Recommend me a credit card

I don’t have one, figure I should get one eventually, specifically with some trips planned in a few months. Giving a credit card at a hotel is considerably easier than having a large hold put on funds on a debit card.

So what should I get, what should I look for? Should I get something through my existing bank, pick a retailer I use a lot (Amazon? Target?), something else entirely? Specific recommendations, general advice, cautionary tales, show me what you got. At this point I don’t know what I don’t know.

I’ve got several credit cards but I tend to pretty much use one exclusively, it’s a Visa with Amazon points rewards. I find that helpful because you can get just about anything at Amazon and I buy stuff from them regularly. So, I’d pick a rewards card that has a system you would make use of. And no annual fee.

And you didn’t ask, but if you want a little advice managing a credit card, especially if it’s a new concept for you, I’d suggest using that card for things you normally would spend money on. Things like gas, groceries, movie tickets, the like. Then when you get the statement, pay the entire amount. Next month, rinse and repeat. This way you won’t get into a negative cash flow situation (avoiding big expenditures unless necessary) and will establish good credit pretty quickly. And hopefully start knocking down the interest rate, since an introductory card probably won’t have the best rate to start with. I realize you’re not a college kid going nuts with his first card (well, I don’t think you are?) and that’s not meant to talk down to you if this seems like no-brainer advice, but I’ve known a lot of intelligent people who weren’t so great with managing money and credit. So, take it (or leave it) for what it’s worth.

Yep, might as well get some perks. I have a Capital One MC that I run most of my everyday stuff through, about $300-$500 a month. The reward points get me a $50 Amazon card a couple of times a year. Other cards give squat.

Depends on what your plans are for the card. Are you going to do a huge remodel and put it on the card? Look for something with a long 0% introductory rate and low interest afterwards. For a “daily driver” as it were, a rewards card is a great choice. Your bank may have a program with added benefits since you’re a customer (mine gives me ~2% in reward points because of the type of checking account I have) but there are other cards out there as well. Annual fee is a deal breaker – there are few cases where this doesn’t hold but that’d probably be a ways down the road. CreditKarma used to have a nice card comparison tool but they’ve gone a lot harder into sponsored offers so I can’t speak to its quality anymore.

Thanks, appreciate any and all advice. I’ve made it this far without having one at all, so my plan is to keep my same spending habits and just have the credit card as backup for emergencies, or like I said, something like travel plans where I’d still save up the money I plan to spend in advance, but use the card while I’m actually traveling for convenience and security, then pay it off right away.

Does it make sense to also do things like make car/student loan payments with it in the same way, charge the monthly payments to the credit card and then turn around and pay them off the same month?

If you can do it for free, yes. Most of the time this isn’t an option or they tack on a service fee that makes it not worth it.

And as for interest rates, that obviously just depends on my credit history, right? Are there still some ballpark figures for “oh that’s a good rate” or “oh that’s insane”?

Yes, your usage pattern will make a big difference. Do you want to try to use airline miles for one of your trips? Look for an airline-branded card that gives a nice fat bunch of bonus miles for signing up (read the fine print about how much you have to spend and how far in the future the miles will get credited to your account). After the bonus, though, miles aren’t a particularly lucrative payback. The Delta Amex card gets you out from under the bag fee, so if you are flying Delta a few times per year that will more than make up for the annual fee. But I’ve taken to packing a bag that could fit as carry on and just waiting for the inevitable announcement that the flight is full and they will check your carry on for free at the gate.

We spend a ton at the grocery store, so I switched to the Amex Blue Cash preferred. Has a fee, but at 6% cash back on grocery store purchases the fee just knocks the effective cash back rate down to ~5%. Its also 3% at gas stations with no limit. Amex has a no-fee version that is 3% on groceries.

There is no such thing as a good interest rate on a credit card. You should never, ever, pay credit card interest.

I use my Sears Mastercard, but I barely get anything for it (maybe a giftcard or two a year). I think I might grab the Amazon Credit card so that I have a Visa and a Mastercard Available.

I don’t do a lot of shopping on Amazon, but than, I don’t do a lot of shopping anywhere.

Shouldn’t matter since you’re never going to carry a balance, and therefore will never pay interest!

What he said.

That said… I have a USAA rewards card that I don’t use much, but it has a fairly low interest rate (something like 9% not exactly sure since… I never carry a balance!). The card I use a lot, my Chase Rewards card, has some obscene interest rate like 25% (which doesn’t matter since… yeah, you know). I guess if you have good credit rating you can call and have them cut the interest rate. I don’t see a reason to futz with it though.

Since I’ve really adopted budgeting I have had little trouble with the credit cards. I use them for stuff, it comes out of the budget, and when the bill is due I pay it. So I’d advocate having a good handle on your budget before you go too wacky with the credit cards. We had a situation where my wife’s debit card was compromised and as a result she didn’t have a debit card. She started using the credit card for most everything and I have discouraged her from changing back. So now we only use our debit card maybe 5 times a month. Heck, I think we actually write more checks than use the debit card now, which is crazy since we only write 3 or 4 checks on a busy month.

