Ask the Readers: How Do I Pick the Best Credit Card?
Published on - January 29th, 2010 (Modified on - March 26th, 2013) (by J.D. Roth) Sometimes I get questions that are out of my league. In the past, I’ve just sort of ignored these, but I’d like to try to answer more of them. To do this, I’m going to start asking for tips from some of the experts I’ve met through GRS.
For example, my good friend Mac from Get Fit Slowly (where I may eventually write again some day), came to me this week with a question about credit cards. In fact, it’s a question I get surprisingly often: He wants to know how to find the best credit card for his needs. To find out, I tapped a couple of the experts in my professional network.
First, let’s look at Mac’s situation:
My wife and I are long-time users of the Alaska Airlines Visa Signature® Card. We use this card to earn frequent-flier miles, and since we primarily fly up and down the West Coast to visit family with our children, Alaska seemed like the way to go. The card also has a few other perks:
- One frequent-flier mile for every dollar spent.
- Three frequent-flier miles for every dollar spent on alaska airline tickets and vacation packages.
- One companion fare each year (buy one full-price ticket, get a second from $110).
I have no idea what the interest rate is because we pay off the card every month without fail. Neither of us likes to carry cash, so we basically use this card for everything we can. (We even use it for small purchases like morning coffees and video rentals.)
Recently, I’ve been unhappy with some changes they’ve made to the card benefits. So, I’m looking into switching cards and was wondering if you could offer some advice. I’m looking for a rewards based card for folks who pay off their balance each month. Our rewards would be used for travel, so I’d like the best travel rewards primarily, but I’m not opposed to other rewards programs such as merchandise rewards, etc.
A few of the cards I’ve looked at but haven’t pulled the trigger on are the The Platinum Card from American Express and the Chase Sapphire Card. I’m not sure which of these to choose from or if there are better options out there. What are your thoughts?
My thoughts are that looking at credit card offers makes my mind numb. I’d rather go to the dentist!
As most of you know, I carry just one credit card (a Capital One Cash Rewards card), and sometimes I think I should get rid of even that. But I really do like getting one percent cash back on the things I buy, so I’ve kept the card. (And I use it — a lot.)
If I were to start looking for a new card, I’d start by checking two sites: Index Credit Cards and Card Ratings. There are other credit-card sites out there, but these are the two I know best. Both have huge lists of cards that you can sort through to find the one that fits your needs.
In fact, because I know so little about this subject, I contacted both sites to ask if they could give feedback on Mac’s predicament. Here’s what Curtis Arnold from Card Ratings had to say:
Many of our readers share Mac’s frustration. I personally have never been a big fan of airline reward cards, but particularly in this tough credit environment; my personal mantra is that cash is king.
I would challenge Mac to take a look at our recent press release regarding the best credit cards of 2009. There are a couple of cash rebate credit cards that give you 2% cash back on every purchase and several cards that give you 5% back on certain types of purchase. If you do the math and compare the rebate percentage of these cards with your current one, I would be shocked if your current card even comes close.
Adam from Index Credit Cards suggested two options, depending on how important the travel rewards are to Mac and his wife:
First is the Citi PremierPass Card, which pays you points on purchases as well as on actual travel miles flown. There’s a no-annual-fee version of this card as well as a card that charges $75 annually but offers a more generous rewards package. Which you choose would obviously depend on how often you use your card and also how often you would buy airline tickets with it. You can use the points from this card for travel across airlines or for other rewards from Citi’s ThankYou rewards program.
Second is Blue Cash Everyday from American Express. Based on Mac’s description of his card use habits, I’m assuming he puts a lot of expenses on his card every year. This card is a cash rebate card where cash back adds up quickly on everyday purchases. You can earn 3% cash back at supermarkets, 2% at gas stations and department stores and 1% on all other eligible purchases. There are no spend minimum’s no enrollments and no rotating categories.
See why I went out to the experts? This is all gibberish to me. Maybe I’m hurting myself with my ignorance, but I’m content with my Capital One Cash Rewards card. It gives me one percent cash back on everything I buy. That’s it. No muss, no fuss. The whole thought of having to track travel miles makes me tense! (Seriously.)
Anyhow, what are your thoughts? Where do you go to get info on current credit card offers? What should Mac look for in a card? Can you recommend any options for a family that doesn’t carry a balance, but uses their card for most of the purchases they make?
