Hi, I’m Zac. Welcome to CashFreely! If you learn from these 9 mistakes, you’ll be in better off than 95% of people in the world of credit card rewards. When banks are handing out $500 – $1,000 in cash back bonuses, you’ll want to make sure to be wary of every possible mistake to enjoy you don’t fall into the same trap. Let’s jump in!
#9 Impulsive Credit Card Sign-ups
A couple years ago, my wife came home with a smile and said, “Hey, I signed up for a Nordstrom card and got 20% off at the register! She was thinking that it was always good to get a card to save money. Her total purchase was about $100. We saved $20. At the time, she was under 5/24 (Chase’s rule), and we needed to be strategic about our next cards. (More on the Chase 5/24 rule below).
Instead of getting a great cash back card with a $500+ bonus and ongoing benefits, we used a card signup to get $20. I see this happen all the time with store cards or online pop up ads that attract people to sign up for extra $20-30. If you already have great credit, you need to be getting at least $400 from a signup bonus when opening a new account.
#8 Redeem Cash Back for Other ‘Stuff’
Many credit cards award rewards in the form of points — requiring you to then redeem those points or rewards for cash back. There are times that instead of redeeming those hard earned points for cash back, your online account will tell you about other options — such as buying products in their online shopping mall or towards an Amazon purchase.
Typically, redeeming your points for ‘stuff’ is not a great usage of your points. The value you’ll receive is typically less than the normal 1 cent per point value when you redeem for cash with most cash back cards.
If you really want some free stuff, consider the cash back and gift card options. For example, I saw a Nespresso machine in a rewards catalog for 30,000 points. Instead of buying it with points, I used 12,500 points to get a $125 Gift Card to Williams Sonoma. I bought the same exact machine on sale for $120!
#7 Overspending
Some people tend to use a credit card differently than a debit card. As soon as you start overspending because you have a credit card, you are quickly losing the advantage of earning a big bonus and earning extra rewards on spending. If you’ve been in debt before or have a hard time controlling your spending, this hobby may not be for you. Be cautious. I strongly suggest using a budget app to see if your spending stays the same.
#6 Trusting Offers in the Mail
If you have good credit, you will get letters and emails from all the banks. They will entice you with some great “Limited Time Bonus Offers.” What you don’t realize is that some of these offers are less than what you can find online. Don’t let the marketing language fool you. Always check online or email us. Bonuses can vary as much as few hundred dollars in cash back! Most people miss out on tens of thousands of rewards simply because they don’t do a quick google search, or check their CashFreely Best Offers recommendations. =)
#5 Ignoring the “Secret” Cash Back Cards
The average person has no clue that that best overall cash back cards are hiding in plain site. These cards earn points that can easily be converted into cash back. People search for “cash back” and see bonuses of $100 to $200 with 1.5% cash back on spending. That is not even close to the best cards you could be getting! There are “secret” cash back cards that earn signup bonuses of $600 to $800 and the equivalent of 15-20% cash back on that initial bonus spending on regular expenses! Read more: Psst. Learn about secret cash back cards.
#4 Closing Old Accounts
Before I got into credit cards, I didn’t know much about credit scores. I thought it would help me to get rid of old cards I didn’t use. So, I closed the oldest credit card account that I got when I was 18 years old. #yikes. It killed my credit score. I lost several years of positive on-time payments and responsible credit use.
Instead of helping my finances, closing my oldest card hurt me badly. Make sure you always keep your oldest cards open. That’s why we recommend your first credit card be an “anchor card” that you keep around forever. Get a good “no annual fee” card, or a card that can eventually be “downgraded” to a no annual fee card.
#3 Ignoring Your Significant Other
If you’re married, ignoring your spouse is never a good idea. It’s especially bad when talking credit cards! Did you know that significant others have separate credit profiles and separate credit scores? This great news means that couples can double up on all the best cards. Each person can apply with their social security number.
It’s a common mistake the couples think they both have a credit card. Unless you filled out two separate applications, one is the primary account holder and the other is the authorized user. You are allowed to each have a card as a primary account holder.
For example, instead of one Chase Sapphire Preferred, you could each get one and double your sign-up bonuses. Few people know this. Couples are missing out on of thousands of dollars in cash back! More on this topic.
#2 Forgetting You Have a Business
Did you know that you can get a business card if you can claim to earn $1 through your own business? If you sell stuff on Facebook Marketplace, have a small consulting business, or operate several LLC’s, you MUST look into business credit cards.
On average, business credit cards have higher sign-up bonuses than most personal cards. They often stay off your personal credit report, too. For those who know about the 5/24 rule, most business cards don’t count towards this either. There’s an extra $1,000 to $2,000 in cash back every year with minimal effort. Here are two articles related to business cards: Am I Eligible for A Business Credit Card | Amazing Chase Business Card Offers.
#1 Using the Same Rewards Card for Years
I hear this all the time with the average Joe. “Oh yeah I love rewards. I’ve had my Chase Freedom Card for 10 years. We get cash back all of our spending.” This is true, but Joe is missing out on a ton of cash back EVERY SINGLE YEAR. Loyalty is NOT “rewarding” for those who use the same card for 10 years. There are now even better cards out there, or cards to couple with the card that you currently have — and not to mention increase your sign-up bonuses.
A family who only got 2 cards per year could easily earn $1,000 cash back PER year by maximizing new card offers. For example, you can get a new Chase Freedom Unlimited or Chase Freedom Flex card bonus every 24 months.
Our #1 personal card that we recommend most often. Hands down the single best "starter card" for beginners and MVP card for overall value and flexibility. For those looking for cash back, 60,000 Chase Ultimate Reward points can redeemed for $600 cash back.
Bonus Tip
The biggest obstacle to maximizing rewards is getting organized. The average person does NOT have a system to help them earn with their credit cards. They lose out on thousands of $$$$ every year. They end up with one or two cards and can’t keep track of them.
CashFreely can make this so easy for you. You’ll get the best card offers and an automated system to help you manage it all every step of the way. If you are financially responsible and can pay your bills on time, it’s a no-brainer.
