Many people receive all kinds of promotional material from credit card companies. These contain signing bonuses and offers, for example, aiming to entice people to sign up for a provider’s credit card.
With all of the different offers you receive, how do you determine which ones are the best or will suit your needs the most?
You may get tempted to try out a few cards to find out for yourself which one works best. But because of the wide variety of credit cards out there, you may end up getting overwhelmed, and frustrated, with a mountain of bills to pay. Allow us to give you a few tips on how to compare credit cards and sign up for the one with offers that meet your needs perfectly.
1. Check the requirements for the offer.
This may sound obvious for some, but sometimes we forget to consider the requirements when all we see is the offer in big bold letters. For instance, a credit card may offer a sign-up bonus of $500 or 10,000 miles. However, to avail of that bonus, you may need to spend $4,000 within the first 90 days of signing up.
If you need to spend $4,000 within a specific amount of time, try to time the sign-up to coincide with a major purchase. This will make it easier to reach that requirement. If you don’t have the money, think about it carefully first. Would you want to end up in debt just to avail of the bonus?
It is also important to make sure that you have enough money to pay for the credit card purchase. Having a credit card does mean you get free money; you will need to pay it back once the bill arrives.
If you are unable to pay, you will end up paying for interest rates. This can lower the value of the offer you were trying to score when you signed up for the card.
2. Be aware of the annual fees.
More often than not, credit cards that offer grand offers come with hefty fees — more specifically, hefty annual fees. Some do waive the annual fees during the first year, but you have the responsibility to cancel the card before the year is over if you are not interested in keeping the credit card.
Another aspect to take note of is your credit score. In some countries, canceling too many credit cards too soon can effectively lower your credit score. This is another reason why you may want to be careful about signing up for too many credit cards at the same time.
3. Verify the sign-up limitations.
To increase the number of their subscribers, credit card companies use promos to target new customers. Credit card companies often use bonuses and sign-up offers to entice first-time credit card owners or individuals who don’t currently own a credit card from their companies.
If you already have a credit card with the company advertising the promo, your application may be denied outright. Be sure to check your eligibility carefully to prevent your efforts in applying from going to waste.
4. Study your lifestyle.
Choose a credit card with offers that coincide with your spending habits. It would not be practical to sign up for a credit card that you won’t use or that has purchasing requirements that are entirely different from how you would normally use a credit card.
For instance, it would not make sense to get a credit card with an offer that requires you to buy $500 worth of gasoline if you don’t have a vehicle, or if you have one but rarely use it. The same can be said with credit cards that offer thousands of flyer miles if you are not a frequent flyer.
In these instances, you will be forced to go beyond your budget. There is also the added risk of wasting the bonuses as you won’t be using them and getting value out of them.
5. Check the expiration dates.
This is especially true with travel cards. Some cards require that you spend the accumulated points within a specific amount of time or you won’t be able to use them after a certain period has passed. Be sure to know the expiration dates for the promo, bonus or offer to ensure that you have enough time to accumulate and convert or spend the rewards.
6. Check the caps on cash back rewards.
There may be hidden caps when it comes to cash back rewards. For instance, you may get a 4 percent cash back on eligible groceries, but only if these do not go beyond $1,500. Once you go beyond the limit, you may no longer be eligible for cash back, or the rate could be lower than 4 percent.
Check the hidden caps and compare these with your spending habits to ensure you make the most of your rewards. Perhaps you can split up your purchases among different shops or different times to ensure you avail of the cash back rewards.
With these tips in mind, you can be on your way to becoming a better credit card candidate. Go out and use these tips to choose the best credit card for your needs.
AUTHOR BIO
Deepak Kumar is a Co-Founder of SoulWallet, a neutral comparison portal for consumer financial services. With a team of “out of the box” thinkers and a deep understanding of the UAE consumer banking industry, the company helps customers make the best choices when shopping for financial products such as credit cards and loans.
