There are seemingly thousands of different credit cards, but how do you choose the right credit card? With so many different bonus offers and bolded percentages that end up as spam in your mailbox, sometimes it just isn’t something you understand or pay attention to.
I’m (officially) a year into my credit card journey and looking to grow the benefits I get with credit cards. A few years ago, my parents put me down as a user on their AMEX Delta Skymiles card, but I only used it twice when I needed to. It did help a little with my credit score but somehow my student loans helped much more. To be honest, I didn’t understand credit cards because of how it was initially explained to me. Skip below if you’re just here for the credit card bonuses. This does have 1 affiliate link!
Credit cards are often described to students as borrowed money that you have to pay back plus interest. Once I found out this isn’t really true, it turned my spending around! Currently, I get money back from using a credit card like my debit card. I do need to note that the one type of person who should not get a credit card is the person who currently overdrafts their checking account multiple times a year due to not being able to keep up with their expenses or being unaware of their spending.
Here’s the run down for those of you who are unfamiliar. Many credit cards will give points that are redeemable for cash or travel, for example. So if a promotion says “1% cash back,” for every dollar spent, 1 cent is given back as 1 point in your account, which you can redeem later. Every card will also tell you its APR and annual fee.
APR stands for Annual Percentage Rate and this is the part you probably already know about. It’s the interest you’re charged for borrowing the money from the credit card company. Here’s the thing, though. Lots of credit cards charge 0% APR for the first year, and even after that if you’re paying off your bill on time, you’re still charged 0%. This is why some people who aren’t great with managing their financing shouldn’t get credit cards. It’s usually better to get hit with an overdraft fee and occasionally get it waived, instead of now owing 15-25% on top of what you bought, and hurt your credit score.
In addition, there are still many cards out there that waive the annual fee. Most of the credit cards that have a high annual fee tend to give large travel bonuses. Some feel that it’s worth it to pay the fee since you’d already save so much on travel, but personally travel isn’t something always in the front of my wish list, and especially not now. You could also just cancel your card before the annual fee is due. Just be aware that closing a credit card will lower your credit score by some points, depending on how much line of credit was afforded to you. Personally, I don’t trust myself to cancel a card on time even when I have a calendar notification, so I know I shouldn’t do it. Maybe one day I won’t let myself down…
If you haven’t already, also check out my bank checking account promotion guide here! Now onto how I choose the right credit card.
Chase: Freedom Unlimited
This is the card I have now, and have been using for over a year. I get 1.5% cash back on all purchases regardless of where it’s from. A lot of cards, some listed below, will give cash back on just selected categories and/or vendors. I live in an area where there’s a lot of independent small businesses, and I don’t buy groceries from a supermarket chain. So having cash back on all purchases is important to me.
Chase also gives me extra bonuses through discounted gift cards at Buffalo Wild Wings, 5x more points at Contacts Direct, and 3.5% back at DoorDash to name a few. This all cycles in and out, but there’s usually at least one thing I’ll get an extra bonus for.
If you’re interested, they’re giving $200 if you spend $500 within your first 3 months. Right now they’re also giving 5% back on Lyft rides as well. Check out the details here!
Bank of America: Cash Rewards
This is most likely the one I’ll be using next for a while. I’m aiming to get their $200 signup bonus. It requires me to spend $1,000 in 90 days, which is not difficult once I pay the utilities and food for me and my SO!
It’s also giving 3% cash back on a selected category. You can pick gas, dining, drug stores, home improvement, online shopping, and travel. I personally chose online shopping since I basically live off Amazon. It also gives 2% for groceries and 1% all other.
DISCOVER: it Cash Back
This credit card offers 5% cash back on select categories on their Cashback Calendar. Right now, they’re offering 5% on restaurants (& Grubhub, Uber Eats, etc) and PayPal. In October, it’ll switch to Amazon.com, Walmart.com, and Target.com. All other purchases is 1% though, so if you can’t adjust your shopping by the Discover seasons, the cash back benefit may even out.
They also offer a cash back match for 12 months after opening the card. If you do most of your shopping on Amazon in October-December, for example, this would be a really good card!
American Express: Blue Cash Everyday
This one is offering a $200 bonus after spending $1,000 in 3 months. It’s 3% cash back at supermarkets, 2% at department stores and gas, and 1% on all other.
Like I mentioned before, the locations are too specific for me to see much benefit. If you lived in an area with lots of Targets, Vons/Albertsons, and drive, this would be a reasonable card to get. My only concern is being rejected by vendors who don’t accept American Express. If you end up finding out that you frequent a lot of stores or restaurants that don’t accept AMEX, that 1% cash back would be 0%.
American Express: Cash Magnet
This is also offering a $200 bonus after spending $1,000 in 3 months, but with different features. This card is 1.5% cash back for all purchases. Now this is the same rate I get with the Chase Freedom Unlimited, so I don’t feel the need to make the jump here.
One interesting thing I also read on is their “Plan It” feature. This credit card gives you the option on certain purchases to pay if off in a fixed payment plan that’s interest free. With that fine print “qualifying purchases” it won’t mean all your monthly purchases could be flattened, but a benefit for some, I’m sure.
As you’ve noticed, each card has different benefits and drawbacks. Personally, my plan is to stop using my Chase Freedom Unlimited, and use my Bank of America Cash Rewards credit card for all my main purchases. If there’s something that I know for sure I won’t get that 2-3% cash back on, I can use the Chase card to get 1.5% back.
There are different tricks here and there, and I’m definitely still learning. I hope regardless this has helped and shown you how you can save on your daily spending, and understand better how to choose the right credit card!