What is the best credit card?
February 18, 2022 8:23 PM Subscribe
I don't understand credit cards. I try to avoid using mine but do sometimes use it for a larger purchase, then pay off within a month or two. But it has associated fees and lacks some of the 'perks' that I think may be possible. I have good credit. What credit card should I apply for?
I don't even understand how to use the 'points' program associated with my card (will call tomorrow and try to figure out I guess!!) but I don't really think I want 'points' because I don't buy most things with credit cards and I never will.
But one thing I have wanted sometimes is trip cancellation insurance, and I understand some credit cards come with that? Perhaps there are other 'perks' to a good card that do not rely on my using the card frequently?
My current card which I have through my credit union has an 8.5% APR.. So I would want that or lower?
Basically, explain this to me like I'm 5 please.
I don't even understand how to use the 'points' program associated with my card (will call tomorrow and try to figure out I guess!!) but I don't really think I want 'points' because I don't buy most things with credit cards and I never will.
But one thing I have wanted sometimes is trip cancellation insurance, and I understand some credit cards come with that? Perhaps there are other 'perks' to a good card that do not rely on my using the card frequently?
My current card which I have through my credit union has an 8.5% APR.. So I would want that or lower?
Basically, explain this to me like I'm 5 please.
^^ Totally agree with above - either get a cash back credit card, or get a credit card that gives you grocery store or gas points at a store you already shop at. I have a grocery store one that works out to about $100 worth of free groceries a year.
Put all your purchases on it.
Pay the card down to zero every month.
You’ll never pay interest, you’ll have an excellent credit rating, and you’ll get some free stuff. Wins all around.
posted by nouvelle-personne at 8:41 PM on February 18, 2022 [1 favorite]
Put all your purchases on it.
Pay the card down to zero every month.
You’ll never pay interest, you’ll have an excellent credit rating, and you’ll get some free stuff. Wins all around.
posted by nouvelle-personne at 8:41 PM on February 18, 2022 [1 favorite]
Yup, agree. I had the same "Credit cards are scary!" thought when I was younger, but in order to get my credit score up, I signed up for a card through my bank about 10 years ago. I pay off the balance every month, so I think the only time I've ever paid a fee is when I sleepily clicked the wrong button in online bill-pay and as a result took a cash advance instead of making an equivalent payment, and had to pay a month's worth of some ruinous amount of interest on a $100 cash advance. I think it turned out to be about $20, which is fine for me as a stupid-tax on ten years of payment history if I ever need a loan for anything. A few years later I signed up for a card, also through my bank, that lets me redeem points for cashback at 1 point = 0.001 (10k points = $100 statement credit). That's pretty crummy, so I'll probably sign up for another card soon. Shrug! Paying off the balance every month is the important part!
posted by Alterscape at 8:51 PM on February 18, 2022
posted by Alterscape at 8:51 PM on February 18, 2022
Air miles.
I have upgraded to business on many an intercontinental flight through AA air miles accrued from credit card purchases. For me personally it is the best perk imaginable.
So whatever your choice of airlines is I would get a card that gives you air miles every time you spend money, run absolutely everything you can through it, and of course pay it off every month.
posted by Tell Me No Lies at 9:27 PM on February 18, 2022 [2 favorites]
I have upgraded to business on many an intercontinental flight through AA air miles accrued from credit card purchases. For me personally it is the best perk imaginable.
