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TikTok is known for viral videos and life hacks galore. But while many of the tips you might find are pretty useful — hello, tortilla trend — there’s plenty of bad advice floating around, especially on a topic near and dear to our hearts at NextAdvisor: personal finance.
Vox dug deep into this phenomenon, and that got us thinking, too. What about credit cards on TikTok? They are a fundamental part of financial life for someone who lives in the United States, and there is a lot of credit card advice on TikTok. The app says it has 100 million active users in the U.S., most under 29 years old, with one-third of its total users being teenagers — so there’s a good chance that young, impressionable minds might get their first exposure to credit cards on TikTok. Is the advice they are getting helpful or harmful?
To determine that, we scoured through TikTok to find some of the most-watched credit card advice out there. Some of it holds up, some of it is misleading, and some of it is pretty mind-boggling. Let’s take a closer look.
There are two fundamental tenets of holding a credit card: Pay your bills on time and in full every month, and never buy things you wouldn’t be able to afford otherwise, unless you absolutely have to in an emergency.
You should also be aware of all the factors that influence your credit score, and of how credit card usage affects it directly, since your credit score determines a lot of your financial life.
That’s why TikTok user @KingCredit is giving you good advice when he explains why you should never cancel a credit card. “You should never close credit card accounts, even if you don’t use them,” he says in the video. If you cancel an account, your payment history and the credit line associated with it will stop counting toward your credit score, thus lowering it altogether.
Having a low credit score can prevent you from getting a car loan on favorable terms or even from getting approved for a mortgage, so it’s important to protect it carefully. (If you no longer want to pay for a credit card that has an annual fee, you can ask the issuer to downgrade it to a no-fee card rather than cancel it outright, which leaves your credit intact.)
Credit scores also affect the type of credit card you can be approved for. For example, you’ll need a high credit score to get approved for premium cards such as The Platinum Card® from American Express, which requires good to excellent credit, or the Chase Sapphire Reserve, for which you’ll need excellent credit.
These cards offer large welcome offers as well. If you spend a certain amount of money in a certain amount of time on that credit card, you’ll get a certain amount of points.
These offers vary from card to card — and they can also vary depending on your web browser, as TikTok user @EliteMoney points out. Next time you go to apply for a card, it could be worth checking the offers on both standard and incognito browsers. You might be able to get a higher sign-up bonus, have more time to hit the minimum spend required to get the bonus points, or both.
You can later use these points to offset the cost of future travel, either by using your card issuer’s travel portal or transferring those points to airline or hotel partners.
A lot of good credit card advice is summed up in a TikTok by user @faaresq, who explains the five things you never want to do with your credit card: max out your card, carry a balance (if possible), buy things you don’t need, close an account with an annual fee, or use your card to pay another credit card’s bills.
Doing the latter can either hurt your credit score or land you in credit card debt. Before you apply for any card, it’s a good idea to familiarize yourself with this advice, and practice overall financial responsibility.
Getting a credit card is a personal decision, and there’s no such thing as the “best” card. It all depends on factors like the perks you’re looking to get out of it, such as points or cash back, and if you’re fine with paying an annual fee.
TikTok user @JoeParys says there are three cards beginners should never get. According to him, that’s store cards, cards that aren’t accepted everywhere, and cards with annual fees. On the first one, store cards, he is right. Store credit cards offer virtually no rewards other than at their own stores and can come with high APRs, often around 20%. To get the most out of your spending, you’ll be much better off getting a cash back or travel credit card that earns points.
Telling beginners not to get a card that isn’t accepted everywhere is poor advice, however. Historically, this has meant American Express cards, as merchants would have to pay higher swipe fees when customers used one of their cards. Not only is this changing, but Amex cards can offer a variety of perks for beginners and advanced credit card users alike.
The beginner-level Amex EveryDay® Credit Card* is a great example of this. You’ll earn two points per dollar spent at U.S. supermarkets (up to $6,000 a year) and 1x points on other purchases (terms apply). The card does not carry an annual fee. It also offers a complimentary ShopRunner membership (enrollment required), where you can get two-day shipping from a variety of top retailers, such as Saks Fifth Avenue and Bloomingdale’s.
There may be some merchants that won’t accept your card, but those will likely be few and far between.
Annual fees are another topic this TikTok user gets wrong. Credit cards that come with annual fees often also come with perks that offset the fees — including lounge access, travel and airline credits and even free nights at hotels. Those travel-focused perks may not be coveted right now that travel is not on most people’s minds, but once it comes back, they can really make your experience better. You’ll typically find these perks on premium travel cards with annual fees around $500.
That doesn’t mean you can’t find valuable perks on beginner-level cards that come with smaller annual fees, though. A popular beginner card is the $95 Chase Sapphire Preferred Card, thanks to its 2x points-earning rate on all dining and travel.
