Credit Card Offers: Which Should You Accept?

Not all credit card offers are for the garbage, but you need to pay attention to what matters most to you

Aug 30, 2014 at 12:13PM

If you have credit that can be described as "good" or better, chances are you get credit card offers on a fairly regular basis. Sure, you can't accept all of them, but that doesn't mean they should all go directly in the trash. Sometimes you'll actually get a pretty good offer.

Perks and welcome offers that matter to you
Here are a few tips to help you sort through the stack of credit card offers and figure out which are best for you.

No matter how great a credit card offer is, it doesn't make sense unless the perks and rewards matter to you. For example, if a card is offering 100,000 frequent flyer miles, but you only travel once a year at most, you'd probably be better with a "cash back" card or different form of rewards.

If a credit card offer will require you to spend more than you're comfortable with, or has great perks that you aren't likely to use, throw it away.And make sure you look at the requirements to take advantage of the offer. Some credit cards may offer you enough hotel points for a week of free stays, but you'll need to spend $5,000 on the card in just a few months to get it.

Do you have high balances?
If you are carrying significant balances on your existing credit cards, maybe you should consider a card with a 0% interest balance transfer offer. It's not unheard of to find a card that will let you transfer balances for up to 18 months without paying a dime of interest. 

For example, the Discover It card lets you transfer balances at 0% APR for 18 months, with a 3% balance transfer fee. This may sound like a lot, but consider that a $5,000 credit card balance at 18.99% interest will cost you more than $1,400 in interest over 18 months. That makes the $150 transfer fee look like a steal. There are a bunch of cards with good balance transfer offers which change regularly, and a good list is available here.

So, if you have a lot of existing balances you'd like to consolidate or eliminate the interest on, keep an eye out for good balance transfer offers.

Interest rates, fees, and other things to consider
Pretty much all credit cards charge higher interest rates than you could get with other types of loans. Still, there is a big difference between paying 14% or 20% interest on a credit card balance.

Annual fees are another big factor, and are especially common among cards with large welcome offers. For example, the American Express Delta SkyMiles Platinum card has excellent benefits, but the $195 annual fee could make it less worth it to you.

However, don't automatically discard credit card offers because of the annual fee, just be aware of it. If the perks more than justify the cost, then it could still be a good deal. For example, if you travel with your family of four just twice a year and check one bag each when you travel, you could save $200 in baggage fees alone with the Delta card I mentioned.

How many cards should you have?
In short, you should have enough credit cards to give you the credit line you want, but not so many that they become a hassle to manage.

For example, if you have a dozen credit cards, simply remembering which bill you need to pay when can be a scary task.

One of the largest components of your FICO credit score (the scoring model used by most lenders) is the amounts you owe, which account for 30% of the total scoring formula. However, this doesn't refer to the actual dollar amounts you owe, but mainly the amount you owe relative to your entire available credit line.

For instance, if you have $500 in credit card debt, but only have one credit card with a $1,000 limit, you are using 50% of your available credit. On the other hand, if you owe $5,000, but have a total of $25,000 in credit limits, you are only using 20% and therefore might look better to lenders.

Experts generally say you should aim for less than 30% usage of your available credit, so either reducing your debt or raising your available credit to get there could help your score significantly.

Don't throw them all away, but be selective
In a nutshell, credit card offers deserve to be read, but only the best ones are worthy of acceptance. Credit card companies are intensely competing for business, and some of the offers can be really good deals, if what they are offering matters to you.

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