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No overall information here, but if you are a military veteran (with a good credit history) you can get an interest rate of below 7% with USAA. We’ve had our card for the past six years and our rate has never changed.
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The best credit card is no credit card at all. Live debt free, and don’t buy things you can’t afford. If you have to have a credit card (which no one ever does) then be sure to pay it off early to avoid interest charges. Also, try a checking account with a cash balance of $3k and a debit card instead. Just pay yourself back instead of paying anyone interest. I’ve been debt free (aside from my mortgage) for 3 years and counting – you can too.
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My husband and I use the same credit card. I have him added as an authorized user. We’ve looked at applying for a new one jointly so he has a credit card on his report:
http://ultimatemoneyblog.com/do-we-need-another-credit-card
We use the National City Everyday Rewards. It works well for us, and we get $100 check at least once a year!
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flyertalk.com has a section discussing various credit card programs. I have found them to be very knowledgeable.
http://www.flyertalk.com/forum/credit-card-programs-partners-390/
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My wife and I have been super happy with Schwab’s 2% cash back visa. The rewards go to a Schwab brokerage (which you can transfer directly to a Schwab IRA), where you can buy their low-cost, no commission ETFs.
They’ve got a pretty good set-up in my opinion.
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I use my Discover More card for everything. It’s probably not the absolute best card for me, but I’ve had it for years and I really like it. They have certain categories that can earn 5% cash back and they change the categories several times a year, which is good because the limit for the categories is usually around $800. I like that they let you take the cash back as a gift card and they even increase the value of the gift card. For example, I recently used $40 of my cash back to get a $50 AE gift card.
I don’t think this card is good for anyone who spends a lot and is really interested in a good reward program. It works for me because I am young and broke and don’t have a lot of moeny to spend. So whatever I do spend goes on the card and gets paid off every month and then every couple of months I get to go out to eat or get some new clothes for free.
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There has been an interesting series on credit cards, debit cards, reward cards on the NYT. I found it interesting that reward cards cost the retailer much more in credit card processing fees than regular credit cards. The fees hurt small retailers and there is a further debate as to whether its ethical to use reward cards since poorer people end up subsidizing the rewards. This is the web site to check out http://truecostofcredit.com/
I think the retailer sob story over processing fees is overblown, especially since they discount the cost of handling and processing cash and they ignore the fact that people spend more when using credit (except for smart GRS readers). But I think the fact that we all pay more for goods and services to cover credit card costs is an interesting topic and whether there ought to be a system like some European countries where the credit processing costs are broken out as a separate line item and the customer who uses credit pays it but those who use cash do not.
We don’t use credit cards for day to day purposes, but our one credit card (which we use for travel) is Capital One.
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How could this question be even answered if you do not have the following information?
1. How much do they spend on the card?
2. Are they frequent flyers? If so, which airlines?
3. How do they make use of their frequent flyer miles? just plain domestic flights, upgrades, first class tickets?
4. Where do they travel and which airlines do they use? Never assume it is always Alaska Airlines.
Without even asking the reader this question, how can any suggestions be made?
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@Sam,
I noticed that in some areas of the country, places do charge more if you use credit. My brother lives in TX and he said the if he uses his debit card as credit, his bank charges him an extra dollar. I also had a friend who visited Atlanta and he said things would cost a little extra if he used his credit card. In my town, there are some gas stations that charge more for using a card.
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Just like local banks and credit unions tend to have awesome deals on checking accounts, they can also have good deals on credit cards.
My local credit union offers a no-other-frills, fixed-rate Visa or Mastercard with 1% cash back up to $10,000 in a full calendar year and 2% beyond that. It has all the basic protections you’d expect with any Visa or Mastercard, but also nothing complicated or shady. Every January, the cash back just automatically shows up in your savings account.
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Surprised no one mentioned this already…but http://www.billshrink.com is great. You can compare cards, even to your current card, and customize the search by reward type you prefer (cash, points, miles, etc.) If you’re disciplined enough to use your card for just the stuff you need and can afford, and pay it off each month you can really save some cash.
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The best card I have found is offered by Pentagon Federal Credit Union, Platinum Cashback Rewards. You receive 5% cash back on gas purchased at the pump, 2% on supermarket, and 1.25% on everything else. The best part is the cash back is applied to your statement EACH MONTH. No waiting until the end of the year to receive a check. The 5% on gas can add up to substantial savings for some folks. I believe there is a $30 one time fee to join the credit union if you are non-military.
