Before You Apply

Because we are extremely sensitive to the importance of keeping your credit and your financial well-being in good shape, there are a few considerations we’d ask you to make before taking advantage of credit card reward bonuses. We have other great posts from the past that talk about the importance of credit.  Browse through them and ask us questions.  We are here to help.

We might seem overzealous at times to encourage you to get a new credit card, but our purpose is for you to do it with caution.  We understand that your credit is necessary and it could negatively affect you if you don’t manage it properly.  For that reason we’ve come up with a few very important items to discuss today.

First, never, never pay interest. You’ll notice that we never talk about the interest rates on the cards we’re discussing. It’s because we pay the statement balance in full each month. We are using the cards as if they were debit cards.

Second, never, never charge something that you wouldn’t otherwise buy. You must refrain from the temptation to make those kinds of purchases. If you don’t have that kind of discipline, then using credit cards to secure free travel might not be the best option for you- Because it wouldn’t be free in that case.

Third, always, always pay on time. Mint.com is a phenomenal resource to ensure that your balances are organized and paid on time. It’s a free service, so don’t hesitate to use it.

Fourth, always, always be sure that you can meet spending requirements before applying. For instance, if a card requires $4500 in spending over three months, and you won’t have $4500 in chargeable expenses, don’t put yourself in the predicament of having to charge things just to meet the obligation to get the bonus.

If you follow these simple rules, you’ll win the game. But remember that the moment you become reckless with your finances, you’re no longer taking advantage of these amazing bonuses, you’re being taken advantage of.

Wanderlust with us.



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8 Responses to Before You Apply

  1. chase says:

    Other than keeping a low credit utilization to boost your credit score, is there any advantage to paying off the balance before the statement closing date?

    • Sheldon says:

      Chase, I can think of two reasons how it would benefit you:

      First, it would make sure that the account is paid on time. I usually put my credit cards on autopay or I pay them the day that the statement arrives. Once you have quite a few cards and you are trying to juggle them it could be much easier to forget about paying one of them.

      Second, you also want to make sure that your statements never close with “high credit.” This means that your statement when it closes shouldn’t reflect that you’ve spent over 30% of your available credit. For example: If your credit limit is $10,000, and your statement closes with a $9,000 balance, it would negatively affect your credit. You would want to make sure that your statement never closed with over $3,000 in charges.

      On your Experian report it always shows how much money you paid on your accounts every month. I’m not 100% certain if that plays a role in your score or not.

      Mint.com helps me as they send me reminders right before they are due. When the reminders come I usually check to be certain that the bill is paid.

      Does that help?

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