Open Thread: Which Are The Best Rewards Credit Cards?

Credit Card, originally uploaded to Flickr by 401(K)2012.Which is the best rewards credit card for “beginners”?  Everyone knows if you fly a lot to get a card for miles, or if you drive a lot to get a card for gas points — but what if you don’t fly or drive often?  Reader J asks an excellent question:

I wanted to suggest a topic for purely selfish reasons, but I think other readers would find it helpful as well.

Specifically, I am interested in hearing your (and your readers’) thoughts about which credit cards are best for “beginners.”

I am a recent law school graduate and  have never had a credit card. Now that I’m working, I think it’s time to start building up my credit, but I’m overwhelmed by the options. Which card is best for someone who is looking for a good card with decent perks? I’m not very concerned with interest rates because I will pay it off each month (I have a good job and I’m not a big spender). In the same vein, I’m not sure I spend enough to make an airline miles card worth it, given the annual fees (although I do a lot of short haul flights to visit my family, so maybe I’m wrong?).

Congrats to J on graduating from law school and starting to build up your credit.  Everyone should get a credit card (even a local department store card) as soon as you possibly can, because the length of your credit card history factors into your FICO score.  If you can, put a recurring charge on it (such as your Netflix account) and pay it off, in full, every month.

Now, on to the best cards — I’m curious to hear what readers say.  Different card companies offer different deals at, um, different times — you can often check Mint.com to see a rundown of what the best deal you can get at that point in time. (NerdWallet also just did a round-up.)  For my $.02, though: I have been with the same credit card program since 1997, and have been really happy with it.  I have an Amazon Rewards Visa, which offers “points” for general purchases (with triple points for Amazon purchases).  Points are redeemable for, among other things, cash checks, with 5000 points being worth $50.  (I always just go for the cold hard cash.)  I use Amazon a *lot* right now, but even in years past when I just used it for the occasional book, I still earned enough points on other, non-Amazon purchases to make me feel like it was a good card.  Personally, I put almost everything on the credit card, but pay it off in full every month — I find the purchases easier to track than cash expenditures, and I like that I get points for using the credit card.  (I’ve even heard of some people who put their rent or mortgage on their credit card, but that’s never something I’ve been able to take advantage of.)  There’s no annual fee to the card.  You can also “use” the points for purchases at Amazon — but my understanding was that it’s smarter to use the credit card for Amazon purchases, get triple points, and then use the points for cash checks.  If you shop frequently at one store, you may want to see if that store has a general credit card that you can use for purchases at that store as well as others.  (For example, Target’s REDcard has a similar program that offers 5% cash back on Target purchases.)

Readers, which card do you have?  What research process did you go through to decide which one to get?  How many credit cards cards do you have?

(Pictured: Credit Card, originally uploaded to Flickr by 401kcalculator.org.)

Comments

  1. anonymous :

    My best friend (27, f, 2 kids under age 6, her 1st marriage) has realized she needs to end her marriage (7 yrs long, he is approx. 15 yrs older, this is husband’s 3rd marriage and he has other kids).

    There is no huge blow up, she has just been unhappy for a very long time, he didn’t follow through on what he agreed to in their past marriage counseling trips, and she’s realized he is who he is and that’s not the right person for her. I ordered her the book the hive always recommends (too good to go, too bad to stay, I think it’s called) but don’t know what else to do other than to listen.

    Any other advice would be great, in terms of preparing, giving him the news, telling their kids, etc. Anything you wish you’d done better or learned or did well or… well, anything. Thank you!

  2. We have a Costco Amex that gives us cash back with no cap. Annual fee is the Costco membership, same consumer protections/perks as regular Amex. We use it for everything and actually “make money” since we don’t carry a balance. We also have a Citi card that has points. It’s a waste honestly, too hard to figure out the points game so we don’t end up redeeming them. I would highly recommend a cash-back type card based on our experience.