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In response to post #2.
Why does one assume that if a credit card is used one must be buying something that cannot be afforded? I use the ynab budgeting philosophy so the only money that I spend on my credit cards is money that I have earned last month and has been allocated in my virtual envelopes. Then the full balance of my credit cards are automatically deducted by the bank on the due date. This makes it very difficult to spend more than I can afford. I get float on my bank acct and 2%-5% cash back.
I don’t use debit cards because of their lack of security and possible unfettered access to my bank account.
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I am a big fan of the Costco American Express (3% back on gas, 3% back on restaurants, 2% back on travel, 1% back on everything else). However, some retailers don’t accept American Express (mostly do to the high transaction costs) and focusing on the small businesses that feel this more I’d like to get a Visa. I’m looking into the PenFed (5% gas, 2% groceries, 1.25% everything else but it requires a federal job/military and I have neither but you can still sign up for the National Military Family Association and be eligible) and the Schwab 2% cash back looks great for focusing on investing and not worrying which card to use where. Hope that helps! That’s my 2 cents…
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I second Jimm’s http://www.billshrink.com…..everyone should check it out for cards.
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I 2nd the recommendation for a Charles Schwab Invest First. Every month you get a flat 2% back for all of your purchases. There are no annual fees for the card.
You are required to open up a free on-line Charles Schwab brokerage account where the money is instantly sent to every month. I visit my Charles Schwab Brokerage Account once per month and just transfer my monthly 2% rebate cash to my checking account.
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My husband and I are going through this same dilemma. I want to get rid of the cc he wants to have one on hand. The perks are just to pull you in. One accidental late payment and the cc company has you paying for its perk!
We finally decided to get a cc through a local bank that uses local money to finance the cc. It doesn’t have many perks BUT I’m supporting a local business and if I make a late payment I don’t sweat it- the bank won’t charge me a late fee if I’m one day late!
Go to your community bank and ask if they us local money or are they backed by a larger bank.
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I have used the same credit card for about 10 years now. No real frills just cash back at the end of the year. Cash can be used for anything I want at anytime so it has always been my best option.
Also, the credit card is issued through USAA which offers their own online retail shopping portal where I can get extra discounts at the stores I frequent online. They do this by giving some of the “alliance” money they collect from the retailer back to the buyer. An extra 1% – 3% is always a nice thing for doing no extra work.
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I find that Mint.com puts together a lot of good credit card offers in ways easy for people to understand.
That being said, they also bombard you with ads that you have to be wary of.
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PenFed Visa Platinum Rewards Card – 5% back on gas – no limits and rewards are taken out of your next statement
Citi Forward for 5% back on restaurants, anything on Amazon.com, and any kind of media purchases, have to use Thank You system
Schwab Bank Invest First CC – 2% cash back linked to brokerage account which is linked to any checking account to redeem, also no foreign exchange fees
For simplicity use PenFed for gas and Schwab for everything else.
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I found this site when I was looking for Miles sign-up bonuses:
http://www.moneybluebook.com/airline-credit-card-promotions-that-offer-free-frequent-flyer-miles/
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I gave up my frequent flier card. the value of the flight isn’t near the rewards I was getting.
I’ve been using BoA UPromise gas and groceries. I get 5% back on gas and groceries, and 1% back on everything else. It gets funneled into a UPromise account that can be used for a 529 or to pay off SallieMae loans–you can also just get a check. Combined with the additional cash back for online shopping (ranging from 1-10% back at various stores) I earn about $400 extra a year. This gets funneled as extra payments to my student loans. If I die, it will go to my nephew.
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I would also recommend the Pentagon FCU Platinum Rewards card. We have it and pay it off monthly, but even at our low level of use (gas and a few incidentals) we generally receive between $20 and $30 back each month automatically credited to the account.
Also, as a member, you can currently get new or used car loans at 3.99%. I’ve also found their customer service to be exceptional, easy to get a live person who knows what they’re talking about.
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I’ve been very happy with the Schwab InvestFirst card. 2% back on everything, paid every month. I moved my checking to Schwab a while ago for their no-ATM fees (I travel a lot), and transferring the rewards into my checking takes approximately 30 seconds once a month.
