I’ve been writing about credit cards for eight years and using them for over 15. Safe to say, I’m pretty familiar with how credit cards work at this point. For the most part, I’ve been able to use them to my advantage. I have a high credit score, and I’ve saved money with credit card rewards.
It hasn’t all been smooth sailing, though. I’ve made credit card mistakes here and there that have cost me money. It’s always good to learn from other people’s mistakes instead of your own, so without further ado, here are mine.
1. Forgetting the spending requirement for a welcome offer
Credit cards often have welcome offers, sometimes referred to as sign-up bonuses. Most of them follow the same rules. Spend a certain amount of money within a time limit, and you’ll earn a bonus.
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These are a fast way to earn rewards, and I’ve earned a lot of them. But there is one that got away: Earn $200 in bonus cash back after spending $1,000 in the first 90 days.
I spent $750, gave myself a nice pat on the back for spending enough, and stopped using the card. Why did I think I was done? I have no idea. For some reason, I got the idea in my head that the spending requirement was $750 instead of $1,000.
When I hadn’t received the bonus, I went back and double checked. By the time I realized my mistake, it was past the 90-day time limit, so I had cost myself $200. Always keep close track of the requirements to earn a welcome offer. If you miss out, there usually aren’t any second chances.
2. Paying my rent with a cash advance check
I was 21 when I got approved for my first credit card without a cosigner. Like a lot of people, I applied for a card through my bank to have all my accounts in one place.
When I received my new card in the mail, it came with a sheet of checks. “That’s convenient,” I thought. And when I had to pay my rent next month, I filled out one of these checks and mailed it off to my landlord.
I assumed this money was coming out of my checking account. So I was shocked when I saw a large transaction on my credit card, and I even called my card issuer thinking it was fraud. Fortunately, the representative went over the details of the check with me, and it all clicked into place.
What I didn’t realize was that these were cash advance checks. Cash advances are expensive, for a few reasons:
- They have a cash advance fee — usually 5%.
- Card issuers often charge a higher cash advance APR.
- Interest charges begin immediately, without the grace period you get for purchases.
My rent, if I remember correctly, was $800 (hooray for 2011 prices). The 5% cash advance fee was $40, and I also paid some interest, since I didn’t realize that was getting charged right away. Once I found out what happened, I immediately paid off the balance.
3. Using a card with a foreign transaction fee abroad
Last August, my wife and I were in Italy. We had just arrived in Naples, and since we were tired after traveling that day, we decided to order pizza. I placed an order through Glovo, a food delivery app, and paid with Google Pay.
A few weeks later, I realized that I hadn’t selected the right credit card in Google Pay. I was trying to get the order placed quickly, and I used a card with a 3% foreign transaction fee.
It cost me $0.74. In all fairness, not a big deal, but I kicked myself at the time. I have so many travel credit cards, and I chose one of my few cash back cards that charges extra when used internationally. A rookie mistake on my part. And it’s a mistake that could cost you much more if you use a card with a foreign transaction fee for an entire overseas trip.
Now you know three of the mistakes I’ve made with my credit cards over the years. None of them were huge issues, but they’re all avoidable. To recap, keep track of the spending requirement when you open a card with a welcome offer. Never trust checks that come with your credit card. And when you’re aboard, only use cards with no foreign transaction fee.
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