How do you choose a credit card?
November 6, 2010 9:55 AM
How do you choose a credit card? I've been using a Visa through my credit union for the last 8 years, but it has a $1000 limit and I've been thinking I should have another card anyways. I have good credit, I pay my balance off completely every month, and I don't usually put a lot of money on it. So I started looking - there are literally thousands, and every single one I look at seems like some kind of scam. I've read this, but it seems so arbitrary - is there any systematic way to approach it, or do you just have to close your eyes and start pointing?
I've been happy with my Discover card, which gives me 5% cash back on gas & automotive purchases, 1% back on everything else, and 2% to 3% on various categories throughout the year, though you have to opt in to those. For instance, in the statement that came in the mail today, I was informed that I get 2% back on any online shopping between November 15 and December 31 (up to $1000). They've got great customer service, a fairly low rate (12% for me), and they've raised my credit limit a number of times, if that's something that appeals to you. I'd recommend them.
posted by andrewcilento at 10:13 AM on November 6, 2010
posted by andrewcilento at 10:13 AM on November 6, 2010
Google has a surprisingly good filtering tool to help you narrow the field, although I think it sticks to national cards.
posted by msbutah at 10:30 AM on November 6, 2010
posted by msbutah at 10:30 AM on November 6, 2010
I've been very happy with my discover card, which offers 5% cashback on rotating opt-in categories throughout the year and 1% back on everything. They seem to raise my credit limit every time I breathe. Seriously. I also have a Capital One Visa Signature card which I've been happy with, and gotten several free plane tickets out of. I'm not entirely sure what about the cards seems scammy--you need to be very familiar with your credit card terms but other than my citibank card which gradually lowered my rewards percentage from 5% down to almost nothing, there really hasn't been anything unexpected with my credit card experiences.
If you get a discover, definitely keep the Visa, though, because random places occasionally don't take it.
posted by PhoBWanKenobi at 10:31 AM on November 6, 2010
If you get a discover, definitely keep the Visa, though, because random places occasionally don't take it.
posted by PhoBWanKenobi at 10:31 AM on November 6, 2010
I think part of it is that I trust my not-for-profit credit union not to screw me, but I don't trust a very large for-profit financial institution not to screw me. Maybe I'm just being paranoid.
posted by devilsbrigade at 10:35 AM on November 6, 2010
posted by devilsbrigade at 10:35 AM on November 6, 2010
My favorite cards are the market (though I don't have them) are the Fedelity investment and IRA cards. They give you 2% cash back directly into a brokerage account or IRA, helping you save.
Discover is a pretty badass card (as mentioned above), but I find that I need 2 cards, the other being a Visa, since Discover is not accepted everywhere.
For Visa, if you shop at Amazon.com a lot, the Amazon.com visa is actually quite good all around.
posted by kryptonik at 11:14 AM on November 6, 2010
Discover is a pretty badass card (as mentioned above), but I find that I need 2 cards, the other being a Visa, since Discover is not accepted everywhere.
For Visa, if you shop at Amazon.com a lot, the Amazon.com visa is actually quite good all around.
posted by kryptonik at 11:14 AM on November 6, 2010
If you use your card and pay in full every month, there's no reason not to use a card that gives you rewards. Rewards cards usually have higher APRs to compensate, but that wouldn't be an issue for you if you don't carry a balance, so it's all win.
I like Pentagon Federal Credit Union's Cashback Rewards Card -- 5% on gas, 2% on groceries, 1% on everything else, simply credited to your account every month. And they're a credit union, so they're not evil.
I also like the Costco American Express TrueEarnings card, which gives 3% on gas, 2% on restaurant and travel, and 1% on everything else, given as a Costco credit annually. Of course if you're not a Costco member that one wouldn't make sense.
Discover's rotating 5% rewards can be good too, I take advantage of those sometimes, as well as the Chase Freedom rewards.
posted by rabbitrabbit at 11:16 AM on November 6, 2010
I like Pentagon Federal Credit Union's Cashback Rewards Card -- 5% on gas, 2% on groceries, 1% on everything else, simply credited to your account every month. And they're a credit union, so they're not evil.
