Top Credit Card Mistakes | 8 Things to Avoid & What To Do Instead

Hi there, it’s Ernest from Trip Astute. In
this video, we’re reviewing our top points and miles mistakes that people make,
particularly those new to the hobby. (light chiming music) Collecting points and miles is a fun but
complex hobby. There are so many rules and they always seem to change as the
issuers offer new points programs and products. However, there are a couple
mistakes that seem to be pretty common, especially for those who are just
starting out in the hobby. In fact, I’m probably guilty of several
of these mistakes. So today, we’re gonna cover our top eight mistakes and what
you should do instead. Number 1: Not knowing your credit score or history. One
of the most important aspects of whether you can get a specific credit card is
your credit score and history. Sites like Credit Karma and Credit Sesame can help
you get your score and history for free, as well as tell you how many cards you
applied for in the past and when. Also, Credit Karma can tell you the odds for
getting an approval for a card based on your credit factors. For example, the
Chase Sapphire Reserve and the American Express Platinum are both premium cards,
so they tend to require a strong credit score and history in order to get an
approval. Knowing your odds before applying can be super helpful when determining
which cards to pursue. Number 2: Not understanding your travel needs and
goals. This is really important when developing your strategy for points and
miles. Many cards have specific bonus categories, so it’s important to
understand whether they match up with your general spending. Also, your travel
preferences and goals can greatly influence which card is best for you. For
example, if you prefer staying at Starwood Hotels, then you probably are
best served with an American Express card like the Amex SPG. If you prefer to
stay at an Airbnb or boutique hotel, you might be better off using a flat rate
travel rewards card like the Barclaycard Arrival Plus or the Capital One
Venture card. Number 3: Avoiding annual fee cards. I can’t tell you how
many people I know who have told me that they wanted to get the Chase Sapphire
Reserve, but opted for the Preferred instead because they couldn’t stomach
the $450 annual fee. However, when I broke down the cost and factored in the annual
travel credit of $300 and the Global Entry fee credit, it actually made sense
to get the Reserve card. While you shouldn’t pay for a card that has an annual fee
where you don’t feel like you’re getting the full value, I always recommend
evaluating the big picture to see if it makes sense. For more information, check
out our credit card annual fee video. Number 4: Not understanding the issuers’
rules. I hear a lot of stories of folks who apply for a credit card then try to
apply for another card the next week, only to get denied for too many credit
inquiries. There are some basic rules on what you should and shouldn’t do, and
we’ve covered them in our “Tips and Tricks When Applying for a Credit Card”
video. Keep in mind too that each issuer has specific rules, so you want to be
careful and strategic when planning your applications. Number 5: Not challenging
an issuer’s decision. Even those of us that have been doing this for years get
rejected for new cards. In fact, I would argue that the longer that you’ve been
involved in this hobby, the more likely you are to have too much available
credit, so issuers may be hesitant to give you a new card. If you do get
rejected, don’t hesitate to call the reconsideration line and ask whether
there are any options. We’ve covered some of these tactics in the “Tips and Tricks”
video mentioned earlier. Number 6: Not calculating the value per point when
we’re deeming rewards. How and if you redeem points is often dependent on the
value that you get. Sometimes I’ll opt to pay rather than redeem if I don’t feel
like I’m getting a decent cents per point value. For some basic guidelines,
check out The Points Guy’s monthly valuation of points and miles currencies.
He does a great job of explaining how much he thinks each point is worth, which
should give you an idea of how much you should expect to get when booking a trip.
I usually will divide the dollar value by the equivalent number of points
needed in order to get the cost per point value. This can help inform whether
I want to transfer the points to a travel partner or book through a travel
portal. Number 7: Being too aggressive with your spending. If you get a new
credit card, you want to be careful not to spend too much too soon. Remember that
the issuers get nervous when they see risky spending
patterns, especially if you don’t have a long credit history or you haven’t used
a lot of credit in the past. One of the easiest ways to get flagged for high
risk is to max out a new credit card. Also, the flip side is to make sure you’re
not spending too much that you can’t even pay off your bill. The points hobby
is only lucrative if you don’t carry a balance and you’re able to pay off your
bills. Any interest that you’ll have to pay will definitely negate the points
earned. Number 8: Not developing a relationship with the issuer. I hear
about a lot of folks who cancel their credit cards as soon as they meet their
minimum spend and earn their opening bonus. This is a really bad idea,
especially since you’re basically showing the issuer that you were just
trying to churn the card in order to get the bonus. A more long-term and strategic
way of thinking is that you want to build a relationship with these issuers
so you’re able to get new cards and products from them in the future. For
example, I have a ton of Chase credit cards, and I decided to move my personal
and business checking in order to help further that relationship. When I
recently applied for the Ink Business Preferred card, it was a lot easier to
get an approval since I had a history of doing business with the bank. And those
are our top mistakes that beginners make when entering the point and miles hobby. Do
you have any extra tips or suggestions, especially for those of you who’ve been
doing this for awhile? if so, please share them below in the comment section. Also,
let us know if you have any questions. If you’re looking for some of the latest
credit card offers, check out our page on our website. I’ve included a link below
and also on-screen. If you enjoyed this video or found it useful, please hit the
“like” button and consider subscribing. Also, visit our website and subscribe to
our newsletter for travel articles, updates, and contests. Until next time,
travel safe and travel smart.

