Monday, January 24, 2011

Credit Card Series: The Best Card for You

Remember when you were a kid and your teacher told you that every snowflake is unique and different? Well each credit card is qunique and different too. This works out pretty well, since people are unique and different. Depending on your lifestyle and purchase habits you may find you "match" with one card while another reader may find she "matches" well with a different one. This is why instead of ranking cards I am going to lay out the cards with the best rewards options, fee practices and reliability in no particular order. Based on your lifestyle you can choose the card that works best for you.

Note: This is intended for readers looking to open a new card. If you are thinking about switching your card please wait until you read my upcoming post about credit cards and your credit score. Closing a card to open a new one may have consequences you have not yet considered.

The Best Cards:

Amazon Rewards Visa: If you are an Amazon shopper this card is great for you. There is no annual fee and rewards come in the form of amazon gift cards or cash back (the same amount of points will get you either 50$ in amazon credit or 50$ statment credit). You get 3 points for every 1$ you spend on amazon, 2 points for every 1$ you spend at gas stations, restaurants, drug stores and office supply stores and 1 point per dollar everywhere else. 2,500 points earns a 25$ gift card. Recently I got a letter from Visa telling me that because I have been a loyal cardholder I will be getting double points for a few months.

American Express Blue Cash: AMEX has a line of "blue" cards that are very good. Blue cash is the card that works best for most people. There is no annual fee and rewards are in the form of cash back. Up to 6,500$ in annual spending earns you 1% cashback at supermarkets, drugstore and gas stations. You get 0.5% everywhere else. Above 6,500$ in annual spending you get 5% and 1.25% respectively. AMEX has great consumer programs - travel insurance, customer protection etc. However if you travel outside the U.S. or use your card a lot you should know that not everyone takes AMEX, especially in foreign countries. However there are also some places, including one of my favorite restaurants,  that ONLY take AMEX. There are several other blue cards that may work better for you depending on your lifestyle. I use blue sky, because I travel for work. Frequent Costco shoppers may want the Costco True earnings card.

Capital One No Hassle Cash Rewards: This card has a 39$ annual fee. You need to look at your purchasing habits to check if the rewards you will earn merit the fee. For instance, if you pay for private school tuition using your credit card the high cash back rate may justify the fee. Rewards come in the form of cashback. You get 2% cashback on gas and groceries and 1% back on all other purchases.

When signig up for a new card make sure you look out for special signing bonuses. Often you can get a large points/cashback bonus with your first purchase or when you meet certain criteria. Also check if any of your family members can get a bonus for referring you. It's nice to help out family. (and if you'd like a referral for AMEX blue sky - just let me know!).

Worst Card:

First Premier Bank MasterCard: This card is such a dud it was listed by "Consumer Reports" as America's Worst Credit Card. There is a 75$ annual fee and an APR of 23.9%-59.9% depending on when you visit the website. Other surprise fees include an 11$ charge for expedited bill payment over the phone and a credit limit increase fee equal to 50% of the increase. Beware: copycat cards are out there. "Centennial" and "Aventium" from First Premier Bank are also cards you should drop like a hot potato.


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