I also like the Costco American Express TrueEarnings card, which gives 3% on gas, 2% on restaurant and travel, and 1% on everything else, given as a Costco credit annually. Of course if you're not a Costco member that one wouldn't make sense.
Discover's rotating 5% rewards can be good too, I take advantage of those sometimes, as well as the Chase Freedom rewards.
posted by rabbitrabbit at 11:16 AM on November 6, 2010
This is a very good site for comparing cards, and figuring out what kind of offers are out there and will work for you.
As far as the trust thing goes, yeah, credit card companies will try to make money off you. But if you really do pay off your balance every month and pay attention to any changes they make to the rewards/interest rate/etc... you'll be fine. You can always close the card if they start pulling shenanigans.
posted by grapesaresour at 11:17 AM on November 6, 2010
As far as the trust thing goes, yeah, credit card companies will try to make money off you. But if you really do pay off your balance every month and pay attention to any changes they make to the rewards/interest rate/etc... you'll be fine. You can always close the card if they start pulling shenanigans.
posted by grapesaresour at 11:17 AM on November 6, 2010
Oh, I've looked up my discover card for you--it's the "Discover More" card, which gets good reviews pretty much everywhere.
posted by PhoBWanKenobi at 11:18 AM on November 6, 2010
posted by PhoBWanKenobi at 11:18 AM on November 6, 2010
You are right that for-profit financial institutions will screw you. Ask for a credit line increase for your current card and look for another credit union, either local or national, to join for another card. If you are eligible for membership USAA offers a widely respected credit card with cashback or rewards. Even the crappy little credit union in my town offers a card with no annual fee and scorecard rewards.
posted by ChrisHartley at 11:23 AM on November 6, 2010
posted by ChrisHartley at 11:23 AM on November 6, 2010
My credit union card has reward points, but they have a lower interest rate version that does not. Check to see if your credit union does the same. Maybe you can get a card with reward points through your credit union.
posted by bleary at 11:45 AM on November 6, 2010
posted by bleary at 11:45 AM on November 6, 2010
If you're happy with your current card I'd just ask them to increase the limit. I've had mine ~8 years and they've (National City/PNC) just been automatically increasing it for me... odd that it hasn't happened for you.
posted by sbutler at 11:48 AM on November 6, 2010
posted by sbutler at 11:48 AM on November 6, 2010
I think part of it is that I trust my not-for-profit credit union not to screw me, but I don't trust a very large for-profit financial institution not to screw me.
If you pay off the balance every month there is very little they can do by way of screwing you....they can start charging you a monthly fee I guess but that's it. Screwing tends to involve you not paying - either not the full balance (interest), late (penalty fee and often extra interest), at all (lots of penalties and cumulative interest before they try to collect the debt).
So yes, you are paranoid. Just find a reward program that's aligned with your shopping habits and use that to decide.
posted by koahiatamadl at 12:27 PM on November 6, 2010
If you pay off the balance every month there is very little they can do by way of screwing you....they can start charging you a monthly fee I guess but that's it. Screwing tends to involve you not paying - either not the full balance (interest), late (penalty fee and often extra interest), at all (lots of penalties and cumulative interest before they try to collect the debt).
So yes, you are paranoid. Just find a reward program that's aligned with your shopping habits and use that to decide.
posted by koahiatamadl at 12:27 PM on November 6, 2010
devilsbrigade: "I think part of it is that I trust my not-for-profit credit union not to screw me, but I don't trust a very large for-profit financial institution not to screw me. Maybe I'm just being paranoid."
I had the same belief, but for the most part, they seem happy enough to let me help them screw over retailers. I've got a 2k limit with Discover, and the cashback is pretty nice. Discover will actually credit you money not just "miles", and they do this through higher merchant fees (ie screwing retailers). Note that not all retailers carry them, so I have a Visa debit card as backup.
Not to say that paranoia isn't healthy. There's a number of ways you can get screwed. They can start charging a monthly fee. They can up your interest rate. They can charge a higher rate for "balance transfers" and "cash advances". They can charge you for going over the credit limit.
