It took me years to get over my fear of credit cards. For all of college and the first three years of my post-grad life, I paid for everything in cash or with my checking account’s debit card. While this wasn’t the worst strategy in the world (at least I wasn’t maxing out credit lines on spur-of-the-moment weekend vacations and telling myself that I’d pay everything off once I was right and famous), it did set me up for a rather uncomfortable awakening. Over lunch, a friend was bubbly with excitement over the new credit card he’d signed up for (zero annual fees, travel rewards points earned on every purchase); he mentioned that “having no credit history is just as bad as having a negative credit history.” I was floored.
All my spartan discipline! All my subtle protests against the wiles of consumerist culture! All my railing against the Capitalistic Siren Song! All this…was setting me back from a secure financial future?
Not exactly. I simply had to let go of the binary that I’d constructed in my head (credit card = risk, paying up-front, always = smart) and infuse my (baseline correct) philosophy with some nuance. Credit cards can be risky; paying up-front can be the smart thing to do. But — as with all strategies — the real advantages of each financial practice were only maximized if you understand how to time them out properly.
It’s smart to pay larger or recurring sums (such as a new laptop, or a monthly electricity bill) on a line of credit first, and then pay “up-front” for the total, end-of-month sum on that credit card. That way, you A) establish a positive payment history by “racking up” a larger amount of “debt” for the month and then paying all that “debt” off by the end-of-month due date. And B), by using a line of credit for initial payments, you reap the additional rewards provided by your line of credit (the bank adds 1% cash-back to all the expenses cycling through your card, for example).
I damn near had a panic attack the first time I made an appointment with a customer representative to discuss opening a credit card. I stuck to my resolution, filled out the paperwork, and slipped that slick, shimmering square of plastic into my wallet. Now, I treat my credit cards like the sharp tools that they are: agile, convenient, and attractively beneficial when wielded with care, and dangerous — or even wounding — when used indiscriminately, as a crutch to replace real income.
Admittedly, I am still mystified by the folks who have more than two or three of these suckers in their wallet (and still manage to avoid crushing debt). So when I read about the way that The Points Guy manages his 26 (**pulls out megaphone, leans in** TWENTY-SIX) lines of credit, I was floored. Especially because he elects to open cards that charge high annual fees. Before I go any further into the valuable things I learned from this 26 (TWENTY-SIX) card-touting dude, I strongly suggest that you read through his article “5 Things To Know About Credit Before Applying To Cards.” Highlights are the “don’t carry a balance” and “don’t bite off more than you can chew” sections, which advise exactly what you’d expect: paying off the entire balance of the card on the first of every month, and only opening more lines of credit than you can comfortably pay off in a single month with your current income and cash flow.
Now, that cautionary note aside, l want to highlight a few of the credit cards that The Points Guy explains in his Summer 2016 Credit Card Inventory (that is, the cards that might provide attractive and affordable for those of us who aren’t flying first-class and wearing Rolodexes). I also strongly encourage you to head straight to the source and read the entirety of the article — Point Guy goes into excellent detail on each of these offers, and provides many links to further reading, resources, and research.
1. The “Chase Freedom” credit card.
It’s a $0 annual fee, for starters. Points Guy notes that “you can earn 5 points per dollar on up to $1,500 in purchases each quarter.”
2. The “New York Knicks NBA American Express” credit card.
If you (or your partner) is an avid NBA fan, this card has no annual fee. Points Guy notes that, for every dollar spent on NBA tickets (as long as you get them from a licensed NBA distributor), you earn three cash-back points. Bonus round: you get two points to every dollar spent on gas or groceries, and one point for every dollar you spend on other purchases.
3. The “Capital One Quicksilver Cash Rewards” credit card.
Again, the $0 annual fee is the big selling point, here. And though this card doesn’t offer the higher-points-per-dollar ratio for different spending categories (in the way that the NBA card, above, provides three points to one dollar spent on tickets), the baseline point-per-dollar reward is higher than some cards: 1.5% cash back on every purchase.
For you TFD readers who are earning enough to consider opening a luxury-end travel rewards card (that offers such benefits as “free extra night” stays at hotels, and the like), The Points Guy’s article has provides a whopping 23 options for you to look into, guided by his cost-benefit analysis and personal experience. Happy carding!
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