Credit Cards - any recommendations?

[dw316]

Thinking about applying for a new credit card, preferably one with no annual fee and low APR (even though I'm usually good with payments but just in case) with good cash back rewards (that can be used on travel or actual cash back that isn't limited to Best Buy store credit only). Been settling on Citi Double Cash Back Card, with Chase Freedom Unlimited and Chase Freedom regular as possibilities as well. Was wondering what you guys use and recommend? Thanks in advance!

 

[SnakeDoctor]

My honest recommendation ... don't.

Nobody ever got rich with airline miles, and a whole lot of people have kneecapped themselves with debt they didn't intend to rack-up. There's a reason credit card companies use 'perks' like airlines miles or 'cash back' or whatever to draw customers ... because almost everybody spends WAY more on interest than they ever come close to earning back in 'perks'.

I speak from experience. The only way to win is not to play the game.

SnakeDoc

 

[PlayItLoud]

I go with my local credit union's credit card that has cashback rewards with an APR of 7.99%. the one thing i noticed with credit union credit cards and the big banks is that credit union apr is fixed and never changes whereas the big banks can change in an instant depending on the prime rate. I've had my credit union card for almost 20 years and its still at 7.99% and from time to time they offer 0% on certain period of time but I always pay the balance so i dont really make use of it. I have a Citibank Mastercard that started out 3.99% during the real estate bust it climb to a whopping 18% i immediately stopped using it, its down now to 9.99% but i still refuse to use it, i just keep it for my credit score and for the just in case scenario.

 

[Mr. Green]

Mr. Green rarely made late payments but good thing he managed to pay them all off. Now he only have 3. One of which is a Macy card which is most useful for buying 50% off sales and an extra 20% off coupon. So a simple shirt with a bloated price only cost little more than $13.

They're good at establishing credit but should be keep at a minimum.

 

[dw316]

I usually pay on time with automated payments, and I don't really overspend that much. Just wanted to make some cash back on the side that I could use on things outside of Best Buy (that was the card I had previously and all the rewards went to their store credