Reward programmes offer a large opening bonus and a modest continuing rate. The imbalance is deliberate and reflects two different budgets doing two different jobs.
Acquisition and retention are funded separately
Signing up a new customer is treated as a marketing cost, measured against the expected value of that customer over years.
The ongoing rate is a running expense that reduces margin on every transaction indefinitely, so it is kept as low as competition allows.
A business can therefore justify a large one-off payment while resisting a small permanent increase, because the two hit different lines in the accounts.
Switching costs make the bonus worthwhile
Once a customer has set up an account, learned the interface and directed regular spending through it, they rarely move again.
That inertia means the acquisition cost is recovered over a long relationship, which is what makes an apparently generous opening offer rational.
The size of the bonus tends to reflect how hard the category is to switch, which is why financial products offer more than retail programmes.
Conditions control who actually receives it
Bonuses are usually conditional on minimum spending within a defined period, on being a genuinely new customer, or on maintaining the account for a set time.
Those conditions filter out people who would take the offer and leave, and a meaningful share of applicants miss them.
The advertised figure is therefore an upper bound, and the expected value depends on how comfortably the requirement fits spending you were making anyway.
Meeting the threshold can cost more than the bonus
Where a minimum spend requires purchases that would not otherwise happen, the additional spending easily exceeds the reward.
Fees complicate it further, since an annual charge may be waived initially and applied later, quietly reversing the benefit.
Comparing the bonus against the full first-year cost, including any fee, is the only calculation that reflects what is actually gained.
Ongoing rates matter for concentrated spending
For a large recurring category, such as fuel, groceries or travel, the difference between rates compounds and can outweigh a single bonus over several years.
Category-specific rates are often much higher than general ones, and matching them to where money actually goes is where the sustained value sits.
Using a bonus-driven product for the opening period and a rate-driven one thereafter is the structure that follows from how the two are funded.