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As you all know, credit cards are great. They offer multiple perks, they simplify your wallet (sometimes), and they tend to be very rewarding. However, that doesn’t necessarily mean everyone should get a credit card or get “that credit card”.
Here’s why you should think twice before signing up for a new credit card…
Rule #11: Never pay interest on a credit card. You shouldn’t use a credit card as a loan. It’s a waste of money. I would even go as far as to say you shouldn’t carry a balance on cards that offer 0% intro APR for 12 – 15 months (i.e. Chase Slate and Discover It). You will not pay any interest by carrying a balance for those 12- 15 months, but you run the risk of creating a habit that could eventually cost you a lot of money. According to this article by Nerd Wallet, the average US household has $15,191 in credit card debt. Don’t be a statistic.
- It’s Not the Best Offer Available
Many times the best advertised credit card offer is usually not the best offer available. For example, the current advertised Ink Plus sign-up offer is 50,000 UR points after spending $5,000 in three months with the annual fee waived the first year. That is not the best offer though. According to Doctor of Credit (at the time of this writing), the best offer right now is 70,000 UR points after spending $5,000 in three months with the annual fee of $95 not waived. That’s a pretty big difference, considering the minimum value you can get from the extra 20,000 points is $200. This Flyertalk thread and blogs that aren’t affiliate marketing machines are the best way to stay up on these offers.
- You Don’t Foresee Yourself Using Those Points
I like the idea of opportunistically hoarding points, but that doesn’t mean you should be signing up for credit cards with points you don’t intend to use. For example, if you are loyal to Hyatt, signing-up for the Club Carlson Premier card would be silly even if the sign-up bonus increases (unless you plan on expanding your hotel loyalty).
- There Is a Better Offer from a Transfer Partner
Sometimes an airline branded credit card is not always the best way to earn airline miles. As most of you know, there are four popular rewards programs that can transfer to multiple travel partners: Membership Rewards, Ultimate Rewards, Thank You Points, and Starpoints. Occasionally, a card connected to one of those rewards systems will earn you a better sign-up bonus than the actual airline card will. For example, the best United Explorer offer I could find at the time of this writing was only 50,000 miles. Since Ultimate Rewards can transfer to United at a 1:1 ratio, the best sign-up bonus for those miles would be the Ink Plus mentioned above (70,000).
- You Haven’t Researched the Card
Researching a credit card for perks, sign-up bonus, and other pertinent information is vital when signing up for a new credit card. During my last AOR I forgot to do this for the Club Carlson Premier card. It’s important to freeze your ARS and IDA reports before applying for a card from US Bank, because it increases your chances of being approved. I didn’t know this before applying, so my family’s reports were not frozen. I think because of that, my wife’s application was declined when she applied. Fortunately, she called the reconsideration line and was eventually approved, but I don’t think she would’ve had to do that had we frozen her reports.
- You Have Too Many Cards from That Bank
If you have too many cards from one bank, you should diversify your portfolio instead of applying for more from that same bank. I have a friend who had 5 personal Chase credit cards in his name. When you tried applying for the 6th he was declined. He tried calling reconsideration, but they still wouldn’t approve the card due to having multiple Chase cards that were relatively new (4 of them were opened within the last 2 years). Chase does offer a lot of great sign-up bonuses, but there are a lot of other banks out there willing to give you free miles and points also.
- You’re Falling for
Peer Blogger Pressure
Some blogs will only pump credit cards that earn them a commission. Sometimes these offers are the best offer available other times they aren’t. It’s just ridiculous how much these offers get pumped. As an example, check out this post by TravelBloggerBuzz to see just how much the recent 60k UR point offer was pumped in May/June. It’s insane. I’m not saying all affiliate links are bad. In fact, I will use one for every credit card I apply for to support the blogs I read. Just make sure you do your research before applying and that you only use affiliate links from blogs that care about the readers, not blogs that only care about the bottom line.
It’s a jungle out there, so if you’re thinking about applying for a credit card, all I ask is that you take a step back and think twice.