I have 26 credit cards, and there are 4 signs a credit card offer is too good to be true

Holly Mazatlan hatHolly Johnson.Courtesy of Holly Johnson

  • I have 26 credit cards, including the Chase Sapphire Reserve, the Hilton Honors Aspire Card from American Express, and the Ink Business Preferred Credit Card. I use most of them to earn cash back and rewards for travel.

  • There are plenty of "gotchas" to be aware of when it comes to rewards cards, but you may have to read the fine print to find them.

  • Before you apply for rewards credit card, make sure you know the details of the sign-up offer so you can confidently earn bonus rewards for your spending.
  • You'll also want to watch out for annual fees - some cards waive them the first year, but many don't. And take the time to read the fine print on benefits to make sure you'll be able to take full advantage of the perks you're paying for, like the annual airline fee credit offered on cards like the Platinum Card® from American Express.

As of today, my husband and I have 26 different credit cards across our personal and business profiles. That sounds like a lot - and it is - but there's a method to our madness and a reason we have so many cards.

Not only do we have legacy cards we keep open to increase the average length of our credit history and improve our credit score, but we also have cash-back credit cards that let us earn up to 5% back in certain categories.

Most importantly, we have a selection of travel credit cards that help use see the world on the cheap - and stretch our annual travel budget. That's very important to us since we currently travel about four months of the year.

Since I have so many cards and write about credit cards for a living, people frequently ask me for advice on which card they should pick up. This usually happens after they see an ad for a new rewards card - or when they research cards on their own.

While most credit card offers are pretty straightforward, it's always crucial to read the fine print and to know about common credit card "gotchas" that limit how valuable some credit cards are. If you're searching for a new credit card for your wallet, here are the main issues to be aware of.

Big minimum spending requirements

Earning a huge sign-up bonus on a rewards credit card is a smart goal, but don't forget to find out the nitty gritty deals on bonus requirements, including how much you need to spend. Some rewards and travel credit cards offer bonuses after you spend $3,000 to $5,000 in the first three months or 90 days, but other cards have much higher spending requirements.

For example, the welcome bonus on the Business Platinum® Card from American Express can earn you up to 75,000 Amex Membership Rewards points, which could easily get you more than $1,000 in value. But you'll need to spend $10,000 in the first three months to earn 50,000 points, and another $10,000 in the first three months to earn an additional 25,000 points. This is a business credit card, and that spending requirement could be easy to reach if you have a sizeable company, but it could be less realistic for smaller businesses or sole proprietors like freelancers.

Make sure you read the spending requirements and the fine print for any credit card offers you're considering so you can decide if the minimum spending requirement is feasible to meet. If you take the effort to sign up for a new credit card, you're missing out if you don't earn the welcome bonus, but you shouldn't put yourself in a financially perilous situation by spending more than you can afford.

Limitations on credit card perks

Also make sure you understand any limitations on credit card perks you plan to use. Otherwise, you could wind up missing out on value or wasting the money you spent on the card's annual fee.

The Hilton Honors Aspire Card from American Express is a perfect example of why this is important. This card gives you a big welcome bonus right away, but you also get perks like up to a $250 annual resort credit and up to a $250 airline fee credit card each calendar year.

If you read the fine print, however, you'll find that the resort credit is only good for Hilton resort properties that are found at Hilton.com/resorts. This selection of "resorts" is rather limited, so this perk will only work if there's a property you want to stay at.

When it comes to the airline fee credit on this card (and on the Platinum Card from American Express), you cannot use it for airfare or even seat upgrades. Instead, it's officially only good for travel incidentals like checked baggage, in-flight meals and drinks, and internet access, and you have to select one airline to use the credit with. You may have luck using the credit to get reimbursed for gift cards with some airlines, but this isn't officially allowed in the terms and conditions so there are no guarantees.

Annual fees that aren't waived the first year

There are many rewards and travel credit cards that offer big bonuses, ongoing rewards, and travel perks with an annual fee. However, some rewards cards waive their annual fee the first year. And with 12 months to try out a card's benefits without any financial commitment, cards that waive the annual fee the first year can offer great value. For example, the Capital One Venture Rewards Credit Card has a $95 annual fee that's waived the first year, giving you 12 months to get a feel for benefits like 10x miles on hotels booked and paid for via Hotels.com/venture.

Make sure to check whether your card has an annual fee - and whether you have to pay it during year one - before you decide whether to sign up. If you don't, you could be in for an unwelcome surprise.

Stipulations on benefits

Finally, don't forget that some credit card perks come with stipulations. A good example is the Ink Business Preferred Credit Card and other credit cards that offer cell phone insurance as a benefit. With the Chase Ink Preferred and others, this coverage is only good if you pay your cell phone bill with your credit card. If you pay your cell phone bill in person or with debit or a different credit card, you're out of luck.

Travel insurance offered by credit cards works the same way. Sure, you can qualify for perks like trip cancellation/interruption insurance and lost baggage insurance with a premium travel credit card, but you have to pay your common carrier fare with your card to qualify. If you pay with a different form of payment, your travel benefits are worthless.

Curious which credit cards I use the most and why? Here are some of my favorites:

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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