So whatever your choice of airlines is I would get a card that gives you air miles every time you spend money, run absolutely everything you can through it, and of course pay it off every month.
posted by Tell Me No Lies at 9:27 PM on February 18, 2022 [2 favorites]
Like saeculorum, I have a Blue Cash Preferred card that I use for all grocery purchases and most of the time when I’m traveling because AMEX has wonderful consumer protections and it’s easy to access a human if/when problems arise. The Preferred card has a $95(?) annual fee, but the Blue Cash Everyday card, which is a step down - only 3% for groceries, 2% for something (travel? Gas?), and 1% for everything else, is free. I make so much money off of the card I don’t worry about the $95 charge. AMEX also has their Plan It ™ feature, which allows you to break up large purchases for a flat fee dependent upon how many months you want to pay it off (interest is not accrued in these cases, just the flat fee that’s rolled into the payments). Sorry I sound like a shill for AMEX, but my parent/parents have been AMEX Green and Gold card holders since the 70s and my first “major” credit card was the Costco AMEX which I loved. Unfortunately AMEX told Costco to get bent which brings me to my other card…
I have a CostcoCiti card attached to my executive membership. It pays for my membership AND I make about $200-400 off of the card every year.
Now, I carry balances because I like having spectacular credit despite only earning $14 an hour, so I don’t really care about interest rates. These two cards have never charged me an exorbitant amount of interest so I just consider it a “cost of doing business.” I use the Costco card for Costco (surprise) and gas because I get like 4% back on fuel, and then if I buy fuel at Costco I think it’s like another 2% back because of my membership.
I am a fan of both, for different reasons.
posted by sara is disenchanted at 9:36 PM on February 18, 2022 [2 favorites]
I have a CostcoCiti card attached to my executive membership. It pays for my membership AND I make about $200-400 off of the card every year.
Now, I carry balances because I like having spectacular credit despite only earning $14 an hour, so I don’t really care about interest rates. These two cards have never charged me an exorbitant amount of interest so I just consider it a “cost of doing business.” I use the Costco card for Costco (surprise) and gas because I get like 4% back on fuel, and then if I buy fuel at Costco I think it’s like another 2% back because of my membership.
I am a fan of both, for different reasons.
posted by sara is disenchanted at 9:36 PM on February 18, 2022 [2 favorites]
Oh I also have CareCredit because my dental insurance is terrible and I have a furnugget. It’s fine. It allows me to make large health-related purchases interest free for 12-24 months. Basically, it’s a nice card to have for, you guessed it, insurance. I don’t use it often, but I have friends with kids and animals and they use it All The Time.
posted by sara is disenchanted at 9:39 PM on February 18, 2022 [1 favorite]
posted by sara is disenchanted at 9:39 PM on February 18, 2022 [1 favorite]
If you get a credit card from the Credit Union where you do your banking, then you can easily configure it to transfer money from your account to pay off the credit card every month. If you get the credit card from somewhere else, then you can configure automatic bill pay for the same effect.
Here are a couple of links explaining how credit cards have better fraud protection than debit cards, so you really do want to use a credit card instead of a debit card when you can. Just pay it off not "in a month or two", but every month.
The debit card my Credit Union issued can be used to pay by credit or debit. The machine at stores tends to default to using it for debit, I believe because the merchant pays a lower fee that way. However, if you push the button to pay by credit, then you have better fraud protection.
posted by polecat at 9:43 PM on February 18, 2022
Here are a couple of links explaining how credit cards have better fraud protection than debit cards, so you really do want to use a credit card instead of a debit card when you can. Just pay it off not "in a month or two", but every month.
The debit card my Credit Union issued can be used to pay by credit or debit. The machine at stores tends to default to using it for debit, I believe because the merchant pays a lower fee that way. However, if you push the button to pay by credit, then you have better fraud protection.
posted by polecat at 9:43 PM on February 18, 2022
A credit card can also be good to have when traveling. I was on a two-month trip in South America, many years ago. Early in the trip, I lost my wallet, with the cards in it, leaving me only with a modest stash of cash that I had in my bag. The credit card company was able to Fed Ex me a new card within a few days -- where I don't think I would have been able to replace the debit card so easily. Then I was able to get a cash advance on the credit card. On the surface it's like withdrawing money with a debit card, except it's really a loan and you start owing interest immediately -- no grace period like when you purchase something with the credit card. So this is something only to use as a last resort, but a last resort is exactly what I needed at that time.
