Many people do not care about credit cards or their credit score, but they should. I decided to go though which cards I have and their perks.
Nobody is paying me to write about this and there are no referral links in this article. I just like to ramble about things and hopefully educate people.
Credit
A key component to credit cards is your credit. While having a high credit score does not inherently mean you are good with your money, or vice versa, there is a correlation. People with a high credit score tend to, either by accident or on purpose, follow certain practices that will boost your credit score. Bellow I am going to outline a few key takeaways and useful tips.
Build Credit Fast
Unlike a get-rich-quick scheme, there is a legitimate one easy trick strategy to get a high credit score within a few months. There are a few caveats (of course there are) mostly being that this option is really only effective for those who have no credit history. If you’ve ever had any dings in your credit report, like a missed payment or worse, only time can fix your credit. So what am I hyping up? Authorized users.
Much like a cosign for a loan, an authorized user is someone added to a credit card who is able to use the card generally as though they signed up for the card themselves. A common use of this is when parents add their children to help build their credit, which you should do. If the primary account holder (the one who applied for the card) has a high credit score, any authorized user added to the card will ‘inherit’ their score after a billing cycle or two.
Credit Utilization
Whenever I hear of people ‘maxing out’ their credit card(s) I cry a little on the inside. One of the biggest factors about your credit score is the Credit Utilization Rate or Credit Utilization Ratio. The utilization boils down to how much of your credit limit to you actually use every month.
The golden ratio is around 7% to 10% of your limit. For example, if you limit is $100 you would want to keep your spending under $10. While this may sound absurd, it also explains why some cards have high limits. If you want to put $1,000 a month on your card, you ideally want a $12,000 limit to keep that utilization as low as possible.
Pay Your Balance
This one might stump people, as there is no actual impact to your credit score from paying the amount in full each month. However, if you only pay the minimum amount (please never ever do that, I don’t care about your 0% APR) you can often times run into high utilization. A good habit I follow is to set up auto-pay for the full balance when I open the card. I know for many that is simply not possible, but try to pay off as much of the card as you can each month.
Keep Accounts Open
A misconception I hear a lot about credit is that you can have too many open accounts, which is simply not true. Major factors for credit are the average age of your accounts and how many inquiries you had recently. They somewhat go hand-in-hand as if you open a lot of accounts quickly, your average age will be low and your inquiries will be high resulting in a ding in your credit.
This is especially true if you do not have a long credit history, keep in mind that ‘long’ in this case means 10-20 years. A big no-no with credit is only opening cards for the sign-up bonus and then closing the account within a year. This will not only really harm your credit, it will possibly raise red flags in your credit report when applying for new cards.
My Wallet
I have one of those newfangled slim wallets that seem to be all the rage now, despite having had it for 4 years. Meaning that the credit cards in my wallet are physically limited to about 3 or 4, so they have to be useful for everyday spending.
Amex Cash Magnet
Probably one of the more underrated cards from American Express, the Cash Magnet is a really nice card. It is a direct competitor to the Chase Freedom Unlimited card, so if you hit the 5/24 limit then this card is basically identical with the same 1.5% unlimited cash back. The sign-up bonus on the card is not the best, but the card does not have an annual fee, which makes up for the lackluster amount.
Another nice feature of this card is Plan It from Amex, which lets you spread out certain purchases over a period of time. Paired with the current 0% intro APR, this card should be high on the list if you are looking to get a new card. I carry it simply because it acts as a great ‘catch-all’ card if none of my other cards has a point bonus.
Marriott Bonvoy Boundless from Chase
As you may be aware, Marriott recently integrated their rewards programs into one new bundle called Bonvoy. This brought about all new credit cards from both Chase and American Express, and with that comes new sign-up bonuses. If you had a Marriott card before, read the terms carefully to see whether or not you qualify for a new bonus before you apply.
When I travel, I usually stay at a Marriott, so this card makes sense for me. The points accumulation on the card itself is nothing to write home about, 2 points per dollar except at Marriott properties where you get 6 points. The real benefit of the card comes from the automatic elite status the card offers. The free high-speed internet and late checkout are the main benefits, the points boost is a nice perk.
While there are more premium offerings from Marriott, (specifically the Brilliant card) I would opt for a card directly from a bank. Mostly because there are less hurdles needed to spend the points on things other than hotels. If you are looking at premium cards, do your homework beforehand as having multiple premium credit cards is generally not a smart move.
Chase Sapphire Reserve
Speaking of premium credit cards, the Sapphire Reserve is, in my opinion, the best one available to mere mortals. While most people who are not used to premium cards get sticker shock at the $450 yearly fee, Chase is very lenient on its definition of “travel” so the $300 travel credit is very easy to redeem. The 3 points per dollar on travel and restaurants is simply a cherry on top as any travel booked through Chase gets an extra 50% point bonus.
For people that travel to or from airports that have Priority Pass lounges, the complementary access alone will more than make up the $150 gap in the yearly fee after the travel credit. Before you get to relax in the lounge, the card even covers the fee for Global Entry (which includes TSA Pre✓) to help you breeze through security and customs.
I recommend this card to anyone that travels at least a few times a year and goes out to eat a little too often like me. You need to have pretty good credit to apply for the card because of Visa Infinite, which requires a minimum credit limit of $10k. That being said, once you apply for this card any other credit card you apply for is generally going to be accepted and have a similarly high credit limit.
Other Cards
Some credit cards are well worth having, but not that useful for everyday spending and can therefore stay in that pile with the other cards in that one drawer. These are those cards for me.
Amazon Prime Rewards from Chase
While Amazon does also offer a Store Card from Synchrony Bank, I prefer to stick with Chase. The main benefit of this card is the 5% back for purchases made on Amazon. For someone that almost exclusively orders tech products and other random things from Amazon, this card is a must.
Gold Delta SkyMiles Amex
As someone who lives near the Detroit Metro Airport, (DTW) a major Delta hub, this is the only airline card that makes any sense for me. I might upgrade to the Platinum card, but the differences are not useful to me right now. The main perk of this card is having the first checked bag be free, which itself pays the $95 yearly card fee after just two round trip flights.
Final Remarks
Overall, credit cards can either be seen as a financial burden or a system to game. I am in the latter camp as with a little bit of research and a few spreadsheets you can easily get free rewards you would not have otherwise like free hotel stays or award flights.