When looking, I googled around for “credit card rewards” and spent a bit of time on bankrate.com
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@Mr Credit Card:
We use our card for everything we can. Most of our household bills, all of our groceries, gas, restaurants, entertainment, etc. We charge about $3000/month but that number goes up if we’ve got a trip planned etc.
We aren’t “frequent fliers.” But we do fly up and down the west coast several times per year–and maybe to the east coast once per year. The main reason we picked alaska is because they have the best west coast flight options other than southwest. our miles are generally spent on domestic, coach class tickets. We rarely purchase upgrades and almost always fly alaska because they let you combine miles and money to reduce the fairs of their flights. Lately, though, we’ve been able to get better airfares on Jetblue and so Alaska has started to lose some of its luster.
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I use a money-back card which has no annual fee. I don’t carry a balance from month to month, so the interest rate is essentially irrelevant to me. The money bonus is paid annually. Would be nice to get it monthly, but on the other hand, since it comes around year-end it helps with gift-buying.
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Mike @ 12 and Jen @ 21 — I agree!!!
I love my PenFed card — I actually did NOT have to pay the fee — I just filled out the application and chose the option saying I had a roomate that was in the military (true). Then a $5 in my checking and applied for the card. AMAZING rewards — it is put right back on the statement. I got like $50 last month just spending like I normally do. Awesome!
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I use Mint.com, which has a nice credit card tool that looks at your current credit card spending (or numbers you put in, if you don’t currently have a credit card) and finds cards that will save you money.
I ran some numbers myself and found that the Amazon.com Visa card was best for the way I spend. However, I didn’t qualify when I applied, because I did not already have a credit card. So I got a 1% cash back card from my credit union — just a flat 1% on everything. Better than nothing for sure, and credit union means it has lower rates.
I have never spent money I didn’t have in the past — debit card only — and don’t intend to start now. The card is just a tool to get the 1% cash back, and to get some consumer protection in cases where I might need it.
ETA: I should probably note how I ran my numbers. I made a spreadsheet of several rewards cards I found via Mint.com, including their annual fees, rewards categories and percentages/points (converting the points into cash back % — I looked through the rewards to figure out how many points you needed to buy a $50 gift card or similar), and any bonuses.
Then I went through my spending for the past 2 years, and found my average monthly spending in all the rewards categories. I then computed how much cash I would have gotten back over 1 year and 2 years, if I’d used each card for that average monthly spending. The card with the highest cash back won. (I also checked some airlines rewards cards, and found out how many free flights I could have gotten, as well as their approximate cash value. I found that cash back cards tended to be better. And the Amazon card offers flight rewards at a good points rate, so I have that option too.)
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The two best credit cards I have are a Costco AmEx and a Discover card. Both give great points, although I have no idea what the interest rate is – I pay them monthly. I’ll never depart with the Discover card cause its my longest credit card history. But my point here is that not every merchant takes those two cards – so I have to carry a Visa or Mastercard with it. Frankly that sucks – I hate having a fat wallet (unless its fat with cash). So if you are going to carry only one card – make it a Visa or Mastercard.
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I do all my banking at Schwab, and they have a card with unlimited 2% cash back on all purchases that is automatically deposited directly into your account at the end of each month. It’s a great return and it’s nice not having to screw around with converting “points” to rewards all the time.
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Amex Starwood Card wins the Freddie award every year. If you travel, it is an outstanding card because it not only gives you Starwood Points, but you can convert those points on a 1.25 mile-1 point ratio to just about any airline.
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I use the Capital One Platinum Mastercard, it has no annual fee and double miles for every dollar spend. You can use the rewards on just about anything. I get a free trip just about every year if go continental, or every other year if I want to go abroad. Also, though not monetary, I get a kick out of the custom picture I put on it.
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Mr. Arnold from Cardratings said it best.
Cash is King.
He is right. Which is a bit ironic. Actually those three words could have been the entire post.
I side with commenter #2. CC are junk.
Most people are staring right at the tree. Take a step back and clear your mind.
Using a credit card is borrowing money. Plain and simple. Sometimes you pay interest, sometimes you don’t. But it is still borrowing money. It is a loan.
Why would anyone get a loan for groceries. For a gallon of milk. For fuel. For a hamburger.
People focus on the convienence, the rewards, the security, etc. That is by design. The rewards are there to distract you from the foundation of the card. Its purpose.
It is a loan. That is what banks do. They are not in the reward business. Or the convienence business. They are in the loan business.