    • Agree, cash rewards are the easiest.
      We mostly use Amex Blue – it has no annual fee and cash back.
      We also have a Freedom Visa from Chase that has variable cash rewards per quarter – one quarter they up the rewards on grocery spending, the next on gas or travel etc.

    • SF Bay Associate :

      Oh really? The Costco membership = the Amex annual fee? How intriguing! We never carry a balance either. I’ll have to look into this. I have a Citi Professional card right now because one of the “Thank You” rewards is payments for student loans – they write the check directly to your loan provider. I couldn’t think of a better way to earn and spend credit card benefits than on loan debt.

  3. K...in transition :

    What about using credit karma dot com to research where you’re at financially and then looking at their credit card advice? They show you both what you’re likely to be approved for and why they’re so great (low APR, great perks, etc.).

  4. Discover Card… the simplest, easiest reward program I’ve used (for something like 15 years now)

    • I also have a Discover Card and am pretty happy with the points. One nice new feature is that you can use the points you’ve earned directly on Amazon as cash, which is nice come Christmastime. You can also redeem points for discounted gift cards (like a $50 gift card for $40) to various stores, some of which are delivered instantly electronically.

      Also if you have a friend with a Discover Card, ask them to refer you, you will each get a $50 in points for the referral. If anyone wants me to refer them, let me know, I could use the $$ lol

    • Second Discover Card. I use our points for the discounted gift cards and I’ve gotten things from the Container Store, Bed Bath and Beyond and a Starbucks card as well. I don’t mind splurging when I’m spending reward points.

    • Yes, love my Discover card.

    • I also love Discover. They’ve stuck by me through ups and downs (unlike AMEX – would never go to them again).

      My top 4 are Discover, Chase Amazon, Chase Freedom, PenFed (NO annual fees on any). Discover and Chase Freedom do the quarterly 5% cashback for certain categories (which I lay out in a note on Evernote so I know which card to use for more bang on my buck). Chase Amazon for all my amazon purchases (I had A LOT when my kids were still in diapers!). PenFed strictly for gas purchases, 5% taken right off on every statement…best gas card I’ve seen so far.

      Worst yet is this Extra Cash reward from Citi, its worthless!!

  5. My DH was formerly in the military, so we use a USAA credit card that gives cash back – like Kat, we charge almost everything and pay it off every month (I wish we could put our mortgage on there!). Love those surprise deposits!

    One other thing to consider in choosing a card, particularly for people who will be using their credit card at work related things (like taking interviewees to lunch, pulling out your card to order (reimbursable) dinner for the team, etc.) is to choose a “serious” card – like, I wouldn’t pull out my Bloomie’s Amex to pay for a client lunch, even if my wardrobe would benefit the most from accruing points on that card :)

    • We also use a USAA Rewards card, which has no annual fee and cash back. If I remember when I’m online shopping, I check to see if I can make the purchase through their “Membershop” – you get to the same vendors, but do it through their link, and then earn extra points. And they have a ton of vendors in their Membershop — Nordstrom, Macy’s, Target, Land’s End, etc.

      I probably I earn a better interest rate getting cash back on my credit card than I do on my regular savings account.

      • SF Bay Associate :

        Goodness, sounds like I should look into this one too. I love USAA everything else and don’t know why I haven’t considered the card yet. Is it better than 1% cash back? I also wonder if the Membershop has better rebates via extra points than ebates does with its cash back.

    • Kontraktor :

      We love USAA too and put everything on the card/pay off for points. We’ve gotten a lot of money off airline tickets this way (I think it’s $100 off for every 10,000 points).

  6. SoCalAtty :

    I sure like my American Express. I currently have the Platinum, but I’m finding that I probably don’t need a lot of the perks that come with it and the Gold would be just fine. I like that I can use the points to book travel/hotels/air through the AMEX website, and just use some of my points or all of them at any one time. The only disadvantage is you sometimes pay the “rack rate” for hotels or flights rather than the discounted price straight from the provider’s website.

