Points Banking doesn’t exist anywhere else in the world. If you are a US citizen, you are extremely lucky to have access to large sign-up bonuses on credit cards. One or two strategically chosen credit card sign up bonuses can get you flights within US or any country in the world for up to 90% the retail cost.
Applying for credit cards is the quickest and easiest way to earn miles and points than actually flying on a plane.
The 4 Risks of Applying For Credit Cards
Although, applying for credit cards without knowing what you’re doing is a great way to set yourself up for failure. Banks don’t exist to provide everyone free vacations with miles and points. They exist to make money. Trillions of dollars at your expense.
1. Applying For Too Many Credit Cards
It can be tempting to think of flying around the world and staying in free hotel rooms that would cost hundreds of dollars. So you apply for 6 or more cards at a time to get there. Bad Idea.
If you are new to Points Banking, you almost always should NEVER start off with a bunch of cards. A lot of success in Points Banking comes from being diligent and being able to track minimum spending deadlines, payment due dates, and how to interpret complex terms and conditions.
Fortunately, Wise Flys has created a software to remind you of all these important dates. Learn more about how the Card Tracking Software can help you.
It is much better to start slow with perhaps just 1 or 2 cards and see the impact to your credit score for free at Credit Karma. There is no harm in applying for just 1 or 2 cards at a time to get the feel of it. After many years of experience, I apply for 2-4 cards every 90 days. I made the mistake starting with several credit cards and couldn’t meet the minimum spending on them because I lost track.
Are you able to meet the minimum spending required for the sign up bonus comfortably? Do you live within your means and spend less money than in your bank account? Do you pay your balance in FULL and on-time?
If the answer to these questions is “no,” you should NOT apply for miles and points credit cards at this time.
2. Not Paying The Balance In Full Every Month
Miles and points cards charge higher rates of interest than any other cards in the industry. Points Banking is NOT for you if you can’t pay your credit card balance in full each month. Don’t apply for miles and points cards if you only pay the minimum amount or less than the full balance due. Otherwise, you are giving the banks your hard earned money via interest and we all know that the banks have more than enough money.
It will be hard to get ahead in life by constantly paying high rates of interest on credit card debt.
We Used Our Credit Card Reward Points For A Family Trip To Cuba
3. Spending More Than You Have
It can be tempting to spend more than what you normally would just to meet the minimum spending needed for a credit card sign-up bonus. If so, then the miles and points you earn will have a high cost.
Keep a budget and stick to it. Plan out the minimum spending requirements before you apply for credit cards cards. For example, calculate how much you normally spend in a month and then calculate the minimum spending requirements.
4. Your Credit Score Is Important
A high credit score will save you hundreds of thousands of dollars in interest fees over your life. A low credit score will cost you thousands of dollars in higher interest fees throughout your life. You shouldn’t start Points Banking if you have a credit score of ~690 or lower on the FICO scale. Improve your credit score and the offers will still be there for you.
Personally speaking, my score of 807 after opening 43 credit cards affords me the chance to be accepted to every points earning card available. A score above 700 will afford you the same opportunity of being approved for points earning credit cards. There is no need to go for the best credit score when the minimum effective dose is above 700.
Credit card sign-up bonuses are among the easiest ways to earn tons of miles and points for nearly free vacations. Its also important to be careful and start slow. Do NOT apply for credit cards if you can’t pay off the full balance monthly. You’ll likely be paying more in interest than the value of the miles and points. This defeats the purpose of earning points.
What are some other risks with credit cards?