I have said it here before. There is simply no reason when factoring risk to ever use a credit card except for credit.
And the reason that it is assumed that most people who use a credit card can’t afford what they are borrowing, i mean buying, is because that is the truth. A majority of cardholders carry a balance. Most people don’t save, buy what they can’t afford, go into debt to do it. Most people are paycheck to paychek. They live on the edge.
They work at jobs they don’t like to buy things they don’t need with money they don’t have to impress people they don’t know.
It really is unbelieveably amazing.
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Troy,
My wife and I have had the same credit card for 10 years. We put everything on it, pay it off every month, and earned extra rewards for her charging clients on the card, us paying the balance, and them reimbursing us later. A trips to Ireland, PEI, and Peru, an electronic record of each purchase cent, and not having to keep up with cash make a CC a pretty good deal for the disciplined.
Simple rule…if you can’t buy it outright, don’t put it on the card. Ever.
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First, good for JD not posting links which get him a kickback for promoting specific cards – that’s common in financial blogs and this non-self serving post is really appreciated.
I posted about this recently on my mostly non-financial blog:
http://unclezeb.blogspot.com/2009/12/best-cash-back-credit-card-offers-and.html
Here’s the relevant portion:
Some people should not have any credit cards at all – reflect on your financial situation personal spending issues before continuing.
If you don’t carry a balance on your credit card and can avoid the temptation to overspend because you have a credit card, you should take advantage of a cash back credit card. 1% back is standard, you can probably do better with a card on the list below. My list doesn’t account interest rates (which don’t matter because we’re not carrying a balance, right?) or the quality of customer service or anything other nationally available cash back cards that for general purpose spending.
It’s worth repeating – the first step is not to carry a balance. Any cash back (or miles or points) are completely negated by carrying a balance because the interest rates are more than usually absurd with cash back and other rewards cards. If you carry a balance, ignore my list and instead check out Get Rich Slowly instead.
Cash back is generally better than miles or points – some disagree, but they’re wrong.
So, which card or cards should you get? It depends. Some cards offer more rewards (American Express and Discover) because they charge merchants higher fees. But, these cards are accepted by fewer merchants. Others are more widely accepted (Visa and MasterCard) because they charge merchants lower fees; however, the result is that they usually offer lower rewards.
A common strategy is to carry more than one card: for example, your Costco Business Card is from American Express, it offers 4% back on gas and 3% on dining out/travel. Your Charles Schwab Card is from Visa, it’s accepted in more places but offers a lower reward. So, use the AmEx Costco card for gas and restaurants which take it and the Charles Schwab Card everywhere else. But don’t get carried away: a card for every type of merchant or even for every individual merchant reaches a point of diminishing returns very quickly! My suggestion: more than 3 credit cards in your wallet is probably a waste of time.
Applying for credit cards can be bad for your credit score. Applications result in a “hard pull”. Too many (or any) hard pulls will lower your credit score. Curious for an estimate of your credit score? Check out CreditKarma.com
(A) The Best Cash Back Credit Cards:
Charles Schwab – Visa
Excellent all around and widely accepted card, highly recommended, some initial setup time required.
2% cash back on everything, BUT you need to have a Schwab Brokerage Account which is only free if you have a Schwab Checking Account which is only free if you sign up for “e-correspondence” (no snail mail).
Pentagon Federal Visa
1.25% on everything 5% on gas
Need to join an organization to get the card – costs about $15. Excellent all around and widely accepted card especially if you buy lots of gas or cannot qualify for the Charles Schwab card above.
Citi FORWARD – Visa
5 “ThankYou” points (about 3% cash) on books, movies, music and restaurants, 1% points on everything else.
Points are not the same as cash, here 160 points can be turned in for $1 of cash reward. (There are some extra points you can earn when you first sign up for the card, pay on time, or agree to paperless statements.
The Citi MTVU card is a similar alternative to the Forward card, but it is targeted at college students and offers a higher interest rate (but you’re not carrying a balance, right!?)
Both Forward and MTVU cards offer 100 points for $1 in rewards applied to student loan, so that’s better than getting cash back (which takes 100 points for $0.625).
TrueEarnings Business Card from Costco – American Express
4% cash back on gas and restaurant purchases,
3% back on restaurants,
2% back for travel
1% everywhere else (including Costco – where you cannot use any other card)
Free with Costco membership.