I don't think there's any advantage to having multiple credit cards vs a higher credit limit on your current one, so if you're not in it for rewards maybe call the union and ask them to up the limit? Point out your creditworthiness, your prompt payment for years, etc., and ask them to consider raising your limit.
posted by pwnguin at 12:55 PM on November 6, 2010
I had the same belief, but for the most part, they seem happy enough to let me help them screw over retailers. I've got a 2k limit with Discover, and the cashback is pretty nice. Discover will actually credit you money not just "miles", and they do this through higher merchant fees (ie screwing retailers). Note that not all retailers carry them, so I have a Visa debit card as backup.
Not to say that paranoia isn't healthy. There's a number of ways you can get screwed. They can start charging a monthly fee. They can up your interest rate. They can charge a higher rate for "balance transfers" and "cash advances". They can charge you for going over the credit limit.
I don't think there's any advantage to having multiple credit cards vs a higher credit limit on your current one, so if you're not in it for rewards maybe call the union and ask them to up the limit? Point out your creditworthiness, your prompt payment for years, etc., and ask them to consider raising your limit.
posted by pwnguin at 12:55 PM on November 6, 2010
I don't think there's any advantage to having multiple credit cards vs a higher credit limit on your current one
If you're paying them both off, it's good to have a spare one for emergency situations - one card gets stolen, or you travel and a miscommunication gets one card cut off (seems to happen a lot these days, if you read the consumerist).
I keep one high-limit card and one low-limit card, and use the low-limit card for online shopping to keep the "real" card safe (well, safe from getting compromised in the way net transactions can be, I know real life has plenty of risk also).
posted by L'Estrange Fruit at 1:31 PM on November 6, 2010
If you're paying them both off, it's good to have a spare one for emergency situations - one card gets stolen, or you travel and a miscommunication gets one card cut off (seems to happen a lot these days, if you read the consumerist).
I keep one high-limit card and one low-limit card, and use the low-limit card for online shopping to keep the "real" card safe (well, safe from getting compromised in the way net transactions can be, I know real life has plenty of risk also).
posted by L'Estrange Fruit at 1:31 PM on November 6, 2010
No balance -> Rewards card. I have citibank master platinum rewards card 1% back.
Travel a lot abroad? -> CaptitalOne CC. No transaction fees abroad.
posted by yoyo_nyc at 1:42 PM on November 6, 2010
Travel a lot abroad? -> CaptitalOne CC. No transaction fees abroad.
posted by yoyo_nyc at 1:42 PM on November 6, 2010
yoyo_nyc is right, CapitalOne is great for transactions abroad - but when I applied they had apparently just cracked down on their credit limits and gave me an absurdly low limit.
American express delta skymiles is good if you travel a lot and want another way to boost your frequent flier miles. There are several different versions of the card. Some have annual fees which translate into a boosted number of miles per dollar spent on the card. I put almost all of my purchases on that cards and have racked up a lot of miles - took a friend on a vacation to Hawai'i a couple of years ago, and now have almost enough miles to take that trip again.
In short though, you really need to look at the broad range of options offered in the marketplace and think about what suits you best - would you prefer cash rewards back for dollars you spend on the card, or travel perks like I just mentioned? And also consider your own spending habits - are you going to pay off your bill every month? If not you need to look very carefully at the rates for the charges you'd be incurring.
posted by scrambles at 2:12 PM on November 6, 2010
American express delta skymiles is good if you travel a lot and want another way to boost your frequent flier miles. There are several different versions of the card. Some have annual fees which translate into a boosted number of miles per dollar spent on the card. I put almost all of my purchases on that cards and have racked up a lot of miles - took a friend on a vacation to Hawai'i a couple of years ago, and now have almost enough miles to take that trip again.
