Recently I realized that there are some credit card myths that people hang on to.  I was talking to a friend about travel. He was looking for a plane ticket for an upcoming vacation and I asked him if he used credit card points and miles? His reply was that he didn’t want his credit score to go down and wasn’t organized enough to do it!  What?!  You’d rather pay for travel than spend time learning about how to travel for nearly free?

I really can’t wrap my mind around the fact that so many people don’t jump with both feet into this incredible world of points and miles, especially when we are willing to hold the hand of beginners!  While those who are in credit card debt should NOT get into this hobby, many people I talk with are very responsible with money but have this idea in their mind that credit cards are evil. And while they are awful for some people, there are many people who work hard to save their money, are disciplined, budget, and then only use cash or debit cards! These are the people that should be getting in the points and miles game! Seriously, what has a person got to lose except a lot of money paying for airline tickets and hotel stays!  I NEVER want to go back to those days.

Today let’s talk about some of those credit card myths:

 

Getting Multiple Credit Cards Will Hurt My Credit Score

This is probably the #1 myth people worry about.  Honestly, my credit score is above 800 and I have applied for and been approved for over 20 cards in the last 2-3 years.  Yes, initially your score may dip a few points first but, as long as you pay your bills on time, it will bounce up quickly.  They say that with each inquiry into your credit, it dips 3-10 points for about 3 months and then starts going back up.

There are many things that affect your credit score:

• Payment history – 35%.   Just pay on time and in full each month!
• Credit Utilization – 30%.  How much of your credit are you using? It is better to have a lot of available credit and not use very much of it vs. having a small amount of credit and using most of it.
• Credit age or history – 15%.  Don’t close your oldest accounts.
• Account mix – 10%.   How diversified is your credit? Home loans, credit cards, etc.
• Account inquiries – 10%.  This is where you can get a small hit on your score, but only for a short while.

If done right, getting into points and miles does not lower your score. In fact, most people who use credit cards say that their scores are higher than ever. Of course, if you don’t keep track of what you are putting on your card and don’t pay it off each month, you can get into real trouble.  As long as you are responsible, this is not a problem, just a myth. To those who say opening up credit cards will ruin your credit score, I say:

 

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I’ll Forget to Pay My Credit Cards Off

Luckily, most credit cards have features where your bills can be automatically paid off each month.  Just set up automatic payments to pay your bill every month before the due date and that isn’t a problem.

The only way you get into trouble is if you overspend.  Using credit card points and miles for travel is all about saving money on travel, not overspending on other items. The idea is to use your credit card on all your regular, everyday purchases to meet your minimum spend. Don’t buy things you don’t usually buy with your new credit card. However, having a necessary big purchase is the perfect time to get a new card to meet minimum spending.

 

I Can’t Stay Organized

There are two tools we use that can make this credit card myth simply obsolete.  Award Wallet and Travel Freely are both apps where you input some basic information and they do all the work for you.  Easy, peasy.  We talk about them here.  Combined, they will do the following for you and we recommend you get both for the maximum organization:

• Tell you when your time to meet the minimum spend is almost over so you can make sure you have spent what you need for the bonus
• Keep track of all your points from your various cards and give you a weekly record of the change
• Let you know when an annual fee is due so you have time to decide if you want to keep, cancel or downgrade it
• Let you know the optimum time to apply for another credit card
• Keep track of your spouse’s cards too
• Keep track of your Chase 5/24 status
• Let you know when your points are going to expire so you can use that credit card and extend the expiration period – this is part of Award Wallet’s paid plan of $30/yr but it has saved me multiple times and I highly recommend it.

 

I Don’t Want to Carry A Lot of Credit Cards

Most of my credit cards sit in a sock drawer. I only use a few for everyday spending. Usually, you will be trying to meet minimum spend so you will be using one card at a time for all your spending. On the occasion that you are in between credit card applications, just pick a card to use for everyday spending. Ideally, it would be a card that earns more than 1% back on purchases or has category bonuses where you do a lot of spending, like the grocery store.

Honestly, if you just want to keep it simple you can just pick whatever card has the points you want the most. Don’t let it drive you crazy – any points are worth more than no points!  The main thing is to get a card, reach minimum spend on it, get your bonus points, and do that over and over again.  That is the way I have racked up over 3.5 million points in 3 years!!

 

My Life Is Too Busy, I Don’t Have Time

Let’s get real. We all waste time every day. This is not as complicated as it seems or takes that much time. If you want to travel and would like to travel for free or nearly free or just reduce the costs of traveling, you have to make a little time for this. I promise you that, once you get a trip for free, you will be hooked and will say it was well worth your time.

Applying for a credit card only takes a few minutes of your time online. Just do one card at a time, get that bonus, and apply for another. As you see your miles add up, you will catch the fever and kick yourself for not starting sooner.

 

Bottom Line

Don’t let these credit card myths and others keep you from traveling for free or almost free!  Credit cards can be a magical means of traveling like you never thought possible if used responsibly. We love helping beginners so please reach out to us. And don’t be afraid of those credit cards, embrace them as a wonderful means to an exciting adventure!