posted by polecat at 9:57 PM on February 18, 2022 [1 favorite]
posted by polecat at 9:57 PM on February 18, 2022 [1 favorite]
Since you're getting advice to use a credit card for everything, I will add one counterpoint. The businesses you shop at have to pay a fee for every credit or debit transaction. Typically the fee is something like $1 per transaction plus a small percentage of the total. Businesses of course factor this into their expected costs, but if you want to support a small local company, consider paying with cash, especially for small purchases. If you pay for a pack of gum or something similar with a credit card, the store will lose money on the transaction.
posted by Comet Bug at 10:52 PM on February 18, 2022 [1 favorite]
posted by Comet Bug at 10:52 PM on February 18, 2022 [1 favorite]
As far as how points programs work... usually you just use the program's web portal or phone app to buy stuff using the points. If the card is affiliated with a specific company like a hotel group, for example, when you reserve a room on the hotel's website or app you just specify that you want to use points to pay for it.
I've used a number of cards for various reasons, but the ones I've depended on the most are AmEx associated with my favorite hotel group and airline. The annual fees are more than compensated for by free hotel nights awarded every year and numerous airline perks. They also provide rental car insurance above and beyond the standard collision coverage that comes with a lot of cards (a big plus for me since I don't own a car and thus don't have my own insurance). And the points I've accumulated over the years have allowed me to get many free flights, upgrades, and free hotel stays.
Even if you don't travel, if you have the ability to pay the balance every month there's no reason not to use a credit card for everything. A couple possible exceptions would be:
Nerdwallet is a good source for info about the benefits of various cards for whatever your particular situation may be.
posted by theory at 4:29 AM on February 19, 2022
I've used a number of cards for various reasons, but the ones I've depended on the most are AmEx associated with my favorite hotel group and airline. The annual fees are more than compensated for by free hotel nights awarded every year and numerous airline perks. They also provide rental car insurance above and beyond the standard collision coverage that comes with a lot of cards (a big plus for me since I don't own a car and thus don't have my own insurance). And the points I've accumulated over the years have allowed me to get many free flights, upgrades, and free hotel stays.
Even if you don't travel, if you have the ability to pay the balance every month there's no reason not to use a credit card for everything. A couple possible exceptions would be:
• when you don't want to saddle a small business with the transaction feeOne of the big reasons to always use a card is having the ability to do a chargeback, which I've had to do a couple of times with merchants (there's an experience with Priceline from a few years ago detailed in my AskMe history). Generally not having to worry about fraud (it's the credit card company's problem, not yours) is also nice.
• tipping -- I often leave a cash tip even when I've paid the bill with my card
Nerdwallet is a good source for info about the benefits of various cards for whatever your particular situation may be.
posted by theory at 4:29 AM on February 19, 2022
I exclusively use credit cards with cash back reward systems because I don't like going anywhere or doing anything and convoluted points schemes are useless to me. Just give me money.
No annual fee.
Cash back rewards.
Those are my only criteria.
I pay my balances off every month and don't carry any debt except for my house, so APRs and balance transfer offers have no power over me. Just give me cash back. It keeps things very easy.
The only area where things get even slightly complex is some cards have better rewards rates for buying certain things. I've got one that has a bigger cash % back at groceries and restaurants, so I use that one for food. I've got a card with a better % at Costco that I use at Costco. I've got a card with a better % at Amazon that I use at Amazon. I get a bigger % back on entertainment with one card so use that one when buying symphony tix, etc. The only "optimizing" I do is that I get credit cards that make sense for what I actually buy.
In contrast my parents have been accumulating Delta frequent flyer miles since the early 90s and could probably circumnavigate the globe a dozen times. But they hate flying and have only been on a plane maybe 3 times in the last decade so ??? why??? Just give me money.
posted by phunniemee at 5:36 AM on February 19, 2022 [2 favorites]
No annual fee.
