Credit card companies have their own interests before yours. Read between the lines before accepting an offer.

5 minute read

Once you’ve achieved a good to excellent credit score, you’ll find an array of enticing credit card offers tempting you to apply. Credit card companies compete for your business, and that’s why many offer big sign-up bonuses, generous rewards, or 0% APR introductory offers.

Don’t jump on just any credit card offer too quickly, however. If you’re not careful with your choice, that enticing offer could land you in a heap of financial trouble later.

1. The big sign-up bonus

Who wouldn’t want an extra $150 to as much as $750 cash or rewards just for signing up for a new credit card? The other usual requirement for that bonus, however, is charging a specific amount on that card, typically during a 90-day period.

If you don’t usually charge the required amount for the card’s sign-up bonus – $500 for charging $4,000 on the card in three months, for example – this offer could backfire when you end up with a lot of debt that you can’t pay off soon. In that case, it may be better to apply for a card that comes with a smaller bonus but requires you to charge a smaller amount such as $1,000 in three months.

2. Apply now for a purchase discount

When you’re getting ready to pay for $200 of clothing and the cashier says you can save 30% by applying for and putting the purchase on the store’s credit card, it’s tempting to go for it and save $60 right then and there.

That big discount is a great offer if you’re financially disciplined. If you’re not, though, you could pay a lot more than the $60 you saved later, in interest. That’s because retail credit cards have some of the highest interest rates, averaging as much as 25 percent.

3. The more you buy, the more you earn

Women using laptop for shopping online and earn points to website.

An offer that often goes hand-in-hand with the purchase discount when you apply for a store credit card is the lure of earning rewards points when you use the card on purchases. Some stores will even upgrade your card to a cobranded major credit card that earns store rewards on purchases everywhere.

Earning points is fun, but paying the balance off isn’t, especially at high retail interest rates. If you want to earn reward points, stick with charging retail purchases on a cash back major credit card and pay the balance off monthly to avoid paying interest.

4. 0% or low-interest APR on balance transfers

Transferring a large credit card or loan balance to a new card with a 0% or a low-interest APR can save hundreds in interest. That’s because with this offer, you get extra time, typically anywhere from six months to as much as 18 or 24 months, to pay off a balance without interest charges.

That’s a smart way to pay off a large balance or several balances. However, this clever move could backfire if you transfer so much to the new card that you can’t pay it off during the promotional period. When that happens, you’re stuck with just another big balance at a higher interest rate.

5. 0% or low-interest APR on balance transfers and new purchases

Shopping online concept, happy woman opens package with new shoes, ordered by internet

Like the balance transfer offer, this one comes with a 0% APR on transferred balances and on new purchases. What a deal, unless you already have a lot of debt, which you probably do if you’re transferring credit card and loan balances to a new credit card so you can pay it off during the promotional period.

The last thing a person trying to pay off debt needs is more debt, so a 0% APR on new purchases can get you in trouble unless you lay off new purchases and focus on paying the transferred balance before the interest rate shoots up after the promo period.

6. Sign up a friend

Free Trial Storage Member Concept

When your credit card issuer sends a promotional offer where you get paid $50 for every person you refer and gets accepted for the card, you may want to send out an e-mail blast to everyone you know. Your friends may not welcome this offer, though.

What if your best friend feels pressured to apply but is embarrassed because he doesn’t have good enough credit to be approved? Another friend may apply and charge up tons of debt she can’t pay off trying to earn the card’s sign-up bonus requiring a large amount in charges over a specific period. No $50 bonus is worth losing or damaging a friendship.

7. 0% financing on a large purchase

Air conditioning dollars banknotes breeze

Not everyone has thousands of dollars in an emergency fund for a new air conditioner, furnace or other expensive appliance. Even a new refrigerator, washing machine or dryer can set you back. So, a no-interest for six months to a year financing offer can sound pretty good when you need a solution fast.

This offer can return your life to normal fast, but it can also backfire if you don’t stay on top of payments. For one thing, being late or missing a payment will usually cancel that 0% rate. And if you don’t pay off the balance by the time the introductory period is over, a new interest rate will kick in, usually retroactively, from the beginning balance.

8. Credit card convenience checks

Close-up Of A Businessperson's Hand Giving Cheque To Colleague At Workplace

Those handy “convenience checks” stuffed in with your credit card statement or a separate offer from the credit card issuer can seem like money from heaven. The checks, which are linked to your credit card account can be used for purchases or cash advances. You’ll pay a high price for convenience, however, if you cash these checks.

Convenience checks usually have a higher interest rate, and cash advances may also come with a cash advance fee. Before you cash a convenience check, make sure you have a plan in place to pay off any balance from purchases or cash advances as soon as possible.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC