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How do I pick a credit card?
Snowglobe
Registered User regular
Registered User regular
I've never had a credit card and been meaning to get one for some time, but I don't know where to begin choosing one.
Until now I've been making do with my debit card, but I've heard that's less ideal in case of fraud, and doesn't really help with my credit rating. Since it's expiring soon, I thought I'd take the opportunity to switch to a credit card for day-to-day purchases, and maybe use debit to pay that off in one lump.
My bank is a small regional one, in a region I've moved about an hour away from. From a quick look at its site, I don't think it even offers credit cards.
I'd google this myself, but I'm wary of trusting the results on such a monetary issue. Could anyone offer me some advice, or at least point me to a good website? If I missed any relevant info, let me know.
Until now I've been making do with my debit card, but I've heard that's less ideal in case of fraud, and doesn't really help with my credit rating. Since it's expiring soon, I thought I'd take the opportunity to switch to a credit card for day-to-day purchases, and maybe use debit to pay that off in one lump.
My bank is a small regional one, in a region I've moved about an hour away from. From a quick look at its site, I don't think it even offers credit cards.
I'd google this myself, but I'm wary of trusting the results on such a monetary issue. Could anyone offer me some advice, or at least point me to a good website? If I missed any relevant info, let me know.
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So if you buy a lot on Amazon, their card would be a good choice. But only if you pay off every month.
Otherwise Chase or Citibank are two big international banks.
Country matters as ASimPerson said but credit score does as well. Do you have student loans/car loan/a bill paying history somewhere? If you've got decent credit you're looking for something with no annual fee and reasonable rewards scheme.
As for suggestions:
1. Pay it off in full and on time every month or don't get one. A single late fee or interest charge will offset any cash back you are getting for that month by orders of magnitude.
2. I generally recommend sticking with cash back cards as opposed to cards that awards things like airline miles or ambiguously defined "points". The whole reason that points and miles exist is to obfuscate the actual value of rewards you are getting as much as possible because A. they tend to not be as good as cash, and B. the card providers can cut your benefits by changing the value of whatever fake currency you get without technically changing the rewards rate of the card so hopefully you won't notice.
3. A note on credit limits: I tend to ask for as much as they will give me, and increase it whenever I can. The reason for this is because credit utilization(credit you have available vs how much you actually use) is a significant factor in your credit score, and if your month balance is a significant chunk of your limit, it can hurt (raise) utilization. That said, don't feel like you HAVE to get more credit than you are comfortable with, maxing my limit is how I do it but it's certainly not the only way.
Some cards I recommend(assuming you have good credit):
Amex Blue Cash Everyday:
3% on groceries up to 6k
2% on gas stations and some department stores
1% everywhere else
There is also the preferred version (6%/3%/1% back respectively but with a $75 annual fee, you need to do the math and see which comes out ahead for you)
Amex still isn't accepted everywhere (althougn most major retailers will), but you have a debit card to fall back on
Amazon card:
3% at Amazon
2% on gas, restaurants, and drug stores
1% everywhere else
Good if you do a lot of shopping at Amazon, obviously
Citi Double Cash:
2% on everything
One of if not the single best across the board cash back cards there is
There are other things to consider, for example bonuses for signing up. For example, southwest miles are kinda crappy on their card, but I've been flying to 3 PAXes a year for the past two years for free by repeatedly signing up, spending just enough for the signup bonus, then cancelling the card, then rinse and repeat. It sounds like that kind of stuff is probably more hassle then you want to deal with though, and any of the above mentioned cards will serve you well.
Keep meaning to get the 2 percent citi card.
If you don't have kids, something to think about if you ever do.
I'd probably do an Amazon card if it wasn't for my own child.
the most basic rewards system a card offers is cashback, and they come in various flavors. some cards like Capital One just offer straight cash. other cards like Amex Blue will only cashback you for specific purchases but you technically get a better conversion rate (they give you points and you use the points for charges)
I've been an AMEX user for well over a decade and in that time
A) Never had a fraud issue
C) Gotten huge amounts of points from them (currently sitting on over $500 worth of points)
D) They're travel booking service is the least-horrible of all of the options I've dealt with
E) Received the lowest interest rate BY FAR. Like, not even close. My Blue is something like 17%, where most consumer credit cards are in the 20s
we also talk about other random shit and clown upon each other
You may be better off starting with one processed by visa or mastercard since those are almost universally accepted.
Pay it off every month, never carry a balance. Credit cards aren't free money, they are a means to move your money you already have. If you treat them that way, you get the perks without the penalties.
It was also the only credit card I had that didn't impose additional fees or costs on any of my transactions while I was living in Australia (both Amex and Visa tacked on another 1%-3% on each transaction).
That being said, I'm the kind of customer who just pays off my balance every month and generally doesn't cause any hassles, and I interact with credit card companies maybe a couple of times a year, so YMMV.
The #1 rule with credit cards is: PAY OFF THE BALANCE EVERY MONTH
If you take care of that, then by and large you will not care at all which card you are using beyond whether they charge additional fees or the types of rewards you get, because you will not be hit with ridiculous interest rates or other shenanigans.
1) $0 annual fee.
2) Lowest interest rate
3) Cash back bonuses
0% APR balance transfers can be another thing worth looking into, but as a first card their benefit is somewhat diminished to you.
You can't give someone a pirate ship in one game, and then take it back in the next game. It's rude.
I second this. I still have a credit card from my old bank (a credit union) from before I moved last year, and it didn't charge me any interest the one and only time I didn't pay everything off in full at the end of the month (had a couple large unexpected expenses that month).
