How to Compare Credit Card Sign-Up Bonuses

The best credit card sign-up bonuses can provide you with hundreds of dollars in cash, travel rewards or general rewards points. But without the right context for some rewards programs, it can be difficult to know how much value you're getting.

On the surface, some bonuses may seem bigger, but when it's time to redeem them, they may not go as far as other bonuses that appear to be smaller. To help you make the most of your next credit card sign-up bonus, here's how to compare them in terms of their values and their use for you.

[Read: Best Sign-up Bonus Credit Cards.]

How to Compare Sign-Up Bonus Value

If your goal is to maximize the value you get from a sign-up bonus, it's important to know how much the incentive is actually worth.

With cash back credit cards, determining the value of a bonus is easy because it's in dollar terms. But with points and miles, things can get much more complicated, especially for airline and hotel credit cards.

"Hotel sign-up bonuses can be deceiving if you don't have the context of point value," says Becky Moore, who runs the travel blog Global Grasshopper.

If you're looking at a general travel rewards card like the Chase Sapphire Preferred Card, there's not much fluctuation in value if you redeem with Chase. Among the top redemption options, points are worth 1 cent apiece for gift cards and cash back and 1.25 cents apiece on travel booked through the Ultimate Rewards platform.

However, if you transfer your points from Chase to one of its airline or hotel partners, the values can vary wildly.

That's because airline and hotel rewards programs typically don't assign a specific value to their rewards currency. Instead, the value of your points and miles will vary based on the program, your travel dates, your flight itinerary, the hotel property and other factors. There are a number of different point valuations available online -- search "point values."

Why More Points Don't Equal Greater Value

Let's say you've narrowed your list of hotel credit card options down to the World of Hyatt Credit Card and the Marriott Bonvoy Boundless Credit Card. Now, let's say the Hyatt card is offering 50,000 bonus points, and the Marriott card is offering 100,000 points.

On the surface, the Marriott bonus sounds a lot more appealing. But according to an average of point valuation scorings, , Marriott Bonvoy points are worth an average of 0.75 cent apiece, giving you $750 in value. That's still a lot of money, but valuation averages say World of Hyatt points are worth 1.69 cents apiece on average, making the bonus worth $845.

Doing this exercise with the credit card rewards programs you're considering will give you the necessary context to determine just how much value you can get.

Keep in mind, though, that these are just average values. With some loyalty programs, particularly airline programs, you may be able to get far more value with certain redemptions. For example, international first-class flights are often touted by credit card rewards enthusiasts for their award ticket value.

Think About How You'll Use the Bonus

The most valuable sign-up bonus in the world won't be all that helpful if you don't have a use for it.

For example, the Amtrak Guest Rewards program offers an average of 2.35 cents per point in value, according to a valuation comparison, which is one of the best point values available. But if you've never traveled by rail, even the aspiration of doing so might not be a good enough reason to get the Amtrak Guest Rewards Platinum Mastercard.

Even the World of Hyatt program could give some travelers reason to reconsider. Returning to the comparison with Marriott, Hyatt only has about 1,000 properties globally, while Marriott boasts more than 7,000.

So since World of Hyatt points are far more valuable, the program is well suited for travelers who often visit big cities. In contrast, Marriott has a much larger footprint and can give you more options at each destination.

That's not to say the World of Hyatt program isn't worth it, but if you're putting all of your efforts into just one loyalty program, it's important to weigh the pros and cons as they relate to your travel habits to make sure you get the best fit.

When you're comparing airline credit cards, you'll also want to think about whether your home airport is a hub for one or more airlines. If it's a hub for Delta Air Lines, for instance, it may make more sense to get a Delta credit card than an American Airlines credit card.

Fortunately, some airports are hubs for multiple airlines, so depending on where you live, you may have more options.

[Read: Best Airline Credit Cards.]

The Case for Diversifying Your Credit Card Rewards

If you're serious about maximizing your credit card rewards and sign-up bonuses, it can be a good idea to get multiple credit cards across multiple loyalty programs. This approach gives you a lot more flexibility when it comes to redeeming your rewards, especially if you're focused on points and miles.

If you have both a Hyatt credit card and a Marriott credit card, you can take advantage of the value the World of Hyatt program offers in addition to the wealth of options you'd get with Marriott Bonvoy.

And if you prefer to be a free agent when booking flights rather than sticking with the same airline every time, having co-branded cards from multiple airlines can make it easier to ensure you get the best deal every time you fly.

That said, having multiple credit cards requires you to keep track of not only your rewards balances, but also your annual fees, payment due dates and card benefits. Think carefully before deciding to apply for multiple credit cards.

[Read: Best Rewards Credit Cards.]

How to Make the Most of Your Credit Card Sign-Up Bonuses

If you're thinking about getting a new credit card with a sign-up bonus, here are some tips to help you maximize its value:

-- Have a specific goal in mind. If you get a credit card just because it has a big sign-up bonus, it could take you a while to find a way to use it, especially if it's not a general travel rewards program. Think about upcoming travel plans or other expenses and try to find a card that best fits your needs and goals.

-- Make sure you can hit the spending threshold. For cash back credit cards, the minimum spend requirement is often under $1,000, but many travel cards require that you spend $3,000 or more in just a few months. Review your budget to make sure that you can meet the requirements for a sign-up bonus without unnecessary spending. "There are ways to bridge small gaps in spending," says Lauren Keys, who runs the money and travel blog Trip of a Lifestyle, "but if a credit card is making you spend more money than you planned, especially if you end up carrying a balance, then the credit card company has won."

-- Consider other card features. It's always nice to get a good sign-up bonus, but it's best to focus on cards that can provide long-term value. Take a look at the card's rewards rates, benefits, interest rate and annual fee, and decide whether or not it's a good fit based on everything rather than just one perk. "Always do your homework and make sure that the card is right for you," says Moore. "You want to make sure that you can take advantage of the offers and features on the card, and that will happen if you're using it in a way that suits your needs."

-- Be mindful with redemption. Remember, values can vary with points and miles programs, so it's important to be mindful when you're ready to redeem your rewards. A good way to figure out how much value you're getting is to take the cash value of your redemption and divide it by the number of points or miles you're using. For example, a hotel stay that costs $500 or 100,000 points gives you a value of 0.5 cent per point. Compare that with the average value for that rewards program to determine if it's a good redemption.

-- Avoid paying interest. Ideally, you'd pay off your credit card bill in full every month to avoid interest charges. Even paying a little bit in interest every month can negate some or all of the value you're getting in rewards.

Should you wait on a sign-up bonus in case it gets bigger? Some card issuers run limited-time offers that could give you more value.

"While offers change periodically throughout the years, there's no way to really predict if or when that will happen," says Keys. "You'll drive yourself crazy trying to do that."

With all of this in mind, don't get so caught up in maximizing your rewards that you avoid using them. Credit card rewards are designed to help you save money and to enhance certain experiences, so try to find a balance between maximizing their value and enjoying what they can provide.