Avoid These 10 Credit Card Mistakes

Even though we are all about applying for credit cards and grabbing those bonuses and rewards for free flights and hotels, we want to caution you about some mistakes you could make. Here are ten credit card mistakes we hope you never make!

 

1. Not Paying Off Your Credit Cards Monthly

We absolutely love free travel and can’t wait to start traveling more soon. Travel is not free if you pay interest on your credit cards. Be sure and pay off your balance in full each month. If you can’t do this, you might want to delay your entrance into this fun hobby!

 

Couple in front of computer paying bills

Pay off your credit card bills each month so travel is really free.

 

2. Not Using Credit Cards for Normal, Every Day Spending

If you are using your credit cards for items you normally don’t spend on just to meet your minimum spend then it isn’t free to travel either. We try to meet our minimum spending on everyday items, not whims. It is really easy to do this. You just change what credit card you are using every time you get a new card. Almost every person spends at least $1,000 on everyday items like groceries, gas, utility bills, and phone bills. We are confident that this will be easy for you too!

 

3. Make Sure You Meet Your Minimum Spend

Be sure and meet your minimum spend on all new credit cards so that you get those bonus points! Bonus points for meeting minimum spend are how we really ramp up our point balances. I talked to a family member recently that didn’t think she had a way to finish her minimum spending. She hadn’t factored in that she could buy some gift cards to places like the gorcery store and gas station to use for spending in the coming months. This allowed her to get those bonus points for several flights she will use in the future. Make sure that if you have to do this that you don’t spend above your means!

To help you keep track of your minimum spending and when you meet it, download the Travel Freely app. That app keeps track of so many things and lets you stay organized simply.

 

4. Canceling Your Credit Cards Too Early

Never, ever cancel your credit cards as soon as you meet the minimum spend and get your bonus points. That is just a taunt to the credit card companies to take back or claw back your bonus points. Wait until your next annual fee posts and then cancel. Once it posts, you will have 30 days to cancel your card before that annual fee has to be paid. This is a huge credit card mistake – contact us if you have questions about this in the future.

 

5. Not Understanding the 5/24 Rule

Chase has a specific rule that limits the amount of Chase credit cards you can get. It’s the 5/24 rule and basically, it states that you can only apply for 5 Chase credit cards in a 24 month time period. It makes sense to get the Chase credit cards in the beginning because after you reach 5/24 you can get any other credit cards you want. Read more about the 5/24 rule here. I have been on a one-year credit card application freeze just to be able to get a few Chase credit cards that I have never had. After I get a couple, I will go back to applying for some non-Chase cards.

 

6. Avoiding Cards with an Annual Fee

Paying an annual fee is certainly worth it the year you get your bonus points. But I have certain cards I keep year after year because the benefits outweigh the annual fee. I even find certain credit cards with high annual fees worth keeping. My hotel credit cards that give me a free annual night on my anniversary are also cards that I keep every year. I can usually use them to stay in a hotel that is worth at least double, if not more, than my annual fee. Do not let an annual fee keep you from applying for a card or keeping them.

 

7. Not Using Your Credit Cards Correctly

There are times when you aren’t trying to meet the minimum spend on a credit card. Perhaps you are trying to get under the 5/24 rule so you can get another Chase credit card. Maybe you are just waiting to get a new card in the mail. Are you using our credit cards correctly during this time to get the most points on your spending?

For instance, I usually use my American Express Gold Card when I go to the grocery store as it gets me 4 points per dollar spent vs. getting 1 or 2 points per dollar spent with another card. When I shop on Amazon (often) I use my Amazon Prime card to earn 5% on my purchases. Right now, during the COVID-19 pandemic, many credit cards are offering increased points on certain purchases. Know what your cards offer and use the right one to maximize the points you may get.

 

8. Letting Credit Card Points Expire

One time I almost lost 60,000 Hawaiian points because I hadn’t used them and they were going to expire. Yikes! That’s a huge mistake in using credit cards! Luckily, I use Award Wallet and they let me know that my points were about to expire so I could buy 1,000 points and “reset” the expiration clock! If you haven’t signed up for Award Wallet yet, do it now! One of the best features they offer is letting you know when your credit card points are about to expire.

 

9. Signing Up For Credit Cards Jointly

If you are married, you should never sign up jointly on a credit card application. You want to get those credit card points twice – once for you, once for your spouse. You also want to be able to refer each other to cards and take advantage of referral bonuses. The good news is that you can use the total household income on each application so that makes it easier to get a card for each of you! Even better, if you have older young adults still in your home, they can apply too!

 

10. Not Signing Up For New Credit Cards

Some people get really excited about travel hacking, sign up for a few cards, and then quit until they need more points. That is a travel hacking and credit card mistake. The reason I have earned over 4 million points is that I have continually signed up for more cards. Even if I don’t have a need for all the points right now, the fact that I have a huge stockpile of points has let me travel at the last minute many times! I love knowing that I could travel almost anywhere in the world, and in a style that I love, for very little money. At least, once COVID is controlled!

 

Bottom Line

Applying for credit cards that give you bonus points when you reach a minimum spend is the basis for travel hacking. It is a fun, exciting hobby. Just be sure to never make these ten credit card mistakes when you use your credit cards so you can get the most points possible!

 

avoid 10 credit card mistakes Pinterest graphic

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