Is your credit card cool?

March 28, 2014 8:09 AM

I'm shopping around for a credit card for the first time in ages - I've decided airline miles are a sucker's game, and just want something more straightforward. I'd like to know if there's anything really forward-thinking going on in the credit card world, because it all looks like "fees versus rates versus weird points schemes". If you have a credit card that you love (or hate) can you tell me why? FWIW, good credit, revolve occasionally (once a year or so?), and willing to pay a fee for something truly good. I've looked at previous questions but it feels like the landscape changes so quickly!
posted by ersatzkat to Work & Money (28 answers total)

1. Get American Express Card (Blue or Green)
2. Buy all gasoline on card throughout the year. Spouse does the same.
3. Do all Christmas shopping on Amazon, since Amazon lets you spend Amex Reward Points.
4. Bask in awesome.
posted by DWRoelands at 8:14 AM on March 28, 2014 [2 favorites]

What sort of features do you want? E.g. if you travel to Europe a lot, you would like a chip and pin card (good luck, most US cards are actually chip and signature). You might also want low/no foreign transaction fees.

Also a few cards have benefits that kick in only if you spend enough.. e.g. Barclay's travel card.

Anyhow I've been learning a bunch from nerdwallet which seems to have a decent set of writeups about the subject.
posted by nat at 8:17 AM on March 28, 2014

I feel like if what you want is a relatively unconfusing reward program you should probably just go for a cashback card rather than one that is any kind of points or rewards based. You'll eventually get money back and money is pretty uncomplicated.

They have different tiers for different types of purchases, so it's not always perfectly straightforward, but the basic equation is "Will I spend enough money to get more back than the annual fee?"
posted by jacquilynne at 8:18 AM on March 28, 2014 [5 favorites]

1. Get Discover Card
2. Buy everything on card throughout the year.
3. Do all Christmas shopping on Amazon, since Amazon lets you spend Cashback Bonus.
4. Bask in awesome.

I like Discover because it's a straightforward 1% Cashback Bonus on all purchases, no "points" or whatever. They'll send emails saying "sign up now and get 5% on [restaurants / gas / home and garden / whatevs] for the next three months" and it's just a matter of clicking 'okay' on their web site.

The mobile app is decent, their fraud alert emails come through instantaneously when you spend more than your customized fraud alert limit, and their web site is easy to navigate.

They probably hate me because I've been using them for years, literally never carried a balance over to the next month, and I've taken hundreds if not a few thousand dollars from them at this point.

I'm down to two businesses that I know won't take Discover - my favorite pho joint and my dry cleaners. Past that the stigma of Discover seems to have mostly dissipated and I find it's accepted nearly everywhere.
posted by komara at 8:26 AM on March 28, 2014 [5 favorites]

(oh and no monthly fees on Discover, nor signup fees that I'm aware of)
posted by komara at 8:27 AM on March 28, 2014

For many people including me, the best card is the highest % cash reward card you can find with no fee (or something very close to cash that you'll absolutely use, like groceries). No downsides and decent rewards that you'll actually use.

If you spend a lot of money on your card every year and especially if you do a lot of travel, it's worth looking at the fee-based cards since some of them give really nice travel perks and/or give very good air mile rewards. For the average person the fee you pay will cancel out the perks, though.

(you don't need to worry about differences in interest rates unless you're carrying a balance, and if you're doing that the rewards are irrelevant compared to the amount you'll be paying in interest).
posted by randomnity at 8:28 AM on March 28, 2014

I think it depends on how you use the card. My partner and I don't have a car, so gas rewards don't do us any good, but we do order a ton of stuff through Amazon (due to that whole no car thing), so we have a no-fee card that gives 5% back on bookstore purchases (which includes Amazon). Rewards that are applied to mortgage payments or student loans have the best point to dollar ratio, so we use the reward to apply to the principal on our mortgage.
posted by amarynth at 8:28 AM on March 28, 2014 [1 favorite]

I've had a lot of credit cards for various reasons over the years, and I think for a general purpose card, Discover is up there as one of the best, especially if you can qualify for a Discover It card.

