My Thoughts on Credit Cards
What’s in your wallet? Remember that commercial with Jennifer Garner and Samuel L. Jackson. Well, it makes a difference when it comes to vacation planning. You could be using a debit card when you could have been earning 1.5%, 2%, 3%, 5% or even 10% back in cash or better, points!
The credit card ecosystems revolve around several companies/banks. I stick with Chase, but others have cards with all the big issuers including AMEX, Capital One, and Citi. There are a few others out there, but they are more niche (if rent/lease your apartment/house, there is a specific credit card you can use to maximize returns).
Remember, credit cards or in the case of AMEX, charge cards, either must be paid in full at the end of the month (a charge card) or you really should be paying in full every month to avoid APR charges (a credit card). Credit cards are a quick path to debt. Always spend within your budget and if you haven’t already, create a monthly budget for yourself. Figure out where you spend your money per month (groceries, gas, rent/utilities, cell phone bill, restaurants, travel, etc.). Some of those expenses will typically come from electronic checks or directly from your bank account, or have a fee to use a credit card.
Once you have a monthly budget, certain cards have great returns on specific categories. Some cards provide 3% points/cash back on grocery purchases or gas stations. Others provide 5% on airline tickets or even restaurants. There are also cards that just provide 1.5% back on all purchases, or even 2% back on all purchases (such as Citi Double Cash card or Capital One’s Venture X).
I’m not going to dive into what card is right for what purchases, because there are a ton of blogs or websites out there that do that very thing, and have apps you can download for that purpose. They make money on credit card/charge card referrals, so they certainly will push having like 8+ cards in your wallet. Most folks really don’t want that many different cards to balance and think about.
If you are thinking of applying for a credit/charge card, do your research. Google is your friend. Nerdwallet and other websites have in depth reviews of these cards and what kind of Credit Score you need to be accepted. Chase will even provide you a review of your credit score at any time.
I keep it simple myself. I know I could be maximizing my point totals, but it would require far more time than I am willing to spend. Only open cards you can pay with your income. Create a budget. Figure out where you spend your money. Do your research. Collect some points and miles.