Credit

The Biggest Credit Card Mistakes I’ve Made

mistakesAs with most things, when you venture into a new hobby you’re bound to make some beginners mistakes. Of course, its alright to make those mistakes so long as you’re able to learn from them. Or even better, learn, and then share your learnings with the readers of PursuingPoints.com :). Anyway, in the course of my points and miles “career” i’ve made several blunders that’ve left me scratching my head once I realized the mistake. Luckily, none of these mistakes cost me a lot in terms of either money or my credit score, but they could’ve and most certainly should’ve been avoided. The reason for this post then, is that hopefully you and those who know will not make the same mistakes as I have.

1. Amex Platinum Signup Gone Wrong – In the whats in my wallet episode of the Pursuing Points podcast I talked about some of my first cards. The first was the Clearview FCU Visa with a $200 limit. Then came the Citizens Bank Mastercard, followed by my first real rewards card, the Amazon.com Chase Visa. Around 6 months after that I got the Sapphire Preferred, which I considered my first real entry into the points and miles world. What I did not mention on the podcast was the fact that in between my Amazon Visa and my Sapphire Preferred I submitted another application for a card you may’ve heard of, the American Express Platinum card. At the time I was in my early 20’s (21 maybe?) and I had started to get really excited about the prospect of having a top of the line rewards card. I looked around and saw the Amex Platinum with its $450 annual fee, big sign-up bonus, lounge access, and more, and figured “What the heck?”. The problem of course was that at the time I didn’t have $450 to spend on a annual fee, nor could I spend the requisite funds needed to unlock that signup bonus. Moreover, I wasn’t really traveling at the time, and when I was I was flying for free! (I’ll talk more about that free flying stuff in the future). Anyway, not knowing what I know today I decided to submit an application fully expecting a swift denial. My income was low, I wasn’t sure what my credit score was, and I figured there was no way they’d approve me, but I still wanted to get in the game. So I filled out all the information, pressed submit, and to my complete shock I was instantly approved. That shock turned into excitement, which turned into horror when I realized all the things I’ve just laid out; no money for the annual fee, no way to unlock signup bonus, and no use for the travel benefits. But hey, id have this “platinum” credit card that no one else had right? Long story short, when the card arrived in the mail I was terrified. I called up American Express and explained the situation and asked if they could cancel it without me ever having activated it. They did, and now I wonder if ill ever be able to get another Amex Platinum signup bonus because I technically did have the Platinum card, right?

Moral of mistake #1: Don’t sign up for a credit card unless you know what you’re doing, can meet the minimum spend for the bonus, and can afford the annual fee.

2. Expensive Shades – In the second episode of the Pursuing Points podcast I talked about and ultimately applied for the Chase Sapphire Reserve with my friend Michael. During our conversation however I told the story about the worst credit card I ever signed up for. A little over two years ago I was at Sunglass Hut looking for a new pair of shades. Now, I do not wear designer clothes, I do not (or at least did not) buy designer sunglasses, so just walking into the store and seeing the price of a pair of Maui Jim sunglasses took me back a bit. That day however I had decided that I wanted a nice pair of sunglasses that would last me a while and of course they also had to look good. After an hour in the store I had two pairs of sunglasses, one pair of Oakley and one pair of Maui Jim. I convinced myself that this was a good purchase and went to checkout. The store worker got me all setup and said “Oh by the way, if you signup for a Sunglass Hut store card you’ll get $50 off your purchase today.” Im not sure if it was the thought of spending $500 on sunglasses or maybe I just forgot to think about the future ramifications this may have, but I pondered it for a few minutes then said “Sure, why not?”. So I went through that whole process, signed myself up for a Sunglass Hut store credit card, just to save $50 on a pair of sunglasses. Why was this a giant mistake? Well for one I exchanged a hard inquiry on my credit report for $50 worth of “rewards”. Generally speaking I am looking for no less than $200 in rewards per hard inquiry, so that was issue #1. Then came the fact that I now hard a new credit card on my report, in exchange for the same $50. Initially that wasn’t a problem per se, but 2 years later on my podcast when I went to apply for the Sapphire Reserve it could’ve been a big problem. Chase has this rule where if you’ve signed up for 5 or more cards in the last 24 months you will be instantly denied for any new personal credit cards with them until you fall beneath the bar again. As I detailed in my Chase Sapphire Reserve approval post, this Sunglass Hut card put me right at 5/24. I can only imagine how upset I would’ve been had I been unable to take advantage of a signup bonus worth $1,500 simply because I wanted to save $50 on a pair of sunglasses! Luckily it all worked out in the end, I paid off the card immediately and closed it shortly thereafter. I was approved for the Sapphire Reserve. And I’ve still got those two pairs of sunglasses.

Moral of mistake #2: Never sign up for a card unless you truly value the benefits that it will provide you not only today, but tomorrow as well. Think to yourself “If I sign up for this and it prohibits me from taking advantage of a better off in the future, will I be okay with that?”.

 

The great thing about having made these mistakes it that I’ve learned from them and thus, I will not make them again. Hopefully you’re able to avoid them as well after having read this article.

What are some of the mistakes you’ve made with credit cards? How can you avoid them in the future?

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