Help me think through getting my very first credit card

June 30, 2014 11:08 AM

I'm in my mid-thirties and have good credit, but I've never had a "real" credit card. I'm going on an international trip in December/January, and in the hopes of offsetting some of my plane tickets through signup bonus miles, now seems as good a time as any to finally get a credit card (still, I'm not averse to cash back rather than miles). Give me advice!

I'm in my mid-thirties and have only ever had a "student card" with a $200 limit, which I don't think I ever used, and a department store card I used once so I could take advantage of a 50% off sale.

I have no debt currently (student loans were paid off in 2010, and paid on time prior to then) and don't intend to carry a balance, so I'm not super concerned with APRs. No idea what my credit score is, but I think its pretty good considering no previous credit.

I spend ~$2k/mo, most of which is on small things: groceries, restaurants, books, public transit, health insurance, cell phone. I don't have any large monthly payments, and my rent is low.

I don't own a car (no gas bonuses), and don't use Amazon very often.

I like to travel, but I only fly several times a year and my hotel and rental car spending is negligible either way. I'm going to SE Asia and India in December/Jan and would love a card that could potentially offset that flight through signup bonuses or something, or which otherwise offers airfare benefits. A chip-and-pin card sounds nice though realistically I don't imagine I'll go to Europe in the next couple years. No foreign transaction fees sounds good too, though I typically travel in out-of-the-way enough places that it's easier to operate in all cash.

I'm not good at miles/bonus "hacking"; I want something that's fairly straightforward.

I know I probably won't have my pick of credit cards since my credit history's so negligible, but it seems like there are a few especially good deals it's worth applying for, and that people in the last several AskMe threads recommended:

Amex Blue Cashback Preferred card -- 6% cash back on groceries, 3% on gas, and 1% on everything else. $75/yr (I'm sure the annual fee would be offset by my first few months of grocery buying).

Chase Preferred card or the Chase Sapphire

Barclaycard Arrival Plus World Elite MasterCard -- 40k bonus miles if I spend $3k in the first 90 days; 2x miles on all purchases (if I qualify); $89 annual fee (1st yr waived) & the Barclays Sallie Mae card seems good although as my former student loan servicer I really hate Sallie Mae.

Southwest Airlines -- I do fly Southwest a lot, but the $99 annual fee seems pretty steep considering I'd only get travel benefits.

Is there anything crucial I'm missing?

posted by tapir-whorf to Work & Money (18 answers total)

Best answer: "and have good credit" + "No idea what my credit score is" = HUH????

No previous credit actually isn't a reason for a good credit score. Your first step is to go find out what your FICO is through a free website.

Without knowing your credit score, it's almost impossible for you to even know what cards you're eligible for or will be offered.

Secondly, getting a free DOMESTIC ticket using miles should be a PERK of using a card after a period of time, not the reason for it. For example, you'll probably need a minimum of 25,000 miles to accrue a free ticket. Some credit cards only offer you 1 mile for every 2 dollars you spent on your credit card. That means you've spent $50,000 on a credit card to get a ticket for what probably would cost you $500 to buy outright. Not such a deal unless you are a big spender who can pay off your card every month. My suggestion - save up for that plane ticket or in short, check to make sure that actually buying a ticket to that destination isn't cheaper.

If you plan on using credit miles for getting an international ticket, consider that seats using miles often get booked up a year to 10 months in advance. I work in adventure travel, any my clients who use miles to get free air typically have hundreds of thousands of miles accrued over a few years, plan a year in advance to get the dates they want to where they want to go. It's not that easy, actually.
posted by HeyAllie at 11:16 AM on June 30, 2014 [2 favorites]

If you can reach the spend limits, the Chase Sapphire Preferred is a great travel credit card. The biggest perk is that you can easily transfer their points to other companies like Marriott, United, or Southwest at a 1:1 ratio without any fees. But you're only getting double points on travel and meals, not on everything. If you book travel through their website its triple points. I'm not sure what sort of credit you need to apply.
posted by craven_morhead at 11:23 AM on June 30, 2014

Best answer: I have that Barclaycard. My sign up offer was slightly different (I think I only had to spend 1k), but I ended up getting around $450 off a flight I was buying from the sign up bonus alone. I've gotten some rewards back from spending (it's a pretty good return if you spend on travel stuff, but not particularly impressive for other spending), but the real money was definitely in the sign up bonus for me.