I like AmEx because I can use it at Costco, and I have an Amazon Rewards Visa, which is one of the better cards to be using if you're planning to do a lot of shopping on Amazon. (I have a Kindle and Prime, so it works for me.)

Now, I pay off my card every. single. month. on time, and never go over my limits, so my credit score is fairly decent. Keep that in mind as well when you decide to start using a credit card all the time.
posted by PearlRose at 8:33 AM on March 28, 2014 [2 favorites]

Our Fidelity card gives us 2% cash back, no fees. The cash-back gets deposited into our brokerage account and earns more money there. By avoiding a points scheme, we get to use the money back for whatever we want.

We use our Capital One card when we travel abroad because it doesn't charge currency exchange fees, but use Fidelity for everything else.
posted by Capri at 8:46 AM on March 28, 2014 [1 favorite]

A cashback creditcard is so much better than any point system I have ever seen or used. Definitely go cashback. There are ones with and without fees (but a lower cashback amount), so take your pick on that one. I got 280$ back last year. Yeah!
posted by PuppetMcSockerson at 8:52 AM on March 28, 2014

If you qualify, the AmEx Blue Cash Preferred pays 6% cash back on groceries, 3% on gas, and 1% on everything else. We use this card on (almost) everything. It has a $75 yearly fee, but we made more than that back in the first month (we spend more on gas and groceries than we do everything else put together, including rent.)

I also have an Amazon Visa. If you get one of those - Protip: don't use the points to buy things on amazon. Apply the points as a statement credit, and then just use the card for your intended purchase. Your balance functionally stays the same, but you get the 3x points for the purchase since you used your card.
posted by namewithoutwords at 8:56 AM on March 28, 2014 [4 favorites]

I have the Amazon Rewards Visa (which is issued by Chase) and a Discover card, both referenced above. Both give cashback. The Amazon Rewards is 1% generally, with some 2% categories (that don't apply to me) and 3% on Amazon.

Discover is 1% on everything, with quarterly categories of 5% (i.e., gas, restaurants, home improvement, etc.), that you can click through to activate, though I believe there is a cap on the amount that can be earned this way. Discover also ShopDiscover (and I know other cards have similar programs) where you can look at a list of online retailers on the Discover website, and click through to the retailer's site from there, use the Discover card, and get a higher percentage of cash back (between 5-20%, though most of the retailers I used is just the 5%). I tend to do most of my shopping online, so I've trained myself to check to see if the retailer is a ShopDiscover retailer first.

Although I can use my cashback points for shopping on Amazon with either card, I always opt to just get a statement credit for my next statement (whenever my rewards hit $50 for Discover, though the Amazon Visa now let's you do it whenever). That way, I earn more points for anything I buy on Amazon.

Neither of my cards have annual fees, and I think of the cashback as a bonus, not as a means to an end or a reason to charge more. I suspect there might be cards that offer greater rewards, but that charge annual fees or require more work on my part, so I stick with these cards.
posted by Bailey270 at 8:59 AM on March 28, 2014 [1 favorite]

Well, I am a big fan of the Chase Preferred card, but it helps that I love traveling and the travel rewards are REALLY GOOD for this particular card. How it works:
-earn two points per dollar on travel and dining purchases; one point per dollar on everything else
-ALSO on the first Friday of each month you earn an additional point per dollar on dining
-spend (I think) $5k in the first few months of having the card and you get an additional 30k points which is a shit-ton
-no annual fee on the first year; yes, there is one the second year, but...
-at the end of the year you receive dividends on how much you spent during the year and you're almost guaranteed to earn enough back to cover the annual fee
-redeem points for cash rewards or gift cards (honestly cash back is almost always the WORST way to spend points on any card), transfer 1:1 to airline and hotel partners (including Virgin, United, Southwest, British), or book through the Chase site where your points are worth 1.25x the normal amount

I've had the card less than a year and I've already earned enough points to pay for all of the following trips:
-round trip first class airfare from Seattle to Vegas AND 5 night accommodation at the Four Seasons
-5 nights stay at a very very swanky Park Hyatt in DC
-round trip airfare to Vietnam