Cash back rewards.
Those are my only criteria.
I pay my balances off every month and don't carry any debt except for my house, so APRs and balance transfer offers have no power over me. Just give me cash back. It keeps things very easy.
The only area where things get even slightly complex is some cards have better rewards rates for buying certain things. I've got one that has a bigger cash % back at groceries and restaurants, so I use that one for food. I've got a card with a better % at Costco that I use at Costco. I've got a card with a better % at Amazon that I use at Amazon. I get a bigger % back on entertainment with one card so use that one when buying symphony tix, etc. The only "optimizing" I do is that I get credit cards that make sense for what I actually buy.
In contrast my parents have been accumulating Delta frequent flyer miles since the early 90s and could probably circumnavigate the globe a dozen times. But they hate flying and have only been on a plane maybe 3 times in the last decade so ??? why??? Just give me money.
posted by phunniemee at 5:36 AM on February 19, 2022 [2 favorites]
Best card for points is the Chase Sapphire. 60k bonus if you meet spending requiements in the first 3 months. The points can be used to purchase almost anything, not just flights and hotels. They have an online store with laptops and phones and so on. For reference, my 60k points recently paid for 2 round trip domestic flights, a week long car rental and hotel room.
posted by ananci at 6:00 AM on February 19, 2022
posted by ananci at 6:00 AM on February 19, 2022
If you find you do sometimes need to carry a balance, I suggest one card for that and a different card for "cash replacement" (put it on the cc, pay it off every month in full, never get charged interest). A lot of the time if you have any balance carry over, the interest that gets calculated is based on your "average" balance so you might get charged interest even on the part you paid off.
It's also a good way to do it because different cards are good for different things. So get one with a bad APR for rewards and get one with a good APR for actual credit when you need it.
posted by Lady Li at 6:37 AM on February 19, 2022 [2 favorites]
It's also a good way to do it because different cards are good for different things. So get one with a bad APR for rewards and get one with a good APR for actual credit when you need it.
posted by Lady Li at 6:37 AM on February 19, 2022 [2 favorites]
Now, I carry balances because I like having spectacular credit despite only earning $14 an hour, so I don’t really care about interest rates. These two cards have never charged me an exorbitant amount of interest so I just consider it a “cost of doing business.”
It is actually a myth that you need to carry a balance on a credit card in order to improve your credit. OP, it won't hurt your credit a bit to pay your balance off in full every month. So you don't have to worry about this. You can and should always avoid interest fees as much as you can.
I think where this myth comes from is that in calculating your credit score, the amount of credit utilization is a big part of the score. So if you're using 30% or less of your available credit, that's good, and 10% or less, that's excellent. Whereas not using your card at all isn't very useful because you aren't building up a history of making payments.
But that utilization is just based on whatever day during the month your credit card reports the balance to credit reporting agencies. If you have a low balance at that time, you still get the good score if you then pay off your balance in full when you get the monthly bill.
If you run up a huge balance every month and then pay it off in full, then that huge balance still isn't good for your credit score, because that's what gets reported to the credit reported agency. But it's not whether you pay it all off or not that makes the difference for the credit score.
posted by picardythird at 6:41 AM on February 19, 2022 [1 favorite]
It is actually a myth that you need to carry a balance on a credit card in order to improve your credit. OP, it won't hurt your credit a bit to pay your balance off in full every month. So you don't have to worry about this. You can and should always avoid interest fees as much as you can.
I think where this myth comes from is that in calculating your credit score, the amount of credit utilization is a big part of the score. So if you're using 30% or less of your available credit, that's good, and 10% or less, that's excellent. Whereas not using your card at all isn't very useful because you aren't building up a history of making payments.
But that utilization is just based on whatever day during the month your credit card reports the balance to credit reporting agencies. If you have a low balance at that time, you still get the good score if you then pay off your balance in full when you get the monthly bill.
