2. Avoid fool’s gold
“Gold cards” have been around for decades, with American Express debuting theirs in 1966. Since then, credit card companies have added “silver,” “platinum” and even a “palladium” to the list of cards named for precious metals.
While these cards may have indicated prestige in the past, and there are still elite cards requiring exceptional income and expenditures, most precious-metals labeling is meaningless.
Solution? Choose a credit card by comparing the benefits that really matter, such as low interest rates, low fees or rewards. We have a credit card page, complete with reviews and a search function, that can help you find the right card.
3. Bogus business credit cards
Offers for small business credit cards
might seem like a great way to track business expenses and develop a credit history for your business. But these cards seldom live up to the hype and offer fewer consumer protections than consumer cards.
With most small-business cards, it’s your personal credit on the line, not your business’. So you’re not creating or developing a credit file for your business.
In addition, small-business cards lack important protections that consumer cards have. The Credit CARD Act of 2009 applies only to consumer cards, which means your business card can still be hit with fees and rate hikes that would be illegal for personal plastic. So even if a particular business credit card has advantages, such as enabling you to track business expenses separately, you’re sacrificing consumer protections to get them.
4. Big bonuses with a catch
It’s easy to get drawn in by sign-up bonuses offered on new cards. You might see an offer of $150 back or 25,000 airline miles just for opening an account. But there’s often a catch.
In many cases, you’ll need to charge a certain amount on your card within a specified period, such as $1,000 in purchases to get $150 back, or $2,000 charged to earn 25,000 airline miles. While the details vary, completing these offers as stipulated may be difficult or even impossible on your budget.
Percent cash-back bonuses might not be all they seem, either. Some offers boast “up to 5% back” on your purchases, but that may be only at certain retailers, not for every purchase you make. Some cash-back deals might be for a limited period after you open the account and may cap how much you can earn.
When it comes to reward cards, understand what it takes to get the advertised perk. Consider the reason rewards exist: to make people spend (and borrow) more than they otherwise would. If that’s a trap you feel likely to fall into, a rewards card may be less than rewarding.
Shop rewards and all other cards before you commit. Check out our credit card page to find additional choices.
5. Not-so-special offers
Credit card offers come crammed with language that makes you feel like you’re getting a special deal. Envelopes might be stamped with “Important” or “Confidential” to heighten the urgency. Once opened, you might be excited to find you’re “pre-approved” for a credit card.
Unfortunately, being “pre-approved” doesn’t actually mean the card is yours. In fact, it doesn’t really mean anything. You’ll still need to apply for the card and go through the whole approval process as you otherwise would.
Be careful when choosing a card just because it’s a special offer that appears to be just for you. It may just be another trick to reel you in.