If you're not into free travel, though, it might not be the card for you.
posted by joan_holloway at 9:10 AM on March 28, 2014 [4 favorites]

I've been very happy with my Citi Dividend World Elite MasterCard. There is no annual fee, you get 1% cash back on standard purchases plus more on selected categories that change over time. It's been very straightforward and nice to get a check from them with some free money a couple of times a year.
posted by alms at 9:10 AM on March 28, 2014

If you qualify, the AmEx Blue Cash Preferred pays 6% cash back on groceries, 3% on gas, and 1% on everything else

I have that card as well, and I like it quite a lot. Notably, they put a cap on the amount you can get back on groceries after first year. You get 6% back on first 6000 in groceries annually plus the aforementioned benefits. It is still a very good deal, as noted above.

One thing that people don't necessarily realize is that Amex tends to have some great customer protection included. For instance, bought a cable modem that I did not end up needing, Staples refused to take it back as it was 85 days after purchase. Called Amex, they gave me a full refund the next day. Things like that make you loyal.

Another Amex card I have via fidelity gives you straight 2% back in cash on everything, no annual fee.

I have a discover and visa that offer the quarterly incentives, but a pain to keep up with what they are. The one thing about amex is a significant number of places do not accept it, so you need a visa or mc as well.
posted by jcworth at 9:32 AM on March 28, 2014

I'll n-th an Amazon Visa if you buy a lot of Amazon stuff. The 2x point categories are gas, restaurants, and drug stores. The restaurants category seems somewhat liberal in that they consider the cafeteria where I work a "restaurant." The drugstore category is pretty restrictive so places like Target or Walgreens are not drugstores.

Then I do as other people mention--buy everything including whatever bills you can on the card and then convert the points to a statement credit. At 2500 points and up you can convert every point to a credit rather than have to wait for some level (e.g. 2843 points = a $28.43 cent credit.)

And, as others have said never use the points to buy stuff directly from Amazon even though they'll let you.
posted by sevenless at 9:50 AM on March 28, 2014

I use my Cashback Bonus from Discover to buy things at Amazon just because that keeps my impulse purchases under control. Say I spent $1,000 on my Discover card this month - that means I just got $10 in free money to spend at Amazon. Now I could very well use my Discover card on that $10 purchase to earn an additional $0.10. However, if I treat the $10 as free money that gives me a little leeway to buy something frivolous (mainly books I don't need but I sure do want) without feeling bad, and that helps keep my other spending under control.

So, yeah, over the course of a year that could be a couple bucks in Bonus money I didn't receive but at the same time if I'm using real money to fund impulse purchases I don't have a hard ceiling and I'm more likely to bump it up a few dollars, erasing any gain I might have made. YMMV.

(plus a $10 book in-hand feels so much better than an intangible $10 credit against a $1,000 credit card bill, you know? It's all about tricking my own brain into being satisfied.)
posted by komara at 9:58 AM on March 28, 2014 [1 favorite]

I believe the way to really win is not to play games. Please consider:

Where does the money for those rewards come from? From fees charged to retailers, which you don't see.

Retailers cover those fees by raising prices. They raise prices for _everyone_, because credit card companies don't allow them to charge different prices for those who pay cash. People who don't use cards are covering the fees for those who do use cards.

Who gets the brunt of this? People who _can't_ get credit cards, or who can't get the fancy cards with rewards.

Essentially, credit cards rewards programs are a game that means nothing to the card companies, a tiny bit to you, but perhaps a lot to someone who can barely (or not at all) afford groceries.

Also, I'd bet we put more time into tracking rewards and redeeming them than you realize, time that we can't buy back with money :)
posted by amtho at 10:07 AM on March 28, 2014 [1 favorite]

Also, the best credit card company is one you can, at least somewhat, trust; one that will probably not try to raise rates or remove rewards without letting you know. Credit unions are generally regarded as good for this.