It also comes with up to $60 in Peloton credits on eligible purchases through December 31, 2021, and a free, one-year DashPass membership, which otherwise costs $9.99 per month. With the DashPass membership, which must be activated by December 31, 2021, you’ll get $0 delivery fees on eligible orders, which can otherwise cost at $1.99 per order otherwise. These money-saving perks alone easily offset the cost of the annual fee.
Earning points for free or discounted travel is a big selling point for holding a travel credit card. Most of the time, you’re going to get the most value out of those points by redeeming them for travel, either on airline tickets or hotel stays.
User @RyanDubs posted a viral TikTok back in April in which he recommended using points to erase purchases on credit card bills. While there are a few exceptions to that rule, it’s generally a poor use of points.
For example, the Amex points calculator values 10,000 Membership Rewards points at $60 when used to erase purchases, or $0.006 per point, but at up to $100 when used to book travel. That means your points are worth almost 67% more when used for travel. If you can wait to use them until it’s safe to travel, then you’ll get a lot more value from them.
A notable exception to this is Chase’s Pay Yourself Back feature, which boasts a far better rate than Amex’s. With it, you’ll be able to redeem Chase Ultimate Rewards for purchases at up to 1.5 cents per point, or more than double the Amex rate. It also only includes purchases in certain categories, such as restaurants and grocery stores.
Buying a Louis Vuitton wallet wouldn’t fall into that category.
And, just because you can use miles or points to erase the cost of a purchase doesn’t mean you should. User @Kayla_Cummins, for example, posted a TikTok in which she says that she used her Capital One Venture miles to cover the cost of a designer wallet, thanks to the issuer’s Purchase Eraser tool.
Capital One miles can be used to erase the cost of purchases at a fixed value of 1 cent per point. In general, only travel purchases can be erased, although Capital One also introduced a “Cover Your Purchases” benefit through April 2021, where cardholders can redeem miles for restaurant delivery and takeout, streaming services and wireless telephone services.
In a comment on the video, she says she purchased the Victorine wallet, which retails for $570 (not including tax). At this rate, she used over 57,000 Capital One Venture miles to cover the equivalent price of the wallet by using miles to “erase” the cost of other purchases in the eligible, aforementioned categories. In terms of value for her miles, she would have been better off without the Vuitton wallet; those miles would have been enough for a round-trip domestic flight.
We understand wanting to use points to cover charges when necessary, but in cases like this, you’ll get so much more bang for your buck by using those points for future travel instead.
Much of the allure surrounding earning credit card points has to do with redeeming those points for travel, including in luxury that would be horrendously expensive if paid in cash.
However, there’s a right way to do it. It’s not what TikTok user @jt.franco suggests you do, which is known as credit card churning. In the video, he suggests referring yourself to various premium travel credit cards so that you’ll earn even more bonus points by “signing up” for another card, and then canceling them once you earn all the points. Many card issuers have taken steps to ban this practice, instead only allowing cardholders to refer other people.
The video also fails to mention the high annual fees associated with all of these cards, as well as the minimum spending you’ll have to do to gain the sign-up bonus or welcome offer. This quickly adds up to many thousands of dollars. While these bonuses are great if you were already planning to spend the money anyway, and paying off the resulting bills, we strongly recommend against getting a credit card to get the points by buying things you can’t afford.
As mentioned previously, canceling credit cards can also damage your credit score, leading to potential hurdles when trying to buy a car or house, for example.
The points you’ll earn on your credit card are valuable, and you’ll get the most out of them by using them on travel — whether using a travel portal or transferring them to airlines or hotels. As we said earlier, you can also use them to “pay yourself back,” although we only recommend doing so for large and/or essential purchases.
Another gray area in the credit card world is called “manufactured spending.” This is when you purchase gift cards using a new credit card to get the welcome offer or sign-up bonus, and essentially pay yourself back using those gift cards. By doing so, you’re getting all of the bonus points without actually spending any money.
TikTok user @rhercules_ explained it in a video, but didn’t talk about the risks associated with manufactured spending. For example, if your card’s issuer finds out about manufactured spending, it can revoke all of your bonus points or close your account altogether.
It’s also important to be responsible with your credit card, pay your bills on time every month, and not overspend just to meet the terms of a welcome bonus.
Last but certainly not least: Advice from user @Floackofades directed at credit card holders who are 10 years old. While we endorse his message to pay your bills off in full so you don’t accumulate debt, we strongly disagree with 10-year-olds having credit cards. We strongly support financial literacy from a young age, but talking to preteens on TikTok as if they could manage their own credit card accounts is not conducive to healthy personal finance decisions.
Give it a few years, and we’ll be here with age-appropriate credit card advice.
Credit card advice is a dime a dozen on TikTok, and if you’re interested in learning more about how to have one responsibly, it can be a great resource. That said, take everything that you see with a grain of salt.
As a rule of thumb, there is no substitute for doing your research from reputable sources. A TikTok video can be a great way to learn about something referring to credit cards, but it should be a gateway to learning more, not your sole source of information.
*All information about the Amex EveryDay Credit Card has been collected independently by NextAdvisor and has not been reviewed by the issuer.