In a sea of endless credit cards clouded by promotions, bonuses, and fine print, it can be overwhelming to pick and choose which is the best credit card for you. Before you ask “what credit card should I get?”, it’s beneficial to ask yourself some other questions first. What am I trying to do with my credit card? Am I responsible with my credit? What does my credit score look like? These questions will help you identify what card you should aim for next. If you’ve never had a credit card before, you’re obviously in a different position than someone who has already had multiple credit cards for many years. You might just be looking to build credit, while someone else is looking to maximize reward points or churn through signup bonuses.
Now, I don’t own every single credit card out there (although this guy might – he has over 1,500 credit cards and a near perfect credit score!). But there comes a point where you just need a few cards to cover all your bases. So, while its cool to collect them all, I can assure you that you’ll stick to the few that you enjoy using the most.
First is the Worst
Don’t you hate those job postings that advertise “entry level positions” with a minimum of 5 years of experience? I agree – it makes no sense. The bad news is that the very first credit card is usually the most difficult to acquire. I remember when I first learned that I could apply for credit cards in college. Someone told me how easy it was to get one of these beginner credit cards. I eagerly applied to one and was immediately rejected.
But once you’re able to prove your responsibility with that card and build up credit, your next credit cards will come to you more easily. In fact, if you’ve ever wondered what it feels like to be famous, look no further than establishing a good credit score. It’ll come to a point where credit card companies will literally harass you to sign up for their cards. You can practice your autograph on new card signup forms. The point is – it’s always going to be easier to get approved for a credit card once you’ve built up some credit.
Starting Off Strong
One of the things I wished my parents had done was to add me as an authorized user on their credit account. Maybe I wasn’t trustworthy enough. But I’m going to assume that they didn’t know, for my peace of mind. I had friends who were lucky enough to have this benefit. It definitely helped kick-start their credit journey. Obviously, this can backfire if your parents/guardians have bad credit habits. Another way is to be exposed to loans early and build credit that way. Some of my friends who were working and had car loans throughout school were able to start building credit early that way. (As an aside, I don’t recommend getting a car loan just to build credit).
For starters, look into some of these college credit card options (if you’re still in college) as they have much lower barriers of entry. It’s also good to have a checking/savings account with a bank/credit union. They will usually be able to help you get started with an entry card. They may not have the best benefits, but you can’t really be picky in the beginning. It’s like your first job. You just want to get your foot-in-the-door.
Once you’ve been approved of your first credit card (congrats!) you’ll build up your credit even more. Or in job terms, you’re boosting your resume. Just as you’ll get better jobs with more experience, you’ll be able to apply for better credit cards as you build credit. Soon, you’ll be able to start categorizing and targeting which credit cards will best fit your needs.
The Rotating Category
Do you like playing the lottery? Or taking risks? Lucky for you, there are a few credit cards out there that offer rotational categories for bonus cashback. The two that I use are the Discover It and Chase Freedom.
These cards are overall fairly easy to acquire. They also give 5% cashback on all purchases in a target category. These categories rotate each quarter (every 3 months). I personally like having at least two of these cards. They will offer different categories in most quarters and you can double down on the inflated bonus in unique categories. For example, this quarter my Chase Freedom is giving me 5% cashback on all purchases at Walmart or department stores. Meanwhile, my Discover card will give 5% cashback on all purchases made on Amazon and at Target. On all other purchases, both these cards still offer 1% back.
The other good thing about these two cards is that they both have no annual fee and sometimes offer a sign up bonus. Discover is currently offering no promotion, but there is a $150 bonus for spending $500 in the first three months for the Chase Freedom card. A cool benefit of Discover is easy access to your FICO credit score, which you can check directly from the app or website.
This is for people who know exactly where they will spend all their money (looking at you mom). Store cards seem generally frowned upon, but if you know you’ll always be back, they can definitely be worth it. I’ve lost count of how many times I’ve rejected a Target Red Card from one of their employees. However, I know friends who only shop there. The consistent 5% cashback they get from their card is worth it for them.
Another group of recommended cards is the Amex Blue Cash series. These are for all the supermarket lovers out there. The Blue Cash Everyday gives you 3% cashback at U.S. supermarkets and 2% cashback at U.S. gas stations and U.S. department stores. The Blue Cash Preferred gives you 6% and 3% respectively, but tacks on a $95 annual fee. These two cards also come with initial signup bonuses of $150 and $200 back after a $1000 spend in the first 3 months.
If you prefer online shopping, look no further than the Amazon Rewards Visa Signature card. We all know that Amazon is eventually taking over the world anyway. The “normal” card gets you 3% back on all Amazon purchases. Meanwhile, the upgraded Prime version gets nets you 5% cashback on all Amazon purchases. Both currently offer an amazon gift card of $50 and $70 respectively just for signing up.