    These are charge cards, and they have to be paid off at the end of the month – which means I can’t did my debt hole any deeper! They used to have no limits, but in 2008 when the credit market went nuts they changed it to be your 9 month spending average – so when you get the card, they might start you at a low “limit” and increase gradually.

    I also have an REI Visa, which I pretty much just use as an emergency back-up Visa and for purchases at REI. We’re big outdoor sports people, and the big dividend at the end of the year is great. It has a decent interest rate and is run through US Bank, and I’ve had good luck with them in the past.

    • Yes, this. Love the AMEX gold. You can literally use the points on anything. If you are able to manage your spending and are comfortable knowing it MUST be paid off each month, it’s worth it. Husband and I put EVERYTHING on here which helps up keep track of our expenses and rack up points! Good way to backdoor into the Gold, is to start with green and ask to automatically switch to the Gold once you hit the one year mark.

      • Plus Amex has the BEST customer service. What, that item you bought is wearing out too soon, and the retailer won’t give you your money back? I’ll give you cash right now, no questions asked, no pictures of the item needed. Done.

        • SoCalAtty :

          I’m all over this thread, but I forgot to add that! Lost bags? If you don’t have them within 12 hours, we’ll give you $500 to go buy new stuff (I’m not sure if that is the amount, but it was a lot!) Rental car insurance? Covered (US only). Retail returns – no problem. Love it!

          • What do you mean retail returns? That sounds intriguing.

          • SoCalAtty :

            Say you buy something, and they ship you the wrong item, or a defective item, or maybe it is a custom item that just isn’t right. The vendor won’t take it back…AMEX will cover it. It is called “Purchase Protection” and if you go over to their website the full terms are there.

            I bought a very expensive pair of custom boots, and after being delivered 3 months late they look like they were made for someone 5″ taller than me. They wouldn’t take them back, so I took pictures, shipped them back, documented via email, and sent everything to AMEX. Within a day I had a provisional credit, and within about a month the credit was permanent.

          • So you’re telling me I can buy something on final sale and then get my money back from Amex if it doesn’t work?

          • This is from their website. Amazing.

            When your new shoes arrive, they don’t quite match the dress. But if you used your Card, Return Protection1 is there to help you make it right.

            How does Return Protection work?If you are ever dissatisfied with a purchase and the merchant will not take it back, contact Return Protection* at 1-800-297-8019 within 90 days of thepurchase. American Express will refund the full purchase price, up to $300 per item, excluding shipping and handling, up to $1,000 annually per Card account.

            Associate

          • Yep, I am a huge fan of AmEx. Their purchase protection is amazing. I have not had to use it yet, but my neighbor dropped his new iPad into a lake and they replaced it, no questions asked.

            The rewards program is pretty good too. They don’t have as many options for retail gift cards as some others, but I pretty much cash most of our points for Home Depot gift cards and use them for home improvement.

          • The same happens with rental cars too. I just rented a car and declined all the insurance options they sell. The car was hit in a parking lot and I got a huge bill. I called Amex and they said “thank you very much, don’t worry about this again.” They are outstanding. I have a personal gold card, and a personal platinum card that is exclusively for business. This way I get to accumulate points for all my business spending (which is considerable). The customer service is unrivaled. I would recommend the green or gold for a first credit card though. The platinum is unbelievable and there so so many amazing perks that come with it- but the annual fee is around $500 and probably not realistic for a first time credit card.

            I also really do appreciate having to pay my gold card off every month (though you can sign up for an “extended payment” plan for certain specific purchases. It helps keep me out of the credit card hole. I will say with the join points from both cards I was able to entirely refurnish my living room with pottery barn gift cards I bought from amex using points. You can also link your amex point balance to Amazon as well.

      • SoCalAtty :

        Second the statement re “you must manage your spending.” I keep pretty close track of it, but I’ve gotten a few statements and said “WTH did I DO this month?” Adds up shockingly quick, but we put probably 90% of our bills on there, on auto pay, and having it all in one place is great.

