Best credit card for a grad student?

June 17, 2012 1:28 PM

Starting grad school in August. It seems about time I got a credit card. Advice?

Information about me:
-I have only ever owned a debit card
-I will be spending about $20,000/year
-I want maximum rewards and/or signing bonus possible
-I don't want to pay for the card unless it comes with some honking big positives to outweigh the $150/year or whatever it costs
-It is completely, totally impossible that I will take on credit card debt. I have many failings and shortcomings as a person, but it is inconceivable that I would slip into that. So if it's a scenario where it's "huge bonuses, but 90% interest/day on your debt" then that's fine, because I won't have debt.
-I will be spending a good chunk of money on Amazon and on air travel.
-I will be living in Indiana

Any banks/cards that would serve me well? Any that I should very definitely avoid?

Bonus points if you have an explanation, or a link to an explanation, to the effect of "here is how credit cards worked, explained in terms understandable to a moderately intelligent alien attempting to familiarize itself with humanity."

posted by pdq to work & money (15 answers total)

-I will be spending a good chunk of money on Amazon and on air travel.

I've got an Amazon card myself - 1% back on everything, 3% back on Amazon purchases. Combined with the free Prime you can get for being a grad student... well, there ya go, eh?
posted by Tomorrowful at 1:38 PM on June 17, 2012

(Oh, and it's no longer limited to trading points in for Amazon credit - every 5,000 points, I can cash in for a $50 check or $50 credit to the account.)
posted by Tomorrowful at 1:39 PM on June 17, 2012

The Delta Gold Amex seems to fit your criteria. Flyer miles, priority boarding on flights, and free checked bags. But you may wish to consider getting a credit card with no annual fee -- there are plenty of free ones out there, so why pay for the privilege of spending money?

Will you be staying at hotels? Something with Starwood hotel points could also make sense (I believe, again, Amex has one).
posted by J. Wilson at 1:45 PM on June 17, 2012

Personally,I like the Chase Freedom card. It's free and it gives you cash back -- so it's at least automatically better than using a debit card.
posted by J. Wilson at 1:47 PM on June 17, 2012

It is completely, totally impossible that I will take on credit card debt. I have many failings and shortcomings as a person, but it is inconceivable that I would slip into that. So if it's a scenario where it's "huge bonuses, but 90% interest/day on your debt" then that's fine, because I won't have debt.

Just suggesting that you reconsider your stance on fees, because shortcomings and failings are not, I suspect, the only causes of debt. Since you haven't enumerated the other cases and their likelihoods and eliminated those as zero probability, I'll mention a few: long-term illness or grad school stipend goes away suddenly and you need to cover rent. I'm sure you can come up with others. These are some cases where having a high fee takes you very rapidly from 'I have to let this bill slide this month' to 'holy heck, how am I ever going to earn enough to pay this back?'
posted by zippy at 2:05 PM on June 17, 2012 [4 favorites]

The answer to this sort of depends on what sort of credit cards rewards you would value the most. Personally, I have gotten a ton of value out of a combination of the Chase Sapphire Preferred ($95 annual fee, waived for first year; 40,000 current sign-up bonus but has been higher in the past) and Chase Freedom (no annual fee; various sign-up bonuses available).

Here's how it works:

-I make purchases on the aforementioned cards based on the best Ultimate Rewards (the name of Chase's rewards program) points return. So restaurants and travel purchases usually go on the Sapphire for the 2X point bonus, and of course maximizing usage of the Freedom's rotating spend categories for 5X bonus points.

-Instead of redeeming Chase Freedom Ultimate Rewards points for cashback, I transfer the accumulated points to my Sapphire Preferred account.

-From the Sapphire Preferred account, I can transfer points to a variety of hotel and airline partners to redeem for free nights or free flights. Some of the most lucrative include Hyatt hotels, which have reasonable point redemption rates for fairly high-end properties (e.g., Park Hyatts that are normally $900+ a night).

Depending on the redemption value, I have been able to squeeze out more than the 5% return that the best cash back cards can offer. It's not the best option for everyone, but I offer it up as an option for a great travel rewards strategy.

