Q: I want a free gift for my credit card application. Which credit cards offer the best free gifts?
Competition does wonders for consumers. Think back a few years ago, to the height of the financial crisis. Banks had little money to lend, even to the point of cancelling accounts for long-time cardholders. It's great, then, to see so many lenders loading up their credit card offers with significant signup bonuses.
According to Mintel Comperemedia spokesman Andrew Davidson, plenty of Americans share your plans. In a statement to reporters announcing the results of his company's industry analysis of credit card signup offers, he noted that many consumers now consider applying for cards they have no intention of using, just because the "free gift" has become so attractive.
Recent signup bonuses have broken records, especially for rewards credit cards that are designed to lure frequent travelers and affluent consumers.
Even with some generous sign up offers for the taking, signing up for a new credit card just on the basis of getting a prize could carry some unexpected costs.
First, remember that many rewards credit cards cover the costs of your free gifts by charging higher annual percentage rates than "no-frills" accounts. If you're paying off your total balance at the end of each cycle, you'll avoid finance charges and the APR won't matter. Over time, if you happen to carry a balance, you could potentially give back the full value of your bonus, and then some.
Second, consider your credit score whenever you consider an instant approval offer. FICO and other credit analysis companies will consider you more risky if you open too many new accounts in a short period of time, or if you have too much available credit. Your penalized credit score could knock you out of contention for similar offers in the future, while making it harder to get the best deals on auto and home loans.
Even if you're not buying a house or a car, a lower credit score could cause your insurance company to hike its rates or even cost you access to a job interview. Use our credit card database to compare the best credit card deals on the market, so you can choose the best offer for your current lifestyle.
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