If you're planning for a large purchase, taking advantage of credit card welcome offers and promotions can be beneficial, especially if you earn rewards, qualify for a bonus, or if your card offers purchase protections or other benefits.
Here are a few tips for finding great credit card offers, and smart ways to use your card to make big purchases.
How to find the best credit card offers
When looking for a new credit card, there are a few things to look for to help decide which offer is best for your situation. Here are a few tips for finding the best credit card offers.
1. Take advantage of points or cashback match
Some credit cards offer a points or cashback match program, which means the company automatically matches the rewards you earn at the end of the first year.
For example, if you earned $500 cash back in your first year, it would be matched for a total of $1,000.
While you don't get this "delayed" bonus until the end of the first year of having the card, it can be significantly beneficial if you spent a lot of money on that credit card during the year, and the match may help you get to the big purchase faster. It also gives you more time to plan and prepare for your purchase.
2. Find the best welcome bonus
Many credit cards offer a welcome bonus, which means when you open a new card, you earn extra rewards when you use your card. These can be cash back, points or miles. Typically, you must meet a minimum spending requirement within the first few months of opening your card to earn this bonus.
When comparing welcome bonus offers, be sure to pay attention to other information about the card, such as annual or other fees and other rewards. Also consider how much you have to spend and within what time period to earn the bonus, and weigh if that's feasible for you.
3. Compare introductory APRs
APR, or annual percentage rate, is the annual rate charged on your credit card balance. This also could be called interest rate.
Some credit cards offer introductory APRs, even as low as 0%, when you first sign up for a card. This means you pay 0% interest on your balance; however, this is typically only available for a limited time. And, you still have to pay back the money you borrow.
While a 0% introductory APR may be tempting, understand what the APR is once the introductory offer period ends. Sometimes, the interest rate can be higher than other cards available to you.
4. Look for $0 fees
Some of the most common credit card fees include:
- Annual fee
- Late payment fee
- Foreign transaction fee
- Balance transfer fee
- Cash advance fee
- Over-the-limit fee
You may find many credit cards offer $0 annual or other fees when you open a new card, though sometimes it's a limited-time offer. Before choosing a credit card, compare their annual and other fees to make sure you won't have to pay more in the future.
5. Using credit card offers for big purchases
Once you've found the credit card offer that's right for you and you've applied and been approved for the card, it's time to start using it.
However, there are a few things to keep in mind when it comes to using credit cards for large purchases.
- Keep an eye on your credit utilization ratio. This is the amount you owe on your card divided by your credit limit. For example, if your credit limit is $10,000 and you have a $5,000 balance, your rate is 50%. Having a high utilization ratio can negatively impact your credit score, so if you make a big purchase on your card, be sure to pay off most or all of the bill when it's due.
- Have a plan for the bill. While earning rewards such as cashback matches makes it tempting to spend a lot of money, you should always have a plan for paying the bill. Avoid justifying purchases just because they earn you rewards or because you get a welcome bonus for using the card because this can quickly lead to overspending and debt.
- Stay in the introductory period. If you qualify for a card that has $0 fees or a 0% APR rate for a certain period of time, or a welcome bonus if you spend a certain amount within the first few months, be sure to make your purchase within that introductory period. Otherwise, you may be subject to higher interest rates or you may miss out on your welcome bonus.
- Take advantage of purchase protections or benefits. Some card companies offer benefits when you use your credit card to make a big purchase, including extended warranties, purchase protection, return protection, travel insurance, and others. Before buying, check to see if your card offers these benefits and your purchase is eligible so that you can take advantage of them.
- Avoid impulse buying. If you have a plan for your spending, using your credit card offer can be beneficial. However, making a large impulse buy can lead to overspending, debt, fees and penalties, and even take an emotional toll. Plan ahead for your purchase and be smart about how you spend your funds.
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Original Source: Get the Most Out of New Credit Card Offers With These 5 Tips