On the other hand, if you're just interested in cash back, the Chase Freedom card offers additional bonus features if you have a Chase Checking account. Namely, you get 10 bonus points per transaction and a 10% bonus on each purchase. It adds up, especially if you tend make a lot of small purchases.
posted by roomwithaview at 2:09 PM on June 17, 2012

The Citi Forward card will give you five ThankYou points [each worth around a cent] per dollar of spending on "purchases at restaurants (including fast food), bookstores, music stores, video rental stores and movie theaters;" -- and bookstores include Amazon.com (products, not digital downloads). It's better than the Amazon card for Amazon purchases and a great choice if you really will be spending a lot of money at Amazon (and those other categories are very student-friendly, too). No annual fee. It's also available in a "student" version that seems to be identical (but without the signup bonus) that might be easier to obtain between your .edu address and lack of a credit history.

Unless you are truly spending a lot of money on flights--more than most grad students I know--a specialized card with good bonus rates on airfare spending probably will not make sense. However, if you are going to be doing a lot of travel on a certain airline, its cobranded card may offer you useful benefits, including a bonus for spending money with that airline, free checked bags, and priority boarding (and likely a waived annual fee during the first year).
posted by deeaytch at 2:19 PM on June 17, 2012

I like the Chase Freedom card as well: no fee, 1% cash back on everything; 5% on some things (it rotates).
posted by lewedswiver at 2:25 PM on June 17, 2012

An additional question, which didn't jump out in surfing wikipedia. Right now I have an ING checking account. I get a credit card. Do I have a checking account linked to my credit account when I open that card? Or would I funnel money from ING to the credit card account each billing cycle?
posted by pdq at 2:35 PM on June 17, 2012

I don't know if you've heard of Ramit Sethi or his book I Will Teach You To Be Rich, but I like he work, and he talks about his favorite credit card here. I have one, and I have tons of points amassing so I may take off to places I want to go whenever the need or fancy strikes.
posted by deezil at 3:03 PM on June 17, 2012

You would pay the credit card, presumably from your checking account, but it wouldn't "link" it like a debit card/check card.
posted by J. Wilson at 3:04 PM on June 17, 2012

Will you be traveling abroad? Foreign transaction fees on various cards can vary between quite large (say 3-5% on top of every single purchase) all the way down to zero.
posted by kickingtheground at 3:50 PM on June 17, 2012 [1 favorite]

Yes, if you are going to be traveling internationally, look into a credit card that does not charge a fee for the exchange rate. Capital One cards are among these - I recently went abroad with mine, and telling them I was leaving the country was also painless. The Venture card also accumulates air miles.
posted by sararah at 5:50 PM on June 17, 2012

OK, here is one you can not pass up. It is so good I hate telling people about it, lest they withdraw their offer. American Express Blue Cash PREFERRED (note the preferred, there is one that isnt preferred). What do you get for your $75 annual fee?

1) A whopping SIX percent back on all groceries
2) 3% back on all gas purchases
3) 3% back on all department store purchases
4) 1% on everything else.

In addition to that, you get American Expresses amazing warranty service. Example, I bought a router that was highly rated on Amazon. (i actually bought it locally at a staples, wanted one in a hurrr) I failed to notice that for 85% the router was great, but for the other 15% it was a complete fail. After 45 days, started having chronic router problems. Staples: sorry charley. After 89 days I was talking to Amex and suddenly I thought what the hell... I asked them about it, and I had a complete credit for the router in 36 hours.

They have KILLER customer service. I now have 2 of their cards, they have another card that gives you back 2% on everything and goes straight into any investment account you designate. I know it sounds like I am a company shill, but I LOVE great customer service and great deals. One major caveat, and it is really true of all credit cards. If you are the kind who would likely carry a balance try to live without a credit card. Their is a reason they want you to buy groceries with it, they want to make 20% interest on your grocery purchases if you carry a balance.

I also have the Chase card (!% on everything with occasional other promotions) for those places that do not take amex. Between the three I get back close to 3 grand a year, and remember those are post tax dollars. So, for almost NO time investment (the small amount of time of paying three credit cards instead of one) I make 3 grand a year. To me, that is a major win. Hope it works for you.
posted by jcworth at 8:08 PM on June 17, 2012

I would highly recommend getting credit cards through every credit union that you can qualify for. Credit union credit cards not only have lower interest rates. They are much less focused on nickel-and-diming you with fees, because credit unions are run for the benefit of the depositors, not for outside investors. The drawback is that credit union cards have lower maximums, however.
posted by jonp72 at 7:13 AM on June 18, 2012