This is basically the way to go. Citi Double is a must-have. Then you need to figure out how many cards you want vs. how many categories you spend a lot of money on and can find a card that is higher than 2% for them. The above cards are good, and if you spend a lot on gas, you can also get a Bank Americard which is 3% back on gas.
If none of these categories look particularly appealing, you may want to get one of those rotating category cards that give 5% back (Chase Freedom and DiscoverCard are pretty good IMO), but if your grocery store takes Amex that's probably a better buy, and if you're just starting your credit you don't want to get too many cards too quickly.
If you go for one of the rewards cards check your personal network of family/friends as they often give bonuses to folks if they refer somebody for a card and that's just free money at that point.
Eh, agree that a card should be paid off in full every month, but I disagree that you shouldn't care about the intrest rate. You never know when you might have a tight month and need to leave a little on to allow yourself wiggle room. I'm not saying that should be a regular occurrence (it shouldn't!), but a safety net that won't bury you isn't a bad thing.
I'm not going to weigh in on whether or not you should care about interest rate, but I do want to weigh in on the latter point. I do understand that saying is often easier then doing, but you really don't want to fall back to a credit card in a tight month. You want to have an emergency fund for this type of thing. If your funds are tight enough that you are putting stuff on the credit card out of necessity, they are probably also tight enough that you aren't going to fare super well next month with your normal expenses PLUS last months interest (and hopefully the remainder of the balance). That's how people start with putting "a little on the card to get me through the month" to winding up in serious debt. It's a very easy path to go down that you should be very wary of.
I just recently got a secured card and have been buying stuff just so I could pay it all off every month.
Do not engage the Watermelons.
I was stating it as a one time sort of thing. I mentioned earlier in thread that I had to do it once, just once, due to a large expense followed my another large one that I wasn't expecting. It made my budget tighter than I'd prefer so I didn't pay it off in full that month (but did pay off most of it). The next month I easily payed it all back off due to have a low intrest (in this case zero).
This is exactly right. You do not rely on our credit card for emergency funds. If that is the case, then you are living well beyond your means. Even in an absolute worst-case scenario where you lose your job and you have to pay several months' worth of living expenses, you should have that money available in a place where it can be easily accessed (bank account, money market fund, etc.). A credit card means you don't have to carry around thousands of dollars in cash when you need it right away. It doesn't mean that you don't have to actually have that money available when the bill comes due.
A few years ago i had to travel for work a lot (still do some, not as much). So i got a Hilton Amex that have me some points from every purchase but a triple multiplier from buying hotel stays in Hilton hotels (cab be one of their sister brands too i.e. Hampton Inn). Work refunds my purchase, i keep the points, always have a free room at a decent hotel when i travel for vacation.
I will say that Chase Freedom is about to get far less appealing at the end of the month due to the change in the Amazon rewards. Currently you can redeem your points 1:1 on Amazon, but they're changing to 125 points = $1 in September, which annihilates the usefulness of that program.
Best tip I ever got was don't ever put anything on a credit card that you can't pay off with savings/checking accounts at a moments notice while accounting for emergencies (such as your transportation breaking down, job loss, etc.) Throw food and utilities on it and pay more than the minimum every time, always leave a little bit of debt on it while making above the minimum payments because the amount of time that you have debt (that you can successfully pay for) also builds your credit and looks better and better for you.
Credit is a fickle mistress that can help you get a nice car and house but if you rub her the wrong way she will burn you.
This is a common misconception. There are a few relevant factors re: credit score that this effects, none of them are helped by leaving a balance you could pay off (and effectively throwing away money on interest).
The first, which appears to be what is being referenced, is credit history length. This is independent of any balance you have on the card as far as credit score is concerned. This is a reason not to CANCEL a card (provided there is no fee), but not a reason to carry a balance. For example, I keep an eye on my credit report/score, and my "average length of credit" and "length of credit history" are largely where they are due to a credit card I got as a teenager. It has a zero balance and I haven't made a purchase with it in years, but I keep it stashed in a drawer because it doubles the length of my credit history. In short, credit history length is independent of balance as far as credit score is concerned.
Second is variety of debt. Having a credit card over not having a credit card helps this, but again, it is independent on having a non-zero balance or not.
Last is credit utilization, which is essentially (credit used/credit available). Lower is better. Carrying a balance actually HURTS you in this case.
Tl;DR Don't carry a balance just because you can. It hurts, not helps, your credit.
EDIT: One thing I forgot to note, UTILIZING your credit does impact your history somewhat in certain scenarios. That said, charging stuff, then paying it off at the end of the month counts just as well for this.
Because it needs to be said by everyone: Carrying a balance is bad. Pay it off in full every month. Every paycheck if feasible.
You want to make sure a balance is established or else it does nothing for your credit. Don't pay it off after ever purchase, once a month is fine.
But absolutely do not carry a balance unless you need to.
Once a month they'll look back, total up all your charges that they have at that moment, sum it all up and put it into a bill to you. Because dead trees and USPS it will typically have a due date a few weeks in the future. For example Amex last totalled up my bill to August 5th and it has a due date of August 19th. So when August 19th comes around I will pay everything up to August 5th. I will not pay the stuff I charged on August 6th, that doesn't come due until around September 18th.
That sort of balance doesn't incur any interest charges and is what Bowen is saying causes the account to be "used" for reporting processes. If on August 19th I don't pay Amex we will quickly get into the bad sort of balances and I will be charged all the moneys in interest and they will start making grumpy faces at me. Don't carry that sort of balance.