quietly doesn’t post, and you’re left wondering what happened. In some cases, consumers did meet the terms and were still denied bonuses due to fine-print technicalities, leading the CFPB (Consumer Financial Protection Bureau) to label it a bait-and-switch concern .

Real-world story: The CFPB received a flood of complaints about sign-up offers not delivered as promised. In one illustrative case, a consumer thought they earned a bonus, only to find out an obscure clause disqualified them. Regulators have started cracking down – if a company promises “free $500 airfare” and then changes the deal after you sign up, that’s deceptive . It’s happened enough that the CFPB Director openly warned, “When credit card issuers promise cash back or free flights, they should actually deliver them.”

Who’s most at risk?

Newcomers to credit (like college students hungry for a quick score or that free pizza for signing up) and busy folks who don’t read the fine print line-by-line. The offer hook is exciting, and issuers bank on us being too distracted to notice the strings attached. To avoid this trap, always read the terms of a bonus offer carefully. If it says $500 bonus, check what exactly you must do to get it – and consider whether you can meet those terms without spending more than you normally would. A bonus that puts you into debt or never materializes is no bonus at all.

There’s plenty more bank trickery where this came from—make sure to check out all the other sneaky reward traps down below.