It’s easy to get caught in the marketing traps of credit card companies, especially for first-time owners. Alexa von Tobel is the founder and HBIC of LearnVest, the Chief Innovation Officer at Northwestern Mutual, and the New York Times bestselling author of Financially Fearless and she’s here to help all you fiscally confused betches out there. We asked her what credit card you should consider getting based on your spending habits and lifestyle. Read on for Alexa’s advice, and for more career and adulting advice, pre-order our third book, When’s Happy Hour?
I always advise people to identify their priorities before choosing what credit card is right for them. First, think about your goal: Do you want cash back? Do you travel a lot on one airline? Do you want to use points for a trip you wouldn’t normally pay for? All of these are important since you don’t want to change your spending habits once you get a new card. Here are a few to get you started:
If You Want To Get Cash Back Without Thinking: Citi Double Cash
Other cards get more back in certain categories, but this is the most no-thinking-involved card out there. The Citi Double Cash earns 2% cash back on all purchases. Think of it like getting a 2% discount on everything you buy. You simply redeem for statement credits and don’t have to think any further than that. Two cents per point is really the benchmark for all other cards. If you’re not getting that much back on your redemption (divide the dollar value by the number of points you redeem), you’re better off just using the Citi Double Cash.
If You Cook At Home And Drive Everywhere: American Express Blue Cash Preferred
This card gets you 6% cash back on up to $6,000 spent at grocery stores; after that, it’s just 1%. It also gets 3% at gas stations and select department stores. Shop anywhere from Kohl’s to Neiman Marcus with no set limit. Those big cash-back percentages don’t apply at Wal-Mart, Target or discount clubs, but if you spend more than $1,500 on groceries in a year, the card already pays for its own $95 annual fee. That’s not even considering the unlimited 3% back or the great extended warranty benefits of an AmEx.
You Spend All Your Money On Dining Out And Travel: Chase Sapphire Reserve
The Sapphire Reserve’s $450 annual fee sounds steep, but it quickly pays for itself. First, you get a $300 credit every year toward travel. So if you book plane tickets or hotels, that effectively cuts the fee to $150. You also get a $100 Global Entry/TSA Precheck credit that’s good for five years, as well as lounge access with unlimited guests. Every time you fly, instead of waiting in lines and eating at Cinnabon, you’ll zip through security and sip on an adult beverage for free.
The real kicker comes through the Sapphire Reserve’s point accrual and partner transfers. You can earn three times the points on dining and travel (that includes taxis). While Chase offers a 50% bonus to redeem points for travel through its travel portal, you could instead transfer out to airline partners like Singapore Airlines. You’ll be flying in a private suite to Asia for just 120,000 points. With a 50,000-point signup bonus, you’ll get there pretty quick. Once you’re there, there’s no foreign transaction fee either, which will likely save you a bundle.
You Love Planning And “Deals”: Discover It Card Or Chase Freedom
Both of these no-fee cards offer rotating quarterly categories where you earn 5% back. For example, Discover it Card earns 5% back at restaurants from July through September when you’re enjoying the height of summer, then another 5% on Amazon and Target purchases from October through December when you’re stocking up for the holidays. Plan wisely, and you cash in—without having to pay a dime for the trouble.
You Need To Tackle Your Current Credit Card Debt: Chase Slate
Maybe you went a little too crazy on gifts last Christmas, or you ended up spending a lot more on that vacation to Santorini than you’d planned. It happens. Rather than staying in that hole, transfer your high-interest debt to the Chase Slate card, with a $0 transfer fee and 0% APR for the first 15 months on your balance transfers and purchases. Stay after it, and you could be debt-free in no time.
A final thing to consider: If you fly a lot with one airline, consider getting that airline’s credit card. For example, having one of American Airlines’ co-branded cards will let you check a bag for free—that’s normally $25 each way, so the savings can really pile up.
For more advice on credit cards, adulting, and career, pre-order our third book, When’s Happy Hour?, out October 23!
Images: Hanson Lu / Unsplash