If you run up a huge balance every month and then pay it off in full, then that huge balance still isn't good for your credit score, because that's what gets reported to the credit reported agency. But it's not whether you pay it all off or not that makes the difference for the credit score.
posted by picardythird at 6:41 AM on February 19, 2022 [1 favorite]
My recent trips have all used miles from my Aadvantage credit card. I pay the card off not every month, but every week, because I ended up putting almost all my regular bills on it. (Did you know they'll let you pay a card off on a weekly basis? I didn't until I started doing it). It does have an annual fee but I have saved enough on flights that I don't care. Apple Pay is more secure than carrying a physical card or cash around, though I do keep dollar bills on me for handing to panhandlers and putting cashh in the basket at events that take up a collection.
A big plus is that it has made budgeting a lot easier and my expenses more obvious, because everything shows up in one statement. And annual fees (I swear I have them in my tickler file, but they always startle me anyway) no longer sideswipe me by coming out of my checking account.
posted by Peach at 6:56 AM on February 19, 2022 [1 favorite]
A big plus is that it has made budgeting a lot easier and my expenses more obvious, because everything shows up in one statement. And annual fees (I swear I have them in my tickler file, but they always startle me anyway) no longer sideswipe me by coming out of my checking account.
posted by Peach at 6:56 AM on February 19, 2022 [1 favorite]
Point and mileage systems are complicated. If you want to make an investment in understanding the true value of your points, then sure, get a mileage or point credit card.
I don't want to worry about that, so I have a Citi Card that gives me 2 cents back for every dollar, and an Amazon Prime card that gives me 5% back on everything I buy at Amazon and Whole Foods. The Amazon card requires Prime membership.
Both of these cards offer to let you use "points" for abstract gifty/travel things, but I never do that. I just do cash.
The other important thing about credit cards is to never carry a balance. You end up paying huge amounts of interest, especially if you use the card to spend more than you are making for basic living expenses. It's sounds like you've been using it for an occasional large purchase that you want to pay for over a couple of months. That makes sense. But don't get in the habit of having a balance that just sort of gets carried over all the time. That's money down the drain.
posted by Winnie the Proust at 7:26 AM on February 19, 2022 [1 favorite]
I don't want to worry about that, so I have a Citi Card that gives me 2 cents back for every dollar, and an Amazon Prime card that gives me 5% back on everything I buy at Amazon and Whole Foods. The Amazon card requires Prime membership.
Both of these cards offer to let you use "points" for abstract gifty/travel things, but I never do that. I just do cash.
The other important thing about credit cards is to never carry a balance. You end up paying huge amounts of interest, especially if you use the card to spend more than you are making for basic living expenses. It's sounds like you've been using it for an occasional large purchase that you want to pay for over a couple of months. That makes sense. But don't get in the habit of having a balance that just sort of gets carried over all the time. That's money down the drain.
posted by Winnie the Proust at 7:26 AM on February 19, 2022 [1 favorite]
Absolutely love our Apple Card. Easy to use, easy to pay. Easy to transfer the cash accumulated via rewards. Easy to share with my spouse. Easy to change number without replacing the card. No physical number on the card. Easy to deal with issues via Messages chat without having to make phone calls.
posted by Hey, Zeus! at 10:34 AM on February 19, 2022
posted by Hey, Zeus! at 10:34 AM on February 19, 2022
There's no one answer to this question because the best card for me might not be the best card for you, and vice versa. The interest rate on the card you have from your credit union is much lower than any card I have, so it might be the best card for paying off a large purchase over time. A couple of the cards I have do have an option to mark a specific purchase (or purchases) as something to pay off over time at whatever fixed rate, which will still allow me not to carry any interest on other purchases made over the same timeframe as long as the other purchases are paid in full. I think I used this once when we had some surprise vet bills right after buying our house, so we were cash poor, but otherwise I'm like everybody above recommending just paying in full every month so you never pay interest on anything.
