Thursday, September 1, 2011

Top Credit Cards

Disclaimer - The Discover offers are no longer valid.

Everytime I see someone pay for something in cash, I cringe.  When you use cash you are paying more for your purchase, every time.  If you use a credit card you have the potential to get back 2-6.25% back on every purchases.  Also, when you buy something on a credit card and you are duped by the retailor you can usually get your money back from the credit company without a hassle.  Here is how:

I do not own any credit cards with annual fees.  Unless you are a big spender and can find a rewards program that is far superior to a free credit card, it is not worth it.  I also don't have any cards that are airline miles based.  If you get cash back you can use it on anything (including airfare), if you get airline miles you need to use them on airplane tickets.  


These are the three credit cards I recommend:

MAIN CREDIT CARD

Fidelity American Express - 2% back on everything



Benefits 

1) This card gives you 2% back on every purchase.  It is hard to find a better deal.  

2) It is an American Express.  American Express is known for its customer service and its willingness to take purchases even when the store won't.

Downsides 

1) The card requires a Fidelity Investment Account.  You need $2,500 minimum to start the account.  Once you have an account, you can transfer the money out of the account.

2) It is an American Express which is not accepted everywhere.  Despite that, I have found that most places do accept them.  My card has only not been accepted once since I started using it. 

3) The money is deposited into your Fidelity account and you have to then transfer it back to an account where you can use it.  If you invest with Fidelity this is not a problem

Fidelity Visa - 1.5% back on Everything 
This card is for those who want the high cash back but don't want the hassle of having to carry two cards for when the American Express is not accepted.

If you have a large family and spend a lot on groceries, the card for you is:

American Express Blue Preferred - 6% cashback on groceries, 3% on gas and 1% on everything else.  $75 annual fee.



Supplementary Cards

Discover® More Credit Card - 5% back on rotating categories.  0.25% back on everything else until $3,000 and 1% after $3,000.



Advantages 

1) You can get up to 5% back and sometimes more.  If you purchase something in the correct category you will get a minimum of 5% back.  Categories can be checked from the Discover it™ website and sometimes include gas, groceries and home improvements (like Lowe's)

2) Your 5% can turn into 6.25%! You can use your rewards on gift cards through discover's reward center to get even more back.  Many of the retailers will allow you to buy a $25 gift card for $20.  This means that your rewards are actually worth 25% more.  25% of 5 is 1.25 so you are actually getting 6.25% instead of 5%!  I usually use it to get $25 gift cards to Bed Bath and Beyond which I will eventually go to.

3) You always get at least 1% back on purchases that aren't in the categories that are 5%.

Disadvantages

1) You have to know what the categories are for that month and sign up for them.  If you don't sign up you won't get the 5%. 

2) There is a limit to how much money will qualify for the 5% rebate.  Often, you can only get back 5% on up to $$1,500 of purchases in that category.


Chase Freedom - Same as discover



Advantages 

Same as Discover but an added $100 bonus for signing up and a high maximum of 5% purchases (often you can get 5% on up to $1,500 of purchases).


My recommendations and usage:

If you are willing to put in a little work and carry a few cards, it is worth it to have all three.  I use the discover on any 5% categories until the 5% bonus is maxed out so that I can get 6.25% back.  Once, the discover won't get me 5% back I will use the Chase Freedom to get 5% back.  If I have used up all my 5% options or it isn't in one of the correct categories I will use the 2% card.

If anyone has a credit card that they like to use please leave the name of the card in the comments and I can try to look into it.

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