In short though, you really need to look at the broad range of options offered in the marketplace and think about what suits you best - would you prefer cash rewards back for dollars you spend on the card, or travel perks like I just mentioned? And also consider your own spending habits - are you going to pay off your bill every month? If not you need to look very carefully at the rates for the charges you'd be incurring.
posted by scrambles at 2:12 PM on November 6, 2010
What grapesaresour said.
To be honest, now that they can't raise your rates on existing balances unless you default, just about any bank that doesn't charge an annual fee is fine. I've gotten around a thousand bucks in gift cards out of Chase and Citi over the past few years, and I have a bunch of Sony Rewards points I've accumulated on my (Chase) Sony card.
They did both (along with Amex, although not so badly in their case) go apeshit after the meltdown and cut my limits in half, thus screwing up my utilization and tanking my credit score, but I still have plenty of available credit and no need for new credit, so I don't really care.
Even before, they can't raise your "fixed rate" APR without giving you the opportunity to opt out, so when Citi decided to kick me from 4.99% to 13.99% I said no. They closed the account for new charges, but again, it didn't really hurt me in any way, as they can't demand immediate repayment.
My deposit bank's cards aren't nearly as good, TBH. They have a rewards program, but it's straight 1%, which is pretty much useless to me when I can get far more than that out of the other guys. They're great for deposit banking (low overdraft fees, no minimum balance requirement, etc.), but just not that great for rewards.
The unfortunate thing is that you don't see many of the "we'll give you $100/$150 just for signing up!" or "0% for 12/18 months" deals that you used to. Chase's Freedom card will give you $100, but only if you charge $800 in the first 3 months. Their Sapphire card only requires $500 in charges to get the $100.
posted by wierdo at 2:19 PM on November 6, 2010
To be honest, now that they can't raise your rates on existing balances unless you default, just about any bank that doesn't charge an annual fee is fine. I've gotten around a thousand bucks in gift cards out of Chase and Citi over the past few years, and I have a bunch of Sony Rewards points I've accumulated on my (Chase) Sony card.
They did both (along with Amex, although not so badly in their case) go apeshit after the meltdown and cut my limits in half, thus screwing up my utilization and tanking my credit score, but I still have plenty of available credit and no need for new credit, so I don't really care.
Even before, they can't raise your "fixed rate" APR without giving you the opportunity to opt out, so when Citi decided to kick me from 4.99% to 13.99% I said no. They closed the account for new charges, but again, it didn't really hurt me in any way, as they can't demand immediate repayment.
My deposit bank's cards aren't nearly as good, TBH. They have a rewards program, but it's straight 1%, which is pretty much useless to me when I can get far more than that out of the other guys. They're great for deposit banking (low overdraft fees, no minimum balance requirement, etc.), but just not that great for rewards.
The unfortunate thing is that you don't see many of the "we'll give you $100/$150 just for signing up!" or "0% for 12/18 months" deals that you used to. Chase's Freedom card will give you $100, but only if you charge $800 in the first 3 months. Their Sapphire card only requires $500 in charges to get the $100.
posted by wierdo at 2:19 PM on November 6, 2010
Whichever credit card you pick, make sure you read and understand all the fine print before you sign anything. The rules are very heavily weighted in their favor, and can change at any time.
posted by aniola at 6:01 PM on November 6, 2010
posted by aniola at 6:01 PM on November 6, 2010
Please be aware that there are ways that credit cards can screw you even if you pay off your balance on time in full every month. Here's a few things to watch out for, when you're reading the fine print that aniola so astutely warns you about on your next credit card: high APR, annual fee, no grace period*, penalties for making a payment early and/or late, funky privacy policies, etc.
You may want to know what your credit score is (typically, there's a fee involved for getting your credit score, as distinct from your credit report and it can lower your score a few points to ask but it's also worth it if you're unsure of how creditworthy you are) so you'll know how 'desirable' you are to a credit card company/bank.
My other piece of extra-credit advice is to keep The Consumerist on your RSS feed. They often have stories on which banks/credit cards companies are screwing someone and how. It pays to know these things, as they can be early warnings of troubles brewing on the horizon for you.