        They also send you a year end summary, so when you go to do your taxes the deductibles are easy. It will even sort by vendor. Very handy. Instead of saving receipts, the IRS gets my indexed year end summary. I don’t know if they like that or hate it, but I’ve been doing it since about 2006 and no annoyed IRS calls yet!

  7. Seconding the Amazon card rec from Kat!

    I typically break this one out for expensive stuff (home repair/big furniture items). When I pay off the statement balance, I get a ton of points, which I save for around the holidays.

    If you have a lot of people to buy for (with many of them living far away), Amazon is a godsend for the holidays, and having those points just makes the financial impact a little bit less. :-)

    • BigLaw Refugee :

      I also use the Amazon rewards card. In addition to 3% on Amazon, it offers 2% on restaurants and drugstores – a category where I spend a lot.

    • I too like my Amazon visa. The only other card I use regularly for the benefits is my target card for 5% off on all my purchases plus free shipping for purchases of any amount online.

  8. I’m really happy with my chase freedom card – good rewards no annual fee.

    • I second the Chase Freedom Visa. I now use it on nearly everything and pay off the balance at the end of the month. I’ve been redeeming points for Amazon and iTunes gift cards lately, but I’ve also redeemed it for cash as well. Occasionally, Chase Rewards will have “discounts” on gift cards; you can receive a $25=2500 points gift card for 2000 points=$20, so you can sometimes get great cards if you happen to find a discounted gift card that suits you!

  9. I recently got the BOFA 3-2-1 card and I’ve been happy with it so far. Right now you get 3% on gas, 2% on groceries, and 1% on everything else. I think the items may change quarterly for the 3 and 2%. If you direct deposit your rewards (aka CASH) into a BOFA account, you get an extra 10% cash back. You can also use the rewards as a statement credit. I think it’s a great card to start out with if you don’t want any fees and are interested in getting cash back.

    • karenpadi :

      I had a credit card account that was bought by BofA and BofA changed it to the 3-2-1 program. It’s a great deal if you can remember what’s what each quarter and don’t mind logging in every three months to click a box that says “Yes! I want my rewards.”

  10. I travel a fair amount (and not for business), so I love my American Express Blue Sky card. It’s one of the only Amex cards without an annual fee. 7500 points = $100 statement credit for any travel expense. The card comes with travel insurance, too, so you don’t have to worry if you get stranded somewhere. Amex also has great customer service in general.

    My first card, though, was the Citi Dividend Platinum Select card. It’s now Visa, but mine was a Mastercard. Not that it really matters. But the rewards are similar to the Amazon card in Kat’s post — you get $50 for every 5,000 points. It’s really about 1% cash back on most purchases, but that averages out to spending $5,000.

    About the Target Red Card — there’s no point in getting the credit card. Get the DEBIT card version. You get the exact same benefits (5% off + free shipping online), but instead of having to remember to pay your card off every month, it just takes it from your bank account like a regular debit card.

    • Second Target Red DEBIT. Very handy.

      • karenpadi :

        I have the Target Red CREDIT and respectfully disagree.

        Credit cards provide way more consumer protections than debit cards. This article mentions them but these protections come in handy if your card is stolen.

        http://www.nytimes.com/2009/01/06/your-money/credit-and-debit-cards/primercards.html

        For me, these protections are worth having to pay the bill off every month. Plus, aside from my student loans, I have a big issue with giving companies direct access to my checking account to take whatever they want (I know, with ACH they do this anyway but I like to think I have some control).

      • I agree with karenpadi – the Target credit card is better because of the protection it offers that the debit card doesn’t. There is an option for autopay so that the balance is paid from your checking account each month if you want it.

        Either way, it is worth it – 5% off every purchase (not cash back, an actual discount at the time of purchase) and free shipping on everything. It’s great.

    • Second the AmEx Blue Sky for a no fee rewards card. It served as my primary credit card through the later portion of undergrad and law school. Truth be told, I gamed the system for max points (i.e. paid tuition and bought books (as much as I could get on the card, anyway) and immediately repaid when student loans came in), and I don’t use it much now that I’m out of school. But if you are just dipping your toes in the credit card waters, AmEx has great customer service, there’s no fee, and who doesn’t like having free money to travel?

