5 Tips for Comparing Credit Card Offers

Every credit card offer sounds good -- so how do you know which ones are actually worth applying for?Image source: Getty Images.

If you’re like most people, you get inundated with credit card offers in the mail and online. Credit card companies spend a lot of money and expend a lot of effort competing for your business -- often by offering generous rewards and perks.

You can’t take advantage of every credit card offer unless you want to have hundreds of credit cards in your wallet. So it’s important to know which offers are worthwhile and when it might be a good idea to sign up for a new card in order to reap those rewards.

To help you weed through credit card offers available to you, consider these tips.

1. Make sure you can actually qualify for bonus perks

Many credit card offers provide a set amount of money or rewards points for new account holders. This may be $500 or 50,000 miles. These offers don’t come just for opening a card. You have to fulfill certain spending requirements, such as spending $3,000 in the first three months of opening the card.

You don’t want to start charging unnecessary purchases and end up in debt just to qualify for a credit card bonus, so make sure the requirements to earn the rewards or perks are reasonable for you. If you usually spend $500 a month on your current credit cards, it’s unrealistic to assume you’ll qualify for any rewards that require you to spend $3,000 in three months -- unless you have a big purchase coming up.

If the card offers other bonus perks, such as a $100 credit for airline incidentals or bonus points for gas or grocery purchases, these rewards will also be beneficial only if you actually incur $100 in airline fees annually or if you spend a lot on gas and groceries. If the rewards and perks don’t match your lifestyle, the card isn’t the right one for you.

2. Read the fine print

It’s easy to get blinded by the card’s special offers, but you also need to read the fine print associated with them.

For example, if a card promises you a 0% promotional rate on balance transfers for 15 months, check the fine print to see if there’s a balance transfer fee. If you have to pay a big percentage to transfer the balance, you may be better off with a different card that charges 0% for 12 months but that doesn’t have a fee.

3. Look out for annual fees

Many of the credit cards offering the most generous rewards and perks charge an annual fee. Sometimes this fee can be quite substantial. The fee may be waived for the first year, but that puts you in a position of having to remember to cancel the card at the end of the year. Plus you could hurt your credit if you cancel too many credit cards by reducing the average age of your credit.

There are situations where it can make sense to pay an annual fee if the card offers tons of rewards, such as credits for rideshares or airline perks, or if the card offers very generous cash back or points. But if you routinely open new credit cards to take advantage of bonus offers, you may not want to keep using the card the same card next year, so continuing to pay the fee may not be justified.

There are plenty of cards without annual fees that also provide generous cardholder benefits. If you don’t want to be hassled with making sure you cancel the card or use it enough to justify the fee, consider limiting your search to those cards only.

4. Understand limitations on eligibility for special offers

Many credit card issuers offer special bonuses only to cardholders who don’t already have a similar credit card or who haven’t opened too many cards recently.

For example, Chase has a famous rule called the 5/24 rule. In a nutshell, this rule means that if you’ve opened five or more credit cards in the past 24 months, Chase is going to deny you a new credit card account.

There’s little sense in applying for a credit card that you’re going to be denied for, or that you won’t be able to earn rewards bonuses for because you’re already a customer. Make sure you know these rules before you apply.

5. Consider whether the card offers a good long-term value

Some people like to open multiple credit cards to take advantage of bonuses for new account holders or to continually take advantage of better deals. If you’re one of them, you may not care if a card is a good fit for the long term because you may decide to just open the card, get your new-account bonus, and then move on to the next one.

Many other cardholders, however, can’t be bothered with all this hassle and just want to get a good bonus for opening a card and continue to earn generous rewards. If you plan to keep using your credit card for a long time, make sure that the cash-back or rewards program is well matched to your spending. This means choosing a card that provides bonus rewards or extra cash back for the type of spending you do the most.

If you ever plan to carry a balance on your card, you also need to consider the APR. The interest you pay on credit card debt will always far exceed any benefits you get from a rewards program, so if you may carry a balance from month to month, prioritizing a low APR is the most important thing you can do.

Don’t sign up for credit card offers that don’t make sense for your situation

When you see a credit card offer that seems really attractive -- like a card offering thousands of free airline miles -- it’s really tempting to sign up. But if you won’t meet the spending requirements to actually qualify, or if you’ll end up paying a huge annual fee for the card, it may not be worth it.

Look at the big picture of how each credit card fits your lifestyle and spending patterns and only sign up for a credit card if it’s a good match for you.