And yes, definitely ask your credit union to raise your limit. If they say no, ask them what it would take to raise it; Capital One just raised the limit for the first time on a card I've had since 2001 and it's because I used the card much more than I typically would have when I moved.
FWIW, I also recommend Discover and Capital One (with caveats). Discover is where I'm going to get a card next (post cancellation of the card mentioned below) and their deals seem very good, though I agree that if you do go with them you'll need to have a second card handy for those places that don't take Discover. Capital One is somewhat shady (and their customer service can be horrendous), but they also offer rewards cards and are good for international travel.
*My primary credit card sent me a letter in March detailing how they were going to make my life miserable post passage of the CARD Act (and if you're American, you know what that is, right, and why it's important?). I later discovered that they are almost insolvent and in danger of being taken over, so they went nuts. They didn't cut my limit but they: raised my APR to penalty levels (despite zero late payments in five years on my part), added an annual fee, and eliminated the grace period.
I thought that eliminating the grace period meant if my payment was a few days past the due date they'd charge me for that. No, in this case elimination of grace period meant the moment I charged something, they started charging me interest at usurious rates. Before I realized, I paid $40 in interest on a $20 item. Watch out for things like that! If you don't understand, call your credit card issuer and make them explain. If you don't like the answer, cancel the card.
posted by librarylis at 6:30 PM on November 6, 2010
You may want to know what your credit score is (typically, there's a fee involved for getting your credit score, as distinct from your credit report and it can lower your score a few points to ask but it's also worth it if you're unsure of how creditworthy you are) so you'll know how 'desirable' you are to a credit card company/bank.
My other piece of extra-credit advice is to keep The Consumerist on your RSS feed. They often have stories on which banks/credit cards companies are screwing someone and how. It pays to know these things, as they can be early warnings of troubles brewing on the horizon for you.
And yes, definitely ask your credit union to raise your limit. If they say no, ask them what it would take to raise it; Capital One just raised the limit for the first time on a card I've had since 2001 and it's because I used the card much more than I typically would have when I moved.
FWIW, I also recommend Discover and Capital One (with caveats). Discover is where I'm going to get a card next (post cancellation of the card mentioned below) and their deals seem very good, though I agree that if you do go with them you'll need to have a second card handy for those places that don't take Discover. Capital One is somewhat shady (and their customer service can be horrendous), but they also offer rewards cards and are good for international travel.
*My primary credit card sent me a letter in March detailing how they were going to make my life miserable post passage of the CARD Act (and if you're American, you know what that is, right, and why it's important?). I later discovered that they are almost insolvent and in danger of being taken over, so they went nuts. They didn't cut my limit but they: raised my APR to penalty levels (despite zero late payments in five years on my part), added an annual fee, and eliminated the grace period.
I thought that eliminating the grace period meant if my payment was a few days past the due date they'd charge me for that. No, in this case elimination of grace period meant the moment I charged something, they started charging me interest at usurious rates. Before I realized, I paid $40 in interest on a $20 item. Watch out for things like that! If you don't understand, call your credit card issuer and make them explain. If you don't like the answer, cancel the card.
posted by librarylis at 6:30 PM on November 6, 2010
I don't think there's any advantage to having multiple credit cards vs a higher credit limit on your current one.
I use one card (Citi Platinum Amex) that gives a high percent on groceries and gas, and another one (Citi Forward) that gives a high percentage on dining and Amazon.
Also, I would not carry a Discover or Amex card as my only card, since they both don't have 100% acceptance rates, especially at smaller merchants.
posted by smackfu at 6:53 AM on November 8, 2010
I use one card (Citi Platinum Amex) that gives a high percent on groceries and gas, and another one (Citi Forward) that gives a high percentage on dining and Amazon.
Also, I would not carry a Discover or Amex card as my only card, since they both don't have 100% acceptance rates, especially at smaller merchants.
posted by smackfu at 6:53 AM on November 8, 2010
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Most big stores have their own branded Mastercard or Visa or whatever, if there's a place you do a lot of shopping at, see what kind of card rewards program they have.
posted by L'Estrange Fruit at 10:04 AM on November 6, 2010