Credit Card Bonus Offers Can Harm You
Knowledge Will Give You the Edge
Remember that credit card bonus offer that you got in the mail? It said you were pre-qualified for a credit line; as well as, a nice chunk of change for meeting certain requirements. These bonuses usually vary from one hundred to five hundred dollars. Sounds sweet! The requirements are usually simple as well. They will give you the extra cash if you charge a certain amount within a pre-defined time frame. For example, you will earn three hundred dollars if you charge three thousand dollars in three months. That could help pay the mortgage. The credit card bonus offer could really help in these tough economic times.
How They Get You
There are a few gotchas. First, to take advantage of the credit card offer without getting into trouble, you must not carry a balance. Usually credit card offers come with cards that offer higher interest rates. You could easily eat up that special credit card offer bonus amount in the first year of paying interest fees. For instance, if you carry a five thousand dollar balance and pay twenty percent in interest, then you will pay the bank a thousand dollars a year for the privilege of having their money. This would not be frugal.
You should also be wary of the annual fee. Another way the bank gets their money back is to charge the annual fee. Many times the fee will be around sixty to seventy dollars a year. In most cases, you'd be best to avoid the fee and take a credit card without the bonus offer. Your best defense if you decide to take out the card is to cancel the card shortly after getting your bonus. Many cards will waive the fee for the first year, so you could get out of the annual fee entirely.
Some minor consequences if you apply for credit too often, then your credit could be harmed. One of my relatives recently tried to take advantage of an offer. The bank turned her because she had applied for credit with the same bank within the last six months. She had excellent credit and would've qualified otherwise. I believe they do this to keep people from taking advantage of too many offers from the bank. The banks, much like a casino, will let you win, but if they think you are card counting then they will escort you to the door.
Credit card bonuses are a good thing as long as you know what you are signing up for. Don't let the banks get the best of you. You can flip the odds back into your favor. Don't let the house win. Best of luck to all, and enjoy them bonuses. Maybe you can get some of that money back that you paid in taxes to bail these same banks out.