Signing up for any old credit card offer is hardly a problem, especially since the Boston Globe reports that 4 billion offers were mailed out in the United States in 2011 alone. That’s an average of 18 offers for every adult in the country.
Of course, not all credit cards are created equal. But with so many offers out there, how do you know you’re getting the best and not settling for a bad deal? Follow this guide to get the most from your cards.
Narrow Down the Type of Card
Credit cards come with many benefits: cash back, frequent flyer miles, 0% interest, and more. Generally, the best rewards and more preferable terms are available to card holders with a better credit score. But even if your credit score is lower or you’re carrying a balance, finding a card with a lower annual percentage rate (APR) can save money on interest.
Many cards offer a promotion for signing up like a big chunk of frequent flyer miles or an increased cash-back percentage for a certain period of time. Some cards also waive an annual fee for the first year.
Before you choose any reward, think about what you’d value most in return. If you’re not a big traveler, frequent flyer miles might be less valuable. But if you’re constantly fueling up your car, a card that offers cash back on gas purchases might be the perfect fit.
Once you decide what type of card to shop for, compare different cards and see how the features and rewards compare.
Picking the first offer that comes your way without comparison is almost never a good strategy. You wouldn’t just buy the first house you saw without any information about other options, would you? The same goes for credit cards.
Before you take the first deal that happens to come along, look around at what else is out there. It’s easy to find offers on the internet since there’s no shortage of sites that aggregate many of the best deals currently available. You can sort cards by type and filter through other benefits instead of attempting to scour individual websites to apply. Of course you can still check the websites of card issuers directly, too. It’s a slower process, but you’ll get the most up-to-date offers.
Using these sites that display a variety of cards is helpful for side-by-side comparison, too. Once you find offers, there are a few details to compare. APRs are generally advertised clearly, but still be sure to understand the terms including APR changes after a certain period of time.
If you’re trying to compare the benefits of cards that offer different types of rewards, just do the math. If you’re considering cash back, take a look at your monthly expenses to get an idea for your estimated earnings to get a ballpark amount. For frequent flyer miles, estimates value miles at an average of 1.2 cents each, but can be worth more than 10 cents depending on how you use them. Of course if you never redeem your miles (and some estimates say 70 percent of all miles earned are never used), they’ll be worthless to you.
Ask Credit Card Companies Directly
Sometimes it’s a good strategy to call up your credit card company and ask directly what promotions they might be offering. If you’re a loyal customer with a solid credit score, there may be offers that aren’t advertised or given to everyone.
This strategy can be effective if you’re looking to close an account due to an annual fee or because you’re no longer earning the great rewards you once were. Credit card providers are sometimes willing to make deals with card users that are of high value to them.
Don’t Rule Out Offers in the Mail
Just because offers come in with your “junk mail” doesn’t actually make them worthless. In fact, some credit card offers are targeted at customers that are loyal and have great credit scores. Don’t assume that the mail or email you’re getting is just a mass mailing sent out to millions of people.
Of course, as mentioned earlier, you don’t necessarily need to accept these offers, either, and shouldn’t do so without researching more about what else is out there.
Read the Fine Print
Many credit card offers sound terrific. The benefits are usually prominently displayed in large letters. But there’s typically a catch, which is often detailed in the fine print.
Always look for time limits and spending requirements that affect your reward. For example, some credit cards may offer 50,000 airline miles for signing up. But you might need to spend $5,000 in the first three months of opening your account to receive that reward. If that’s difficult or impossible for you, you might as well forget it.
Lastly, don’t forget to be realistic. It’s almost never worth it to spend more money in an attempt to earn more rewards. Don’t forget that interest and fees can easily wipe out the value of rewards as well.