    • Laura Holt :

      You can set up monthly autopay on the Target credit card. That’s why I do and the amount is automatically taken out of my bank account each month without me having to remember to do anything.

  11. Another vote for the Amazon Visa. You can also apply the points you’ve earned directly to your credit card balance, which I’ve found to be the easiest way to benefit from the points. You also get 2 points for every dollar spent on gas, restaurants, and office supplies. Like you, I use mine for everything I buy then pay it off each month. I’m an Amazon junkie though so it might not be as useful for those who rarely shop there.

  12. My “first” card was an Amex and I think it’s a good card for someone starting out. I had the green and it was great because I knew I had to pay it off every month. I have since switched to the blue because I don’t want to pay an annual fee. It’s been years now and I have always been very happy with them and it’s really easy to use points.

    If you travel internationally even once a year or two, I would also recommend a card without a foreign transaction fee. This ends up being really helpful since most regular cards charge around 3% for foreign purchases. A lot of banks will issue one if you have a certain amount in an account with them and I think the Capital One Visa has this standard.

    Also agree with the advice that if you shop somewhere a lot, a card from that retailer will probably be a good bet. Do be mindful though – sometimes those cards have less than great rates if you plan to carry a balance.

    • winterwheatfrau :

      I have the Chase Sapphire Preferred from Visa, as well as a United’s FF card. I travel a fair amount for work and my family is far away. I also stash a fair amount of business expenses on there for which I am reimbursed. Chase is really fabulous with customer service, I’ve heard good things about their Freedom cards as well.

      In my view you get the best bang for your points in redeeming from airline miles, which you can do with United, Southwest, and a couple of other options. You can also redeem your points at Marriott, Amtrak, Amazon and a slew of other options. There are also no foreign transaction fees.

      The United Card I don’t use as much, but put small expenses on it. It gets me priority boarding and a free checked bag.

      These cards also generally have hefty sign-up bonuses for points and the fee is waived the first year. The benefits are so awesome, however, that I feel the fee will be well worth it in the coming years. Thanks to business travel and general spending, the Sapphire card allowed me to book three domestic airfares essentially for free this year. It may not be for credit neophytes but was not nearly as hard to qualify for as I thought it would be.

      I would highly recommend the website of The Points Guy who is a whiz (admittedly a little over the top sometimes) at hacking these different rewards and frequent flier programs. While it’s more intense, there is a ton of comparative information about the various cards and how to optimise your benefits.

  13. Political (but satirical!) link ahead:

    This made me (Dem) and my conservative friend at the office crack up. Hopefully it brings a chuckle to your day too!

    http://www.romneytaxplan.com/

    • Ha. This made its way throught my political email chain today (list of friends that enjoy swapping political jokes – yes, it’s as nerdy as it sounds).

  14. To Rawr Re Dino Planters :

    About a month ago there was a post by Rawr asking whether the cute dino planters on the plaid pigeon website were too juvenile as office decor goes. I thought they were great and ordered 3. Two arrived and they made cute gifts for friends. However, the third hasn’t even shipped and the seller has not reached out to give me status nor did they respond to my request for status. I canceled and requested a refund but no response from them yet in that regard either. Just thought I’d post in case the OP was still on the fence in re whether to buy or not. Can’t say I would recommend it given my own experience with delivery delays and poor communication/customer service.

  15. Blonde Lawyer :

    I don’t know if it is the best but I really like my Bank of America World card. I originally got the card through MBNA and my undergrad. The original card had an interest rate of 7% and no fees but no reward program. BOA bought MBNA and raised my rate to 13%. I put some overseas travel on the BOA card and they upgraded me to World. The World card has no fees and you can use the rewards for cash back, travel, or to buy stuff through them. I think I get 1% back on regular purchases but they regularly do deals for triple points on gas, groceries and eating out. They will also do a “deal of the month” and if you charge that deal you get bonus points or extra cash back. They also have great concierge service. I used them another time I was stranded without a ride and the rep found me a car and called me back periodically to update the status. You can call them anytime and just say “help, I need this” and they will find it for you. I’m generally not a fan of BOA but I’ve been so happy with this card, I haven’t switched. It has my undergrad’s name and emblem on it but I don’t know if they get any donations from it or anything.

