The Hidden Costs of Credit Card Bonus Sign up Points

There are many credit card companies offering enticing bonuses to sign up. You can receive 25,000 free air miles, enough to get you one free domestic flight. Some of those, including American Express, even waive the first year's fee for people who qualify. Those two bonuses can add up to a savings of $800. It sounds like a really great deal, but there are hidden costs.

Each time you sign up for one of those cards, you acquire more available credit, and ultimately become more of a credit risk, whether you use it or not. Your credit rating can start to decline and when you do need to apply for credit, you may not be approved.

Those credit card companies can also increase your credit limit, without asking your permission, because they see that you're spending the money and might need a higher credit limit.

If you then start to cancel some of those credit cards in order to decrease your available credit, that can also work against you. When you cancel credit cards you are also deleting your credit history on that card. So if you've had that card for many years, have been a good client and paid all of your bills on time, the history of that is no longer available on your credit rating.

The most effective way to manage your credit is to cancel any unnecessary credit cards that you've not had for a long time. Call up your credit card company and ask them what your credit limit is on each individual card, and if it is unnecessarily high, bring the limit down.

There are lots of effective ways to gain air miles to travel very economically, and this one can be beneficial, as long as you're aware of what goes on behind the scenes.

Happy shopping,
BikeHike Adventures