Top Mistakes People Make With Credit Cards

It goes without saying that credit card debt is bad, however that doesn’t mean that credit cards themselves are bad. There are however several mistakes that the majority of folks find themselves making when they are entering the points game. Let’s take a look at some of these mistakes and how you can avoid them!

Increasing Credit Card Debt

As someone who hasn’t used a debit card to make purchases in over three years, I can tell you that it is absolutely possible to use a credit card without going into debt, however it certainly isn’t easy. Far too often I hear, “I just forget to pay my bill”…this is the worst possible thing you can do as this lowers your credit score and ends up costing you money via interest. You are typically trying to gain points or cash back when you start your journey into the points game, however you can’t do that when you are digging yourself further into a hole.

The concept is rather quite simple… Spend less money than you make. There may always be emergencies that pop up, however with the current average American consumer debt being more than $5,000, I can assure you that this is not the case. Credit cards should be used to generate additional points/cash back(revenue) on items you would be purchasing anyways via cash or a debit card, not to spend lavishly because you have credit card.

Choosing The Wrong Card

The first question I am always asked is “What card should I get?”… That is a rather difficult question to answer, especially without knowing your spending habits. When you are analyzing which card to get you need to look at the following:

1. Where do I spend a majority of my money?
   • Is it dining and grocery stores?
     • If so I would recommend the American Express Gold Card.
   • Is it on flights and hotels?
     • If so I would recommend the American Express Platinum Card.
2. Will I be able to hit the sign up bonus minimum requirement?
   • You should ALWAYS ensure you are hitting the sign up bonus as these are often “once in a lifetime” offers.
3. Am I okay with paying the annual fee?
   • The majority of annual fees can be offset by benefits and everyday spending
4. Do I want a charge card or a credit card?
   • Charge cards often have no set spending limits but also do not allow you to carry a balance.
   • Credit cards often have lower levels of benefits but allow you to carry a monthly balance… something you should be trying to avoid anyways!

Using One Card For All Purchases

Carrying multiple cards is often considered the optimum strategy because it allows you to take advantage of different multipliers for different spending habits. If you were to put all of your spend on only one card, you are often missing out on greater rewards than if you were to spread you spend across cards that have the highest earning potential. For example, I put the majority of my spend on a combination of my American Express Platinum, American Express Gold, and Hilton Aspire card, which allows me to earn 5X points on travel(Platinum), 4X points on dining and grocery stores(Gold), and 14X Hilton Honors Points(Hilton Aspire) whenever I stay at a Hilton property. If I were to use only one card for all purchases, I would be missing out on 2 out of the 3 bonus categories above.

Are you thinking about signing up for a new credit card? Which credit cards are you looking at? Leave a comment below or feel free to send me a message and I can help you determine your optimal card(s) strategy!