All of this. To understand why this is even possible, it's good to understand the factors involved. 1. CC fees, carried balance interest, and merchant fees ar

All of this. To understand why this is even possible, it's good to understand the factors involved. 1. CC fees, carried balance interest, and merchant fees are extremely big business. So much so that banks and payment networks are willing to give out large bonuses to influence your buying behavior. 2. Airlines (and to a lesser extent, hotels and other brand partners) have evolved their miles and points programs into, IMO, basically an unregulated, overly complicated shadow currency. As a result of the complexity of the programs, valuation sweet spots have emerged where you get outsized value per point/mile 3. Since brand partners basically control the value of these currencies, they can sell them cheaply to financial partners. For financial partners, it's a win/win because they can offer a bonus that is perceived as high value without incurring the full cost of an equivalent cash offer. e.g. a 50k mile bonus looks just about as good as a $500 sign up bonus, but banks pay far less than $500 for 50k miles 4. A good majority of Americans will sign up for cards, use them, and regularly pay late fees, carry a balance, etc. This more than pays for the welcome bonus that card issuers offer. OTOH "travel hackers" sign up for the bonus, but use strategies to prevent incurring the costs usually associated with it.