Home Credit inquiry 1 pitfall to avoid when choosing a loyalty card

1 pitfall to avoid when choosing a loyalty card

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The advantage of using credit cards is that you can be rewarded for the purchases you make all the time. Refuel your car twice a week? There may be a credit card that reimburses you for gasoline. Do a lot of grocery shopping? You could get more money on your food purchases.

But there is one mistake consumers tend to make when looking for a new credit card. And this is a trap that is best avoided.

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Think of you

It’s easy to fall for a credit card that offers generous rewards in multiple categories. But before you apply for this card, think about your personal spending needs. And, more specifically, make sure the rewards program aligns with things you spend money on.

You might be interested in a travel rewards card that allows you to easily earn hotel points or earn miles for free flights. But if you only travel once or twice a year, this might not be the best card to get.

Likewise, a credit card that offers bonus cash back on refueling is ideal for someone who commutes to work daily or drives a lot. But if you only refuel your car twice a month, this might not be the best schedule for you.

That’s why it’s a good idea to spend some time going through your credit card statements for the past six months before applying for a new card. Take a look at the categories you’re spending money in and see where the bulk of your spending is. If you find that you are spending more on groceries than any other spending category, then it’s worth finding a credit card that rewards you with extra cash back on supermarket purchases.

Read the fine print

You not only need to make sure that the rewards offered by your credit card are easy to accumulate, but also make sure that they are flexible and do not expire. Suppose you do a lot of clothes shopping at a certain store and decide to open a credit card that refunds you extra money for that store. You might find it difficult to accumulate rewards, but if those rewards expire 60 days after they are issued, that doesn’t give you much flexibility.

Do your research

There are many credit cards that offer a variety of benefits, and the choices can be overwhelming. But it’s important to apply for new credit cards sparingly.

Every time you apply for a new card, it counts as a serious investigation of your credit report. A single request for information won’t hurt your credit score much, but multiple requests over a short period of time could. As such, it’s important to do your research before applying for a new credit card so that you choose the right one from the start – and thus reap the benefits that the new card has to offer.


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