What credit cards with points, miles, or cash back allow you to do is get a very small kickback on purchases you're already making, perhaps with some other benefits thrown in. If you travel a lot, a travel-focused card might have reduced or zero fees on transactions in foreign currencies, extra benefits like trip cancellation insurance, lost bag allowances, rental car coverage for collision damage waivers, lounge access, or a store where you can purchase plane tickets or make hotel reservations at a discount. If you frequently travel on a specific airline or stay at a particular hotel brand, having a card tied into that ecosystem will accelerate the rate at which you gain perks (upgrades, free checked bags, free trips, free hotel nights, etc). If your travel is spread among brands a card that allows you to transfer its points to one or more airline or hotel brands might be more valuable. We have a card like that (Chase Sapphire Reserve) so whenever we plan travel we always price out buying everything for cash, buying it with points through Chase's Ultimate Rewards portal, or transferring points to an airline if doing so will provide the best deal. And yes, this means planning a trip is always more complicated because it takes a while to find the best deal from all those options. This card has a hefty annual fee but we accrue enough benefits from it to cover the fee (although I do the math every year to make sure that's still true).
If you don't travel enough for a travel rewards card to be worth it, you may still find it valuable to get some other sort of rewards card. If you're a Costco member the Costco Rewards Visa has no additional annual fee (over the annual fee you pay Costco) and it accrues cash back not just at Costco but at gas stations and restaurants. The cash back comes in the form of a rebate you can either use for purchases or redeem for cash at a Costco store. Twice I've forgotten to apply my rewards certificate on checkout, and they've literally just cashed it out on the spot.
Some rewards cards have their own "stores" for merchandise (electronics, clothing, etc) although it's extremely rare for those to be a good deal. Before Christmas Chase had an extra bonus offer on Apple products bought through their store, so I think that's the first time I've ever used one of those stores for anything other than burning off points before canceling a disused card. By the same token some cards allow you to spend your points at Amazon, although the point transfer value is usually low enough that this is a bad deal.
Otherwise a general cash back card (e.g. Citi Double Cash, Discover More, or whatever thing it is Bank of America pushes at me whenever I log into my checking account) may be the best option if you want the combination of cash back rewards and no annual fee. Your credit union may also offer a card with no annual fee and fewer benefits, but it will be up to you to analyze your spending and whatever rewards they offer to figure out if it's worth paying a fee in order to gain benefits at a higher rate.
As a specific example of how I approach this, we used to have a card that earned rewards on American Airlines (Citi AAdvantage, I think) that got us free checked bags, an earlier boarding group, and faster accrual of miles with AA. But then our travel needs changed and we started flying less on AA, so it made the annual fee harder to justify. Around that time Citi became the card issuer for Costco, so instead of losing the credit line and credit history I already had, I just called Citi and asked to switch my existing account to a different card. I could make an educated guess about how much we spent at Costco every year and I figured we'd be at least at the break-even point on the switch, if not better. It turns out that we spend more at Costco than I thought, so we're always better than break-even on the card and the cost of our Executive membership. Even though the Costco card earns extra points for dining we still use our Chase cards first for that because with various bonuses the rewards are slightly more valuable to us. If we owned a car we would probably get more use out of the Costco card because of its extra bonus at gas stations, but this is all just maximizing marginal benefits on money we're already spending.