They send a check, no points or other accounts or other bullshit.
Many people say they get the business card by simply using their name as their business name, thus getting better rewards from the same card.
Runners up:
(1) Your current card:
If you currently have a card that seems better, it may not be recommended above because it may not be available anymore (e.g., the OLD Chase Freedom card which offered 3% on your top 3 spending categories and have an extra $50 back when you reached $200 in rewards. There is still a Chase Freedom card, but it now has “rotating” 3% categories, no $50 bonus, and an annual fee for many people).
(2) AmEx Blue – 1% back on everything until you spend $6,500 … then it’s 5% back on everything. Annual fee. This is a deal for some people, but not for most. Also, it’s an AmEx card so it’s not accepted in many places, which makes it harder to get to that $6,500.
(3) Fidelity Rewards American Express [fatwallet discussion and application link]
2% cash back everywhere – you can put the cash back into any Fidelity account including non-retirement accounts like a Fidelity brokerage account, MySmartCash account, etc.
Serviced by through FIA Card Services (BoA – so applying for it it might affect your other B0A or FIA credit cards like the Charles Schwab card mentioned above).
NOT as good as the Schwab Card above because it’s not as widely accepted, but another option.
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We have the Citicard that gives 1% cash back. If you’re doing international travel, the capital one card would be better because it has a 0% foreign transaction fee (citicards is 3%). Sadly Capital One closed my card on me for inaction rather than switching it to a rewards card.
The Schwab card sounds like a great deal. We’re too lazy to add another card, but if citicard ever hassles us, that’s what we would add. I think I have a Schwab account somewhere…
Wells Fargo keeps trying to get us to buy a card that gives 1% back on our mortgage, which would be a neat idea for some people. Personally I prefer occasional cash.
And no, we don’t have any trouble with credit card use. Not everybody does. Purchases are planned in advance. Cash goes through my hands like water, but getting out the credit card is a pain. Thank goodness vending machines don’t take credit card.
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“The perfect is the enemy of the good.” A smart man told me that. In other words, don’t spend too much time looking for the BEST card when you can find one with no annual fee, online bill pay, and cash back rewards. If you always pay in full, all the other legal jargon in the card agreement is moot.
I have an amazon.com card that gets 1 point on all purchases, 2 points on gas and dining out and 3 points on amazon.com purchases. Every 5000 points you can redeem it for a $50 check, which is as good as money! There are no blackout dates, restrictions, or rules when you have money. The answer is simple cashback trumps points everytime.
My dad always talks good about his discover card, 1% cash back, plus 5% cash back on certain purchases, which differ each quarter. I like consistency, so I stay with my amazon card.
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Credit cards, especially American Express, offer some very useful benefits – American Express extends warranties, will repair or replace certain purchases if damaged, lost, or stolen within the first 90 days of ownership, will accept returns within a certain period of time if merchants won’t, offers rental car insurance, has great customer service, and is more likely to side with customers in a dispute. For those reasons (read: the peace of mind), it’s worth using an Amex card.
Charles Schwab also has great benefits – I love their unlimited ATM fee refunds (international even) for checking. Their Visa card is simple – unlimited 2% cash back, no foreign transaction fees or anything. They also have excellent customer service.
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@2 & @31:
Not everyone is comfortable carrying cash. Things happen.
Example: At Christmastime a family member and their co-worker has their wallets stolen from their workplace: the family member was carrying $150 in cash, gone, the co-worker’s credit card was immediately used to buy $800 in electronics – all taken care of by their credit card company.
I think GRS readers have proven to be a very introspective and responsible lot, not the kind of people you are deriding.
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I had Visa, Mastercard & Diner’s before. Honestly, I wouldn’t recommend it because most people have the tendency to overspend. In my case, I woke up one morning in deep credit card MESS, in capital letters! I had to learn debt elimination techniques to get myself out of that quick sand of a situation. Thank God! I came out alive… LoL
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We use a Discover More card for almost everything…it gives us 1% cash back on everything and 5% cash back on certain categories that change every three months.
We also use a Discover Open Road card to get 5% cash back on gas and car expenses like oil changes.
We use Discover cash back to buy discounted gift cards. We usually use $20 to buy a $25 Bath and Body Works gift card since we like their hand soap. We also use $45 to buy $50 Starbucks gift cards…I then take the $50 gift card to Starbucks and either buy five $10 cards or two $25 cards instead. Those make great gifts!