8 comments on “Top Credit Card Mistakes | 8 Things to Avoid & What To Do Instead”

  1. Jose Perez says:

    Super awesome tips Ernest ! thank you for sharing I'm now in the "green" with know how to use my points with Chase Reserve card

    Jose P.

  2. TECH TIPS says:

    nice vid, happy holidays

  3. PBG says:

    I applied for two chase cards last night, yay! I forgot that I have a freeze on my credit reports, like everyone else, because of the equifax breach. Boo! I was able to temp lift for a couple agencies. Fingers crossed that will be enough!

  4. Stan Lee says:

    A really helpful video with a lot of tips I've never seen anywhere else.

  5. Vincent Pascual says:

    I opened my Chase Freedom a few weeks before the end of the quarter in which the 5% bonus categories were gas and Apple Pay. I purchased a lot of gift cards early on. Although I would end up using them eventually, I could’ve waited to purchase them. I also ended up having other large transactions that helped me to reach $1500 before the end of the quarter. In the case of the Freedom, I’m trying to remind myself that it’s okay not to reach the $1500 spend in a quarter. I also remind myself that it’s not necessarily worth changing spending habits dramatically just to reach $1500 (e.g. shop at Walgreens for gift cards when you don’t normally shop there, unless there’s a Walgreens at a shopping center you would visit for other reasons anyway).

    When you open a card, it’s easy to worry and spend a lot in a short period of time (first month) to reach MS. You need to take it steady and make sure you’re spending on something you would spend on anyway. If you have to spend a lot upfront, make sure you can pay for the balance. I did this with the Ink Preferred; I charged my family’s hotel bill to my card (a couple thousand dollars) and asked them to reimburse me for their shares. Even if they do pay you back, it’s stressful to see a huge balance while you wait for the money.

  6. vacationboyvideos says:

    If I use 80-95% of my credit card line…pay the min for 6months and then move out of country and stop paying….could they come after me overseas? I have 160,00 I total credit line on 24 cards.

  7. Xabier says:

    Hi David, my question is about one credit card and let think I want to buy something cost around $10.000, but I have only one card and $3000 credit limit, you said do not mess up expend all your credit, but if I mess up, the first day, pay the same day full, and do it again the next day and pay full again, until I used the card to reach the amount I need it, is this bad for my credit with them, is a red flag… please let me know what to do

  8. Christopher Reini says:

    its zachs dad

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