In other words, your miles will vary. You can't maximize the benefits of a particular card without first matching your cards to your spending habits and lifestyle, and you should be prepared to get rid of a card that no longer suits you, although sometimes that just means switching it to a card with no fee so your credit history and limits are maintained.
posted by fedward at 11:35 AM on February 19, 2022
What credit cards with points, miles, or cash back allow you to do is get a very small kickback on purchases you're already making, perhaps with some other benefits thrown in. If you travel a lot, a travel-focused card might have reduced or zero fees on transactions in foreign currencies, extra benefits like trip cancellation insurance, lost bag allowances, rental car coverage for collision damage waivers, lounge access, or a store where you can purchase plane tickets or make hotel reservations at a discount. If you frequently travel on a specific airline or stay at a particular hotel brand, having a card tied into that ecosystem will accelerate the rate at which you gain perks (upgrades, free checked bags, free trips, free hotel nights, etc). If your travel is spread among brands a card that allows you to transfer its points to one or more airline or hotel brands might be more valuable. We have a card like that (Chase Sapphire Reserve) so whenever we plan travel we always price out buying everything for cash, buying it with points through Chase's Ultimate Rewards portal, or transferring points to an airline if doing so will provide the best deal. And yes, this means planning a trip is always more complicated because it takes a while to find the best deal from all those options. This card has a hefty annual fee but we accrue enough benefits from it to cover the fee (although I do the math every year to make sure that's still true).
If you don't travel enough for a travel rewards card to be worth it, you may still find it valuable to get some other sort of rewards card. If you're a Costco member the Costco Rewards Visa has no additional annual fee (over the annual fee you pay Costco) and it accrues cash back not just at Costco but at gas stations and restaurants. The cash back comes in the form of a rebate you can either use for purchases or redeem for cash at a Costco store. Twice I've forgotten to apply my rewards certificate on checkout, and they've literally just cashed it out on the spot.
Some rewards cards have their own "stores" for merchandise (electronics, clothing, etc) although it's extremely rare for those to be a good deal. Before Christmas Chase had an extra bonus offer on Apple products bought through their store, so I think that's the first time I've ever used one of those stores for anything other than burning off points before canceling a disused card. By the same token some cards allow you to spend your points at Amazon, although the point transfer value is usually low enough that this is a bad deal.
Otherwise a general cash back card (e.g. Citi Double Cash, Discover More, or whatever thing it is Bank of America pushes at me whenever I log into my checking account) may be the best option if you want the combination of cash back rewards and no annual fee. Your credit union may also offer a card with no annual fee and fewer benefits, but it will be up to you to analyze your spending and whatever rewards they offer to figure out if it's worth paying a fee in order to gain benefits at a higher rate.
As a specific example of how I approach this, we used to have a card that earned rewards on American Airlines (Citi AAdvantage, I think) that got us free checked bags, an earlier boarding group, and faster accrual of miles with AA. But then our travel needs changed and we started flying less on AA, so it made the annual fee harder to justify. Around that time Citi became the card issuer for Costco, so instead of losing the credit line and credit history I already had, I just called Citi and asked to switch my existing account to a different card. I could make an educated guess about how much we spent at Costco every year and I figured we'd be at least at the break-even point on the switch, if not better. It turns out that we spend more at Costco than I thought, so we're always better than break-even on the card and the cost of our Executive membership. Even though the Costco card earns extra points for dining we still use our Chase cards first for that because with various bonuses the rewards are slightly more valuable to us. If we owned a car we would probably get more use out of the Costco card because of its extra bonus at gas stations, but this is all just maximizing marginal benefits on money we're already spending.
In other words, your miles will vary. You can't maximize the benefits of a particular card without first matching your cards to your spending habits and lifestyle, and you should be prepared to get rid of a card that no longer suits you, although sometimes that just means switching it to a card with no fee so your credit history and limits are maintained.
posted by fedward at 11:35 AM on February 19, 2022
Now, I carry balances because I like having spectacular credit despite only earning $14 an hour, so I don’t really care about interest rates.
Please don't do this. There is zero need to carry a balance to improve your credit score. FICO looks at how much of your available balance you're using on the day the card reports to the bureaus. 0% is just as good as 2% (and, depending on when you pay off monthly with respect to the day the card reports, you may have a higher number anyway).
