September 24, 2023

Credit Card Surprises You Should Watch Out For

Select’s editorial team works independently to review financial products and write articles we think our…

Credit Card Surprises You Should Watch Out For

Select’s editorial team works independently to review financial products and write articles we think our readers will find useful. We may receive a commission when you click on links for products from our affiliate partners.

Credit cards can be very enticing, with welcome offers luring you in with the promise of thousands of points you can redeem for travel or cash back. But credit cards can also be useful financial tools. They can provide convenience, security and help you build credit all while you earn rewards like points, miles and cash-back benefits that can help you save money.

But intertwined with all the benefits, perks and bonuses are some surprises that can catch you off guard and potentially hurt your finances. Irresponsible credit card use and misunderstanding the terms and conditions of your card can offset all the perks.

“There’s a saying in the industry that credit cards are like power tools — they can be very useful, but in the wrong hands, they can be very dangerous,” says Ted Rossman, credit card senior industry analyst with Bankrate.

Here are six credit card surprises to keep on your radar.

1. Lucrative sign-up offers have a deadline

2. Cash advances don’t include a grace period

3. You’re responsible for anyone you authorize on your account

4. Don’t assume you’re getting all your card benefits

5. You can earn more rewards when you bank with the card issuer

6. Not using your credit card can impact your credit score

Credit cards affect your credit score in many ways. “From the actual credit card application itself to whether you carry a balance, pay it off on time and how much of the credit limit you use,” says Rod Griffin, senior director of public education and advocacy for Experian. But what may surprise you is how credit card inactivity can impact your credit score. 

In order for your credit cards to be reflected in your credit score, you need to show regular account activity. If you don’t use a card for several months you might see an unexpected negative impact on your credit scores, Griffin says.

“Extended periods of inactivity are an often overlooked or unknown threat to your credit scores,” he points out. Credit scores not only require that an account be present in a credit report, but Griffin explains that there needs to be consistent activity in that account for it to be reflected in your score.

“If you set aside a card and don’t use it, eventually it won’t be taken into account and your score could drop as a result,” he says. To ensure an account is helping your credit score, make a small purchase every month and pay it in full by the due date. This action will lift your score. 

If you hold an inactive credit card, there’s a good chance the issuer may close the account if it hasn’t been used in a while. “When this happens, it reduces the amount of credit available to you,” Griffin says. “This can negatively impact your credit score because it will likely increase your credit utilization rate, which is the second most important factor in credit scores.”

Information about the Bank of America® Unlimited Cash Rewards card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.