    • Blonde Lawyer :

      I think for my card, the premium air rewards are the best deal. For 25,000 points you can book anything within the continental US for up to $400. If it is more than $400 than you get flexair rewards at one point per dollar I think. If you can find a flight that costs more than 250 and less than 400 for 25000 you are doing better than the cash back amount.

  16. I’ll put a plug in for one of my clients.

    The website is NERDWALLET DOT COM and they evaluate credit cards for just this sort of thing–you tell them what kind of rewards you want, and they spit out the best deals on offer right now. Check them out. They’re great (and I’m not just saying that bc they’re my client!)

    • I would not recommend Nerd Wallet. After reading your comment, I headed over to check it out. However, the options the website considers are limited, most likely only those for which they receive considerable referral income. I put in my search criteria, and the rewards from the cards identified were lower than many award options I know of or have received in the mail. This website is not going to get you the best offers.

      • They compare 1700 credit cards based on whether you want personal, student, business, carry a balance or not, what type of rewards you want…it’s pretty flexible. For my credit, spending habits and the fact that I’d want a personal card, it’s pulling up Chase Sapphire, which has been recommended here.

        Nerdwallet is featured a lot in Money Magazine and Kiplinger’s Personal Finance, so…I think it must be useful to some folks!

        But I leave it to the Hive to check out.

  17. Jessica L. :

    Fidelity American Express. 2% Cash back on EVERYTHING. everything. no limits. Cash deposits directly and automatically to my checking account. Every once in a while I find an extra $50 or $100 in my checking–always a good surprise.

    • Second this. I have my Fidelity AMEX linked to my Fidelity IRA so the rewards money gets deposited directly into my retirement account.

    • I have a Fidelity Visa. It’s 1.75%back on everything (provided you have the funds deposited into a Fidelity account), and a little more difficult to get the rewards out than the commenter above describes, but it’s a really good option if you shop places that don’t accept AMEX. I really like it as a painless way to supplement our retirement savings.

  18. Legally Brunette :

    I have the Nordstrom credit card. I shop there constantly so I appreciate the Nordstrom bucks I get every month or so, usually a coupon for $20 or $40. I would not recommend it as a “beginner” credit card though, and especially if you don’t shop at Nordstrom often. But the nice thing is that you get points for both Nordstrom and non-Nordstrom purchases (although more for the Nordstrom purchases).

    • karenpadi :

      This. Just got the Nordstrom card because my personal stylist has promised to get me into at least Tier 2 (oops, yeah, I’m like that when I find a sales person I trust). It has some great benefits–including a 1% foreign transaction fee (my other cards are all at 2% or 3%).

      Also, it’s a Visa Signature which means I get a pretty good deal on roadside assistance (think AAA). It was a better deal than what my car insurance was offering and I don’t need AAA enough to justify the annual fee.

  19. I’m surprised nobody mentioned CapitalOne but they are one of the few that don’t charge foreign exchange fees when you use your card abroad.

  20. Chase Freedom… it’s 5% on a rotating category basis quarterly… but when it’s things like restaurants, or gas…. it really pays off! you have to register each quarter, which can be annoying but i just set reminders or I believe Chase can even text/notify you if you sign up.
    I used to be a big American Express Blue as well until I went to Chase. The nicest part is redemption can be a variety of things…gift cards (there’s 10% sales on them that change, so I actually got $50 worth of Macy’s today for a few hundred less points than it normally is). You can also “apply” the awards to ANY purchase on your card. So, I actually used points to pay for my iPhone earlier this year as well. I, like Kat, put everything on my CC and pay it off to get points and to track. So I can’t attest to the APR, etc.

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