The bad: The 0% APR was a little dangerous. I've been getting credit cards for the sign up bonus for years and paying it off so that I never pay any interest. However, this past year was expensive (because I was traveling internationally, as you will be), and I kept putting stuff on that card and saying I'd pay it off before the 0% APR period ended. That intro period ended June 15th and I still have a balance on the card and am carrying (a small amount of) credit card debt for the first time in my life. So don't do that. I'm personally going to take a break from signing up for cards for miles until I have my finances back under control.
posted by geegollygosh at 11:31 AM on June 30, 2014

Don't get Amex. They're expensive, and widely refused. Whatever card you get will likely have chip and pin (or be replaced soon by one that does) because the US is finally catching on to the liability/fraud thing. If you pay off your card every month, it doesn't really matter what type you get as long as it hasn't got fees. In my case, I keep a particular Visa card because a) it gives a small amount of money to Amnesty International, and b) it's bright yellow.
posted by scruss at 11:35 AM on June 30, 2014

"and have good credit," ... "No idea what my credit score is,"

Not having credit cards or student loans is actually a pretty easy way to get bad credit. "Credit" is (in the US anyway), in significant part, a function of your ability to keep your credit lines in good standing and how leveraged you are as a percentage of your total borrowing capacity (i.e., how much of your credit lines you are using, including what % of your credit cards are drawn to their maximums). If you do not have credit cards or student loans, you are not keeping your credits current; if your credit limit is not above what you have currently borrowed, you are not a great credit risk. Again, ironically, it does not matter that you do not have credit lines open.

In any event, I have the Blue Preferred Cash Back card you mention for the groceries. It's great. When I got it, they gave a $150 statement credit if you spent $1000 or so in the first three months; that's enough to offset two years' fees. We've gotten a few hundred back already. Their customer service is really great, as well. Amex is not universally accepted abroad though.
posted by Admiral Haddock at 11:43 AM on June 30, 2014 [1 favorite]

I've not used one, but Capital One's cards have no foreign transaction fee, which is useful for your upcoming travel. And their rewards system is essentially a cashback system.
posted by scolbath at 11:45 AM on June 30, 2014 [1 favorite]

No idea what my credit score is, but I think its pretty good considering no previous credit.

This logic is exactly backwards. No credit history often means a low credit score. Credit scores are all about companies understanding the risk that they run by giving you a credit card. If you have no credit history, they have no way of evaluating the risk. Paying off your student loans is helpful, so maybe that partially counteracts your lack of credit cards. Definitely check your credit score so you know where you stand.

For specific cards, I would consider one of Capital One's cards if much of your spending is on travel. Either the "Venture One Rewards" card (no annual fee and a 1.25% reward on any travel-related expenses) or a "Venture Rewards" card ($59 annual fee after the first year, 2% reward for use on travel-related expenses). The big plus is that none of their cards have foreign transaction fees. I'm sure there are better cards out there, but the Capital One cards are dead simple and offer good rewards.
posted by Betelgeuse at 11:48 AM on June 30, 2014 [1 favorite]

scruss: "Whatever card you get will likely have chip and pin (or be replaced soon by one that does) because the US is finally catching on to the liability/fraud thing."

I've received two replacement credit cards in the last six months that have a chip on them. After calling both of them to figure out a PIN for my recent trip to Europe, I discovered that they are NOT chip and pin. They are chip and signature. No idea if it's secure or whatever, but I kinda doubt it. Stupid US credit card agencies.

Also, I have the chase Sapphire preferred card, and while I love that there are no international fees on it, it is also chip&signature. There's also a sliver of metal through the whole thing, making it very stuff and kinda heavy and it was even too thick to put into a parking meter over in Copenhagen. Weird.
posted by Grither at 11:48 AM on June 30, 2014

Agreed you need to find out what your credit score is. I like CreditKarma, which gives you an approximation of your FICO score and suggests cards that are pitched to people with your credit score.

In addition to looking at signup bonuses, also look into card that don't charge foreign transaction fees - Capital One's cards don't charge foreign transaction fees, which is handy. This may not be useful for you though, if you're going to be traveling in places where you need to pay for things with cash.