To fully maximize rewards, I like to have a final card that “catches” all the rest of my spending. With a lot of the above examples, you have specific categories for higher rewards. But for spending outside those categories, you get 1% back. It’s good to have a card that you can default to when you’re spending on something outside of those categories.
Let’s say you’re buying college textbooks (ouch!) from a specific bookstore. If you use any of aforementioned cards, you’ll get 1% back, because it won’t hit any of the categories. That’s why I carry around a Citi DoubleCash card. It has no annual fee. And it gives you a 2% return back on all purchases. Technically, you get 1% back after you initially pay for the purchase, and another 1% back when you pay it off. So it actually rewards good credit habits as well. There are other flat-rate 2% cashback cards as well, but they may require you to sign up with a specific bank.
Another one that is popular is the Chase Freedom Unlimited. This one is fairly easy to get and offers a signup bonus of $150 after $500 spend in 3 months. There’s no annual fee as well, but it only offers 1.5% back on all items. So why would I even recommend this one when something like the Citi DoubleCash exists? Well, first of all, the signup bonus gives you money upfront. It’ll take you a while to get $150 back in cash even with a 2% card ($7500 spend to be exact!). Secondly, if you are loyal to a specific bank, you may get additional benefits. I’ll talk about this more later.
All I Do Is Travel
I wish I could say the same. But if this is the case, you’re in luck. There’s a crazy amount of travel credit cards out there. In fact, each airline has their own credit card. If you know you’re loyal to an airline, you can easily found out if they offer a rewards card. And if you travel a lot on them, it makes sense to get one. Almost every hotel chain has their own card too. So if you try to stay at the same hotel no matter where you go, you should consider getting one of their rewards cards. I won’t go into too much detail here because frankly I prefer to own a generic travel card. That doesn’t mean you shouldn’t, or that it isn’t worth it. I just like having a “one-stop-shop” card for all travel/dining-related expenses.
For more generic travel, there’s a few good ones. I have friends who use the Amex Platinum. It gives you essentially 5% back on all flights/hotels. But it hits you with a hefty $550 annual fee. I personally like the Chase Sapphire series. They each give you 50,000 bonus points when you hit the minimum spend requirement. This is equivalent to $500 cashback, but if redeemed for travel through Chase, you get a higher rate. The Preferred has a $95 annual fee while the Reserve has a $450 annual fee. There a ton of other benefits with these “premium” level cards too, so be sure to check their respective websites for a full list of them.
Would You Like to Make That a Combo?
If you haven’t been able to tell, I’ve been pushing pretty hard for all the Chase cards. Individually, the cards may not be better than other cards. If you have focus cards that fit your needs, you should get the ones that will benefit you the most. Travel on Southwest and stay at Hilton’s 300 days out of the year? Then you should definitely try and take advantage of those specific cards. Buy a random thing off of Amazon twice a day? Get the Amazon Visa card to get 5% back each time. Duh!
However, if you really just want a family of cards that align with one another, I really do recommend the Chase family. No, I’m not endorsed or sponsored by Chase in any way. I really do believe that having the necessary Chase cards can give you the best bang for the buck (or should I say points). See, by having Chase cards, you are rewarded with points that can flow across the different cards. If you have a Preferred or Reserve travel card from Chase, your points are worth more than they seem when redeemed for the right things.
Here’s the simple math. 100 points = $1. But redeemed for travel, the Preferred gives you a 1.25x multiplier, while the Reserve gives you 1.5x all your points. But wait! If you get the Freedom and hit the 5% category rotation, you’ll get the 5% from your spend. Then, you can transfer those points to one of the travel cards and get up to 1.5x back on the transferred points. The same goes for the Freedom Unlimited. You get 1.5% cashback on everything and then you can transfer it over to get even more of bonus. This “ecosystem” is what makes me pro-Chase!
Credit Where It’s Due
As you can see, there’s a credit card out there for everyone. But before you frantically search for “the one”, I have to emphasize the importance of understanding credit. As you sign up for more cards, your credit limit will definitely increase. If you cannot control spending on credit, it’s better to move slowly. (This almost feels like one of those “don’t try this at home” warnings). Don’t get me wrong – rewards are great. And some of these credit cards have awesome perks that I didn’t even talk about (future topic!). But you don’t want to make unsound financial decisions just to get a credit card reward. Yes, you may get a $500 sign up bonus, but you may have to spend $4000 to get that. After all, credit card companies are still getting you to spend money.
So be wise. Be responsible. Credit cards have killed people’s finances. But if you are able to use them well, you can earn thousands back in rewards each year.
So what do you think? Do you use any of these cards? Others that you would throw into this list or suggest to readers? What’s your go-to card? Feel free to comment below. I’m excited to hear your responses.