News Americas, NEW YORK, NY, Tues. August 8, 2017: Applying for travel credit cards is no more a rare activity. People with excellent scores use them for attaining cash backs and rewards, earning free trips to chosen destinations and even getting free nights in luxury hotels. However, they still don’t use all their benefits in full because owners are misled by the presence of several myths about travel cards usage. Only ones make a thorough research in order to debunk them and get rid of all unnecessary restrictions. Learning what really drives your credit score and setting a responsible strategy for travel credit card usage can help put you in control of your debt. Here’s the reality behind of the most common misunderstandings about travel credit cards.
4 Most Popular Myths On Travel Credit Cards Usage:
- More credit cards lower your score: Different products give different perks and benefits to owners. Any travel points credit card you employ gives you more opportunities for free trip and cash backs while the resulting effect on your score is not that high. Of course, owning 10 credit cards is meaningless if you cannot achieve their spending limits but holding two of them will not hurt your borrowing history much;
- Lower credit limit improves my score: Your borrowing score gets hurt when you procrastinate with payments or when use borrowing resources unwisely. Although higher limit gives clients incentives to use more credit resources, it doesn’t necessarily mean that their expenditures will rise. Only you decide whether you want to increase your spending or not;
- One should avoid travel cards requiring annual fees: Of course, nobody wants to overpay for the credit. According to Forbes, as most travel rewards solutions help user earn 1 mile per every dollar spent, a $59 annual fee can be covered only when they spend 100 times more. The truth is that a lot of products, which don’t require annual payments, charge you with even higher amount with their commissions, interests, and additional payments which we rarely take into account;
- If you carry the balance, you will benefit from card’s rewards: Although in order to activate bonuses and rewards users need to spend a particular amount, they never use these rewards for free. With every borrowed dollar borrowers spend, they pay an interest to an issuer so if you compare the value of rewards with the amount you should pay, the latter amount is always higher.
How To Not Make a Mistake?
No company offers travel credit card with such yummy bonuses for free. Clients might not need complicated math skills to see that the interest on the amount they borrow, entirely covers all rewards. That is why clients’ main task should be to find a credit card, whose benefits they will actively use and this way reduce the difference between what they earn and pay for borrowing.
And don’t think that your score will take care of itself. If you want to become eligible for products offering the richest bonuses, maintaining balance is not enough. You need to show that you are financially responsible and avoid net debt so that your credit score will be high enough for the top notch products.