So, I have a no-annual-fee card with my credit union. It's been wonderful for the past 25 or so years. Great customer service, very helpful if there's ever a problem, and I really don't miss having miles or whatever. If I want to go somewhere, I go :)
posted by amtho at 10:10 AM on March 28, 2014 [1 favorite]

"Most companies go into business to make money. Twenty-nine years ago, we went into business to make change. We’ve succeeded better than we ever imagined. Since 1985, we’ve raised more than $76 million for nonprofit groups working hard for social change—and this year we’ll raise millions more."

"With each purchase you make, we donate 10¢ to nonprofit groups fighting for women’s rights, the environment, equality, peace and social justice—at no extra cost to you. Plus, you vote for which nonprofits will receive the funds."

I've had mine for some twenty years now. In addition to the lefty stuff, they don't screw you on fees and interest rates.

http://www.credocreditcard.com/
posted by intermod at 10:35 AM on March 28, 2014 [3 favorites]

I like my US Bank Cash+ card.

No annual fee
2% Cash back in category of your choosing (gas, grocery stores, drug stores)
5% Cash back in two other categories (there are a bunch of choices here, I've selected restaurants and fast food restaurants for now)
1% Cash back on everything else

You can choose new categories each quarter and once per year when you redeem $100 or more you get an extra $25.

You can get a reminder every quarter to select your categories again, you do have to select your categories every quarter even if you don't change them or your just get 1%.

We also have an Amazon credit card because we buy a lot of stuff through them.

In general, we use the US Bank card for ALL of our purchases and then pay off the statement balance in full each and every month. I honestly don't know what our interest rate is off the top of my head but I've never and will never pay interest on this account.

Full disclosure: I am a US Bank employee.
posted by VTX at 10:51 AM on March 28, 2014 [1 favorite]

I love my Citibank Dividend Card. It's been the primary card I've used since 2000 (!), you get 1% cash back on everything and the rotating quarterly 5% categories. Two or three times a year, I request a rewards check from them (rewards are sent once you hit $50). It sounds a lot like the Discover card, but keep in mind that the Citibank card is a Visa or Mastercard, which are accepted everywhere. I've seen a lot of brick and mortar stores that still don't accept Discover or American Express.
posted by jabes at 11:09 AM on March 28, 2014

I got the Amazon rewards card w/ Visa since I got $50 off my amazon purchase.

It's 1% on all purchases, 2% on restaurants/gas stations/groceries (I think groceries...), 3% on amazon purchases.

It gives me points I could use on Amazon... or gift certificates/cash/credit statement all at the same rate. So I just get the credit statement and it more than pays for any sort of interest rate when I had a balance and now is just free $20-30 a month-ish.
posted by OnTheLastCastle at 11:33 AM on March 28, 2014

I also have the Amazon Visa through Chase, and love it. If you shop on Amazon frequently, it is very handy because you can just enter in the amount of your rewards you want to spend on your next Amazon purchase in the Amazon checkout process, no dealing directly with the credit card company.
posted by rainbowbrite at 11:46 AM on March 28, 2014

Retailers don't "give up" 2% -- they raise their prices so that their customers all pay the extra cost. And all customers must pay it, because nearly all retailers take credit cards, because a retailer who doesn't accept credit cards is a retailer that doesn't have a lot of customers (particulary the customers who are well-heeled enough to have credit cards).
posted by amtho at 1:40 PM on March 28, 2014 [1 favorite]

And that extra percentage, paid to the vast majority of businesses by cardholders and cash customers alike, is where credit card rewards come from.
posted by amtho at 2:03 PM on March 28, 2014 [1 favorite]

I've been thinking about getting the card my bank offers that puts the cashback reward towards the principal on my mortgage. There are similar ones for student loans. So if you're carrying any major debt, you might want to consider a card like that.

Brooke
posted by brookeb at 2:45 PM on March 28, 2014

nthing the Amazon Visa. Use the points for a statement credit rather than paying for Amazon purchases directly because that way you get 3% on the Amazon purchase.

Different direction: if you bank with a credit union, check which card they use. Might be a good match for fees (or lack) and rewards.
posted by yggdrasil at 7:14 PM on March 30, 2014