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by David Chang, ChFC®, CLU® | Published on Nov. 15, 2022
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If you're looking for bad credit card advice, look no further than TikTok.
Check out our picks for the best credit cards
TikTok has become a go-to source for all kinds of advice, from fashion tips to relationship guidance. But when it comes to financial advice, you should tread carefully. We’ve seen a lot of bad credit card advice floating around on TikTok, and we’re here to set the record straight. There’s no shortage of terrible tips out there when it comes to using credit cards, and TikTok is a hotbed for it.
TikTok user @jt.franco recommends “credit card churning,” where you refer yourself to different premium travel credit cards to earn even more bonus points. Then after you earn those points, he says, you cancel your card and start the process over again. He doesn’t mention that credit card companies frown on this practice and have taken steps to ban it.
Plus, every time you open up a credit card or close an account, it hurts your credit score. To qualify for the bonus points, you typically have to spend a minimum amount within a certain period. You also have to pay the steep annual fee that comes with these premium cards. If you were going to spend the money anyway, the bonuses are icing on the cake. But you don’t want to open up a credit card, spend money you don’t have, and take on additional debt just to get the points.
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TikTok user @JoeParys says there are three types of credit cards you shouldn’t get. The first are store cards, the second are cards that aren’t accepted everywhere, and the third are cards with annual fees. If you have a problem with credit cards and don’t pay your balance every month, then he’s right: You definitely want to avoid store credit cards, since they tend to have the highest interest rates.
But if you pay off your credit card bills every month, then some store cards can give you great deals, especially if you shop there quite a bit. I have a Best Buy Credit Card, and for every dollar I spend on it, I get Best Buy Rewards certificates. I was able to accumulate enough rewards to get a free TV when it was time for an upgrade. I have a clothing store card that gives me generous points, and I haven’t had to pay for a new wardrobe the past couple of years.
Even his advice on not getting a card that is not accepted everywhere, such as an American Express or Discover Card, may not be the right advice. American Express is known for its perks and concierge services. If you have bad or no credit, Discover it® Secured Credit Card can help you build up your score and credit history. Even cards that have an annual fee can be beneficial. I have a United MileagePlus card, and although it has an annual fee, the benefits I get (such as free lounge access and free premier status with certain hotels and rental car companies) outweigh what I pay. The bottom line is that you should do your own research to find out what works best for your personal situation. As long as you are a disciplined spender and pay your cards off each month, you should look for a card that gives you the best benefits based on your needs.
In one of his videos, TikTok user @zacharyburrabel lists three specific credit cards you should say no to, and then recommends three others you should say yes to.
While he notes in the comments that the cards he recommends may have better rewards and terms than others, the key is to take advice like this with a grain of salt. You want to do your own research and not follow anyone blindly. Remember, TikTok influencers want as many followers and views as possible and have to capture your attention in a few seconds.
Just type “credit cards” in the TikTok search bar and you will see hundreds of videos on the best cards you should get. Some offer decent advice, while others are clearly steering to their outside site so you can click on the credit card’s affiliate link. TikTok does not allow users to add affiliate links to their videos. However, influencers can promote their brands and products on their TikTok profile.
This is how they make money. A user will recommend a credit card to their followers through their site. When you click on the link and get the card, then the user will get a commission on the sale. Some credit card companies pay a higher commission amount, so it pays for users to push and recommend those cards over others. Before you start clicking on a bunch of links and opening credit cards, be sure to compare credit cards to find one that is right for you.
TikTok videos can be up to three minutes long. It can be difficult to condense complex financial concepts in that length of time. It is important for viewers to not take everything at face value, and do their own research. Also, understand that the number of views on a video doesn’t necessarily reflect its accuracy. It just means these videos are more appealing to viewers. But viewers need to double-check the advice offered and understand the source of the information before using it to make financial decisions.
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David S. Chang, ChFC®, CLU® is an award-winning entrepreneur and financial planner with over two decades of experience in the personal finance space. He is a graduate of West Point and a Lieutenant Colonel in the Army National Guard. He has an MBA from the UCLA Anderson School of Management.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
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