And yeah, the chip-and-signature thing seems to be what you get if you get any kind of chip at all, and if anything it's even MORE confusing to European cashiers than just a stripe card.
posted by mskyle at 11:48 AM on June 30, 2014

In addition to what HeyAllie noted, most mileage bonuses offered as part of signup don't completely kick in until you've had the account for at least six months, all in good standing; i.e., a 50,000-mile bonus will give you 25k miles up front, then 25k after six months/a year.
posted by evoque at 12:26 PM on June 30, 2014

Response by poster: FYI: According to Credit Karma my TransUnion credit score seems to be 717, and my Vantage score is much less good at 723. Neither of these are FICO, obv. How does this change things?
posted by tapir-whorf at 12:39 PM on June 30, 2014

I would say start applying for credit cards tomorrow, and see what ones you get. If I remember correctly, and I am NOT at all sure about this, applying for multiple credit cards within one calendar month doesn't count against your credit score any more than applying for one card. I like the capital one travel card. My friends like the Chase Sapphire card. Both cards don't charge you anything for the exchange rate on foreign transactions. Hit up Nerd Wallet at http://www.nerdwallet.com/travel-miles-credit-cards/ and apply for all the ones that are free annual membership?

Again, double check about the multiple-credit-cards thing or limit yourself to a handful.
posted by Phredward at 1:25 PM on June 30, 2014

USAA says their card with a chip is chip-and-PIN. They charge 1% currency conversion fee. Capitol One and Bank of America both have cards with no currency conversion fee, but not chip-and-PIN, though BOA's has chip-and-signature.
posted by still_wears_a_hat at 1:33 PM on June 30, 2014

If I remember correctly, and I am NOT at all sure about this, applying for multiple credit cards within one calendar month doesn't count against your credit score any more than applying for one card.

Not true for credit cards. Multiple mortgage and auto loan inquiries don't count against you, because that's just shopping around, but multiple credit card applications will each ding your credit.
posted by rabbitrabbit at 1:52 PM on June 30, 2014

At least some Barclaycard Arrival cards do come with real chip and pin chips. But as others said, the vast majority of chip credit cards you can currently get in the US are chip and signature. If chip and pin is important to you, be really careful about knowing what you're getting.
posted by primethyme at 2:34 PM on June 30, 2014

Best answer: N-thing the recommendations for the Chase Sapphire Preferred as a good all-around travel card. You get 2 points/dollar on dining and travel (which includes things like car rental and public transportation), and you can transfer points to other programs for free. If you don't want to buy a ticket through a points program, you can use the Chase points to purchase a ticket at a rate of 1.33 cents/point, and use your own funds to make up any difference. I've also found the no foreign transaction fee and the trip interruption insurance to come in handy. I believe the minimum credit limit that Chase offers with that card is $5,000, so you will need a decent credit history to be eligible.

As somebody who has gotten several transatlantic flights using credit card bonuses, you generally get a better deal if you buy a ticket through an airline's points program than if you redeem credit card points for cash, and you'll do best if you decide where and when you want to travel before coming up with a credit card strategy. For example, a glance at the United website shows plenty of awards ticket availability from your hometown to Bangkok in January and February for 80,000 points round trip. If you wanted to do this using credit cards, you'd need to get the Chase Sapphire signup bonus to transfer to United, as well as something from another card that gives United points - say, the United credit card or one of the Chase business cards. Transferring your Sapphire points to United is a better deal than redeeming them for the cash value of a ticket since a ticket would probably be around $1,500, but you'd need to somehow get the full 80,000 points to do so - no way to pay partly with points, partly with cash. On the other hand, if you find that you're going somewhere where American has better routes and availability, you'd want to apply for one or more credit cards that will get you the number of points you'd need for a round-trip ticket on American.

Note that using credit card signup bonuses is a really good way to get free airline tickets, but only if a) you will never, ever carry a balance, b) you're able to spend the minimum on the card(s) to get the bonus without spending more than you would in your day-to-day life, and c) if you're willing to cancel some of the cards after a year when the annual fee rolls around. If you're just looking for one credit card with a good overall program that won't necessarily get you all the way to SE Asia, the Sapphire Preferred is a good choice for travel. The Amex Blue Cash would be my second choice for general cashback.
posted by exutima at 3:34 PM on June 30, 2014

I have 2 credit cards, both have automatic payment set up to help me keep the balance at 0, and avoid late charges.
posted by theora55 at 5:38 PM on June 30, 2014

Best answer: I was in the exact same boat as you were this past winter (30, no real credit, etc.) You will most likely not be approved for the Chase Sapphire Preferred, as it's a "high limit" card ($5,000 minimum). Chase just won't give you a $5k card if all you can show is that you have a $500 card you never use.

I ended up going with Amex Blue Cash. It's not accepted at about 1 out of every 20 places, but life goes on. Plus, after I was able to prove that I could manage the credit limit they set for me, I was able to easily double it and now I'm much more likely to be approved for the card I wanted in the first place.

In the end, my credit score only went up 20 points. But I now have six months' worth of reliable credit management, which is worth its weight in gold.
posted by harperpitt at 9:04 PM on June 30, 2014