Finally, we have a Worldpoints Mastercard we use anywhere that doesn’t accept Discover…it gives us points you can trade in for airline miles or cash. We use it to get 1% cash back.
I’ve also heard awesome things about the Schwab Visa and the Penfed Visa that are mentioned above. I’ve been happy with Discover, but if they change, I would look into those.
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@ mac (#24)
I don’t know how you can claim that you aren’t frequent fliers, when by most people’s standards, one trip per year is a lot. I’m lucky to fly once every five years on personal travel.
On a more serious note… How far are your trips up and down the coast? Clear to Alaska or just within California to Washington? If the later, maybe it would be a good idea to look at one of the cards with good cash rewards for gas purchases and start driving – the west coast has some beautiful scenery!
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lol i like how there were promo codes attached to most of those links… sneaky sneaky
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My wife and I use the Costco AmEx card as many others here have said. We use it only for Costco trips, gas, and monthly bills. Unfortunately, not all merchants accept AmEx so we carry a Visa, too. The Visa, however, stays in the safe until we need. Out of site = out of mind.
We budget a biweekly cash “allowance” for both us that covers incidentals and luxuries (like coffee) and use our check card for everything else.
I’m not a huge fan of credit, but I like having my bills automated on a card which makes paying them quite easy. Some would argue that this can be done with a check card, too. Yes, that’s true; however, I enjoy getting the rebate check from Costco each year which usually equals one monthly trip to the warehouse.
Like many things in life, credit can be a great a tool; it can also be a great temptation.
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Mac, will you explain what changes to the Alaska card have you looking to move? I also have that card so your post has me a bit nervous — did I miss something?
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The Charles Schwab Visa (2% back on everything deposited each month into a Schwab account) has been outstanding. Also, no junk foreign-transaction fee if you buy things in foreign currency: Schwab and Capital One are the only folks who don’t charge 1%-5% for this.
The Schwab Visa has been pulled from active marketing, so it’s hard to find a link to apply:
https://www.schwab.com/public/schwab/home/brokerage_accounts?cmsid=CC-BROKERAGE-ACCOUNT
Here’s more specific information on the Schwab Visa if you’re interested:
http://www.fatwallet.com/forums/finance/883571/
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PenFed has the best rewards card out there bar none.
Of course, they are an extremely conservative credit union. Even if you qualify for the card you may only have an initial limit of a few thousand dollars.
If your credit is decent then I don’t see any reason to even think about any other card.
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Schwab Invest First 2% Cashback Reward Signature Visa
Penfed Platinum Visa (5% gas, 2% grocery, 1% everything, occasionally they have other deals from particular vendors or types of purchases ex. over the summer it was 5% on airline tickets and then there was 5% on school supplies)
Chase Perfectcard Mastercard (3% cashback on gas, 1% on everything, plus another cashback rewards site that varies by vendor)
Driver Select Mastercard (1 point for every mile one drives, great if you drive a lot)
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I’m not sure if the Chase Freedom card, which used to give 3% back on the top 3 categories but was since made much less attractive, is still available but I have two and always used one for gas, grocery, and drugstore purchases, while the other was used for everything else (giving me 3% back on my top SIX categories).
Since they crippled the rewards program, one card went to 1% back on everything plus 3% back on rotating categories, while the other one went to 1% back on everything, an additional 2% (3% total) back on gas, groceries, and fast food (I wish it were drugstores instead), plus an additional 2% back on rotating categories, so I just use that one for everything. I never pay attention to the rotating categories; if I get a bonus, then great, I know I’m doing better than a straight 1%-back card. (I pay no fees for either card.)
Oh, and my wife uses our Discover Open Road card for gas, which is 5% back, but only on the first $100 per month, which she usually spends on her own, so I just take the 2% from Chase. Once that $100 limit is reached (and for all other non-gas or auto-service purchases), the cash back is only 0.25% so the Chase rebate is 8 times bigger!
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In looking through a variety of different travel blogs and forums (including flyertalk.com) I think a general consensus of the best all around travel card is the Starwood American Express. It is a one to one conversion for Alaska Airlines Mileage program and you get a 5,000 bonus when you transfer 20,000 points. It also has a fairly low yearly fee at $45. If you ever move you can simply transfer the points to a different airline.
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