I personally recommend phunniemee's approach if you don't want to spend enough time to cut through confusion such as the above. It's more or less what I do. Otherwise you could end up costing yourself money for no good reason. Optimizing can be a fun game, but only if you have the patience for it, and sufficient conservatism not to run yourself into trouble.
posted by praemunire at 2:56 PM on February 19, 2022 [1 favorite]
Please don't do this. There is zero need to carry a balance to improve your credit score. FICO looks at how much of your available balance you're using on the day the card reports to the bureaus. 0% is just as good as 2% (and, depending on when you pay off monthly with respect to the day the card reports, you may have a higher number anyway).
I personally recommend phunniemee's approach if you don't want to spend enough time to cut through confusion such as the above. It's more or less what I do. Otherwise you could end up costing yourself money for no good reason. Optimizing can be a fun game, but only if you have the patience for it, and sufficient conservatism not to run yourself into trouble.
posted by praemunire at 2:56 PM on February 19, 2022 [1 favorite]
Another vote for Chase Sapphire. It's been a good card for 5+ years now. Good benefits, no foreign currency fees, and a points / reward system that's pretty robust but ultimately simple. I don't have the patience to min/max points so I just use it for cash back: it works out to a 1-1.5% discount on all credit card purchases. The big drawback with this card is the annual fee, although the preferred fee isn't so bad ($95). Reserve comes with more benefits and a much higher fee ($550).
If you want to research this meticulously there are several good high profile sites comparing credit card rates. I've found The Points Guy to be useful.
posted by Nelson at 7:31 AM on February 20, 2022
If you want to research this meticulously there are several good high profile sites comparing credit card rates. I've found The Points Guy to be useful.
posted by Nelson at 7:31 AM on February 20, 2022
I refuse to pay an annual fee, and I was always scared off by the complexity/restrictions on getting air miles, accruing points etc, so here is what works for me (because I have a brokerage account with Fidelity): I have a Fidelity Rewards VISA, and I automatically get 1.5% rewards auto-transferred to my Fidelity account. Pretty slick.
posted by misterbrandt at 3:42 PM on February 22, 2022
posted by misterbrandt at 3:42 PM on February 22, 2022
This thread is closed to new comments.
If you pay off your credit card entirely every month on time, you will pay no interest fees. Hence, the interest rate of your card doesn't matter. Most of my cards range between 15-20% APR. The amount doesn't matter to me because I literally never pay interest.
If you are not optimizing for points, you probably should pick a zero annual fee card - these are not particularly hard to find. Higher annual fee cards often offer additional points, but if you aren't paying attention, it's really easy for the annual fee to exceed the marginal value of the points received. I only pay an annual fee for one card that I specifically use for groceries (American Express Blue Cash Preferred, which gives me 6% back for my grocery purchases).
You don't need to get points on your credit card if you find that too complicated. It's really trivial to get a flat 2% cash back on all purchases you make or a flat 2.5% cash back on the first $10,000 of purchases every month. You'll literally make everything you buy just a bit cheaper. Most points end up being worth roughly $0.015 to $0.025, so unless you are paying a lot of attention to points, cash back will probably be better for you. I put the bulk of my spending on flat cash back cards.
Most all credit card insurance requires you to use the credit card to purchase the thing being insured. I get rental car insurance from my credit card, but it only applies if I make the purchase with my credit card. So, if you're not going to use a credit card, any insurance perks don't count. The cards that have extensive trip insurance tend to charge an annual fee - you should figure out if the annual fee makes the insurance worth it. For me, it hasn't, so I use cheaper (zero annual fee) cards with minimum travel insurance.
If you really want to avoid credit cards, you can ask for a cash discount at every place you buy from. They increase their prices just a bit to account for credit card fees. You can often negotiate that for cash for larger purchases. However, I don't think that's worth the effort, and I don't personally want to negotiate the cost of a donut.
posted by saeculorum at 8:35 PM on February 18, 2022 [17 favorites]