Why Bother With a Credit Card?

When I turned 18 my dad got a credit card in my name and kept it to make small purchases, pay them off immediately, and start building my credit history. I still have that credit card but hardly use it – there’s no point! I get nothing for it except the stress of having to pay off a credit card once a month.

My husband however has no credit card and an in-the-middle credit score because of it. Now that our finances are fully merged and we’re looking to plan some vacations we decided to explore some rewards cards. I’m not a big lover of credit cards because I don’t want to spend beyond my means and I think they absolutely encourage over spending! Even if you’re an avid bank account watcher you can still be fooled by high balances if you have credit card payments lurking out there.  BUT I’ve proven to myself that I don’t let this happen so rewards card it is!

So it’s fortunate timing that Chris Guillbeau at The Art of Non-Conformity just wrote a great Q&A piece about managing miles. Here’s a snippet of his advice:

Q. I can only get 1-2 cards. Which should I get?

A. Different cards work better for different people, but long story short, my new favorite is the Chase Sapphire card. It offers a mega-bonus of 50,000 points which can be transferred to a variety of airline and hotel partners (including United/Continental and Hyatt), no foreign transaction fees, and the annual fee is waived for year one.

I also like the AA Citi cards and have been getting them for years on a 90-day cycle, reapplying after I’ve fulfilled the requirements for one card, getting the bonus, and then moving on to another.

Q. Do you cancel the cards after a year, when the annual fee comes due?

A. I usually keep them for a year, then see what happens. Sometimes I call up and say I want to cancel and they waive the fee. Other times, they shift the card into a no-fee version (which doesn’t earn as many points, but I don’t care since I’m not actively using it then).

On a couple of occasions, I’ve kept the card and paid the fee if I’m still using it frequently.

Q. Can I get a business card without a business?

A. Yes. One of the easiest ways to double your points bonus is to get both a personal and business card from the same issuer. For example, you can get the Chase Sapphire card mentioned above and receive a 50,000 point bonus—and you can also get the Chase Ink Bold card and receive an additional 50,000 points. The same strategy holds with the Starwood Preferred Guest Business card.

Similarly, you can get an AA card from Citi for a 30,000 mile bonus, and also add the AA Hilton version for an additional 40,000 Hilton hotel points. If you have a willing spouse or partner, they can do their own applications—so as you can imagine, the bonuses add up very quickly.

Q: What about cards for outside the U.S.?

A. There are some, but not many. In Canada we recommend the AmEx Business Gold card, which includes a 25,000 point bonus after completing an initial spend of $3,000, and the AmEx Starwood cards (two versions) which each offer an immediate 15,000 point bonus. If we find more for Canada or other countries, we’ll add them to the list.

We chose to go with Capital One Venture card because 1) no annual fee 2) decent APR (in case something happens and we can’t pay back immediately) 3) good rewards in our opinion. I’m not a fan of annual fees; in fact I booked it out of BoA when they started charging fees for using their debit cards. Blech! But I didn’t know you could get a business card without a business – did you??

Chris answers a question about managing multiple cards and I have to admit, I wouldn’t want to do that and I don’t see the benefit. As it is we all juggle our finances – remembering to pay bills on time, move money around to various accounts, track spending – so it seems like too big of a hassle to manage multiple credit cards especially when mismanagement can hurt you. However, if you’re up for the challenge, you can also reap some great rewards (especially if you’re a world traveler like Chris or aspiring to be one like me)

 

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