The Pros and Cons of Credit Card Referral Links

Referral links can be win-win, but they may also cause you to lose out.

It's always good to have friends with connections -- especially when credit card rewards are on the line. And who doesn't love sharing their favorite finds, while also getting rewarded for their benevolence?

If you've fallen in love with your trusty rewards credit card, consider spreading the word with a handy-dandy referral link. You'll earn bonus rewards for every approval when your friends and family (or just strangers on the internet) use your referral link to apply.

But referral links aren't always one-way deals. In some cases, the person receiving the referral will also benefit from the arrangement. Of course, sometimes isn't always; there are also times when a referral link isn't actually a benefit for the one doing the applying. Let's dive into the potential pros and cons.

Pro: Bonus rewards for the referrer

The obvious pro of using credit card referral links is for the referrer: the bonus rewards. When someone uses your referral link, you'll often earn bonus credit card rewards. The catch here is that they need to apply for the credit card and get approved; simply applying isn't enough to net you a bonus.

Your referral bonus rewards will typically be the same rewards currency as your card usually earns. So, if you have a cash back card, referral bonuses will likely be cash back rewards; if you have a points card, you'll earn points bonuses.

The amount of bonus rewards you'll receive can vary depending on the card -- luxury travel rewards cards with high annual fees tend to have the highest referral bonuses.

Con: Offers may be worse for the referee

Whether or not the referee benefits from a referral link will actually vary. That's because the quality of the referral offer may wind up being worse than the public offer.

Sometime you'll find that the welcome offer you get from a referral link is great. You may get a higher sign-up bonus, a longer promotional period, or even a special deal for extra purchase rewards.

Other times, however, the referral deal is actually less lucrative than what you'd get by applying elsewhere. For example, you may have received a targeted card offer directly from the issuer for a better sign-up bonus or 0% intro APR offer. That would mean using the referral link would effectively cost you extra rewards while earning the referrer a bonus.

And, of course, it could wind up being a lateral choice. Your referral offer may simply be the same as the publicly available welcome offer. In this case, whether you use a referral link may come down to helping a friend earn bonus rewards.

How to find referral links

While some issuers only allow referrals on certain cards, most issuers will let anyone with a given credit card hand out referral links. Most often, the issuer will simply provide a link for you to copy and paste. Others may want you to provide the referee's email address so they can send the referral link themselves.

If you're in the market for a referral link to a given card, asking your friends and family is a good place to start. However, if you don't know anyone with the card you want, you can always outsource your search to the world wide web. Credit card forums and message boards often provide a wealth of referral links to choose from.

Whether you decide to use a referral link will likely depend on the quality of the offer. It can also depend on who is actually referring you in the first place. Either way, be sure to check out the public welcome offer for your target card before you use the referral link, so you can determine where the better deal lies. A little bit of research could save you from missing out on extra rewards.