You also asked about paying for stuff like student loans. I wish I could, that would be a big chunk of rewards. I don’t see a way to do it on their website though.

Absolutely. The way to think about it is, you’re not spending money you wouldn’t have been spending anyway, you’re just paying the credit card rather than the lending agency that manages your student loan, so you’re not getting into any trouble here. And on the upside, by paying off that balance each month, you’re establishing good credit. Also, since you asked about interest rate, that should naturally go down as you pay off these monthly balances and the credit card company recognizes you’re a good risk. They’ll also increase your credit limit, more than likely, should you need it.

I tend to fall on this side of the argument myself, which is why I push for using the card just as you naturally would spend anyway. There’s no downside to that. Having said that, in the event that you find yourself in a tough life situation, maybe lose your job or have major car repairs, something like that, you can get by on this credit if necessary. Obviously you’ll want to pay that down when things level off, but it’s handy to have that additional safety net when things happen.

My wife and I put everything we can on our credit cards and pay them off every month. Comcast, utilities, everything we can. We get back almost $1000 a year in rewards.

We use Amazon visa and discover. That Sam Jackson advertisement for the 1.5% card on everything is tempting, though. For example I just put $5k on for car repairs. That’s and extra $25 with Sam’s card over Amazon.

AAA has a credit with low interest that my wife uses, but maybe we should get the Amazon Credit Card for the both of us.

I have 2 cards that I run my bills/shopping through. I have a Discover It card, which does 1% cash on all purchases plus 5% on certain things each quarter (this quarter, it’s all Amazon purchases, so most of my Christmas shopping will run through it). I also have a Best Buy branded Mastercard that does 2% on most things, 5% on Best Buy and also does the occasional 10% on select items. The Best Buy card is just used for Best Buy in-store point (250 points = $5 off). Neither one of them has an annual fee.

I set both of the cards to auto-pay the full balance each month to avoid finance charges. The only thing I need to be careful of is losing track of how much I’m using the cards and being surprised when a big chunk comes out of the bank.

Discover does some interesting things with their rewards. You can get the cash back as a check, pay for your balance with it, or you can buy things through their online store. I usually buy gift cards with my points since they’ll do things like $100 gift card for $80 reward points kind of deals.

It’s all nickle and dime stuff, but it adds up. Every little bit helps.

Though even then, it’s worth at least investigating cheaper ways to borrow money. You might be able to get a personal loan from your local bank, or, if you’re fortunate enough to have some assets socked away (e.g., in home equity, a Roth IRA, or whatever), the rates on a secured loan can go almost as low as prime.

Credit cards can have some great benefits if you can keep the terms in your favor, but past the grace period they’re still a comparatively expensive way to rent money. They do make it super easy, though, because they really want you paying rent ;)

Here are my thoughts on credit cards:

  1. If you aren’t going to pay them off every month, don’t use them. If you are in that dire of financial straights, take out a second mortgage, personal loan, or find some other way of getting credit. The rates they charge are in loan shark territory and should be criminalizes. 15-25% interest for using a credit line? What an unethical racket. A mortgage loan by contrast is. It going to be over 4-5%.

  2. I use them primarily for the concept of third party protection. That is, I pay with a cc and then pay it off at the end of the month. If there is a problem the money is not gone from my account and I don’t have to have my bank work to get the actual money back. It’s on the credit card company to do that work. They also charge a chargeback fee to the merchant so they are covered there. I’ve never used a debit card for this reason.

  3. Get one with cash back points, not miles or weird rewards. Use that cash to pay the credit card balance down itself. We use this concept in my defense contracting business. If the vendor will let us pay without and additional fee we always use a cc. The points for a $20,000 transaction are very nice when not capped (that’s $200 for a 1% reward like Chase Freedom). Most of them cap, though. AmEx does not and theoretically doesn’t have a credit limit. I put $40,000 worth of fuel oil for an army base on an AmEx once. Amex does have an annual fee. No problem, pay it off and cancel before the annual fee. Reapply later.

  4. Don’t be loyal to a credit card at all. Always be looking. Don’t listen to them about keeping an account open with zero balance, close that shit. They can win your business back next time with a competitive offer. Look on for good deals. That’s the site my buddy who regulates financial services companies recommends.

The simplest and best choice for most consumers right now is the Citi Double Cash card (review). It pays back 2% on all purchases. APR/transfer fees/etc don’t matter, because only fools pay interest on a credit card.

I have a Chase Sapphire Preferred card myself, which is actually quite a lot better for travel, but more complex, you need to call them every year to avoid paying a fee, and I enjoy dealing with all that crap.

All that said if this is your first credit card, either you’re 18 and congrats on graduating highschool or what the heck happened? Anyway, you’ll need to build up credit before getting a good card. Call your bank and accept whatever they offer. Use the card for all your purchases possible, don’t keep a balance, and in a year or two you can move up to something with great rewards.

I just picked up a Discover card last month with the promise of 10% cash back. We’ll see. (I haven’t received a statement yet).

That… would be better. If it wasn’t limited to like $100 per year or something silly, anyway.