Mistakes to avoid when opening a new credit card account

You might know the basics of how credit cards work and even have several in your wallet already. But as you tear open the envelope on a brand-new card and activate it, you encounter a minefield of potential mistakes that could prevent you from getting the most out of it.

Of course, some basics apply to all credit cards. A prime example: Avoid interest by paying your balance in full every month if you can.

But optimizing your new credit card also means avoiding gotchas and not missing out on benefits. Here are common mistakes people make after getting a new credit card.

Botching a bonus

If your new rewards card offers a sign-up bonus for new cardholders, it usually comes with strings attached. You might have to spend, say, $1,000 on the card in the first three months or you won’t get that $200 bonus.

To hit such a minimum spending requirement quickly, you'll want to charge everything you can to the new card, but without going beyond your normal budget to do so.

Some effective strategies:

• If you’re out to dinner with friends, volunteer to pick up the check and have them pay you back. That way, you rack up spending for a large purchase.
• Temporarily switch monthly expenses, such as subscriptions, to the new card.
• Buy retail gift cards for future purchases. (Just make sure you're playing by the card issuer's rules.)

Skipping new-card logistics

Aside from activation, other tasks come along with a new card. For example:

• Add to a digital wallet. Log the new credit card into your most-used digital wallet, like Apple Pay or Google Pay. That way, you can use the card from your smartphone with wireless checkout readers. One-third of cardholders are using mobile payment services with their credit card, according to a 2021 study by J.D. Power.
• Adjust account settings. You not only have a new card but a new account. Customize your settings for autopay, paperless billing, big-purchase alerts, due-date reminders and similar features. Many accounts let you adjust your billing due date.
• Enroll in associated programs. Especially for travel credit cards, you might have to sign up for new accounts to get access to airport lounges, travel loyalty programs or a rewards dining program.

One task you can skip? Signing the back of your new card. Feel free, but it’s rarely required anymore.

Bungling bonus categories

If your rewards credit card offers extra points or cash back for purchases at supermarkets, for example, you might be bummed to discover your Costco purchases didn’t qualify. It sounds like a catch, but it’s typical with credit card categories because merchants are identified by their merchant category code, or MCC. With many cards, Costco is considered a warehouse club, not a supermarket.

If you have a subscription that falls into a bonus category, like streaming services, make sure to log into those accounts and switch your payment method to the new card.

Passing up perks

It’s worth taking the time to read your benefits guide at least once to get familiar with card perks.

For example, you probably know if an airline-branded credit card offers frequent flyer miles for your spending, but many offer free checked bags, too. At a typical cost of $30 a pop each way for checking a bag, skipping that perk would cost an extra $120 round trip for you and a traveling companion.

Especially on travel credit cards, look for travel credits, airport lounge access and free hotel nights.

Minor perks are worth knowing, too. Your card might offer cellphone insurance, rental car insurance, price protection, extended warranty or free FICO credit scores.

Dissing discounts

Many large credit card issuers offer card-linked discounts or extra rewards at certain online retailers.

They offer web-based portals and deals that allow you to stack savings or points on top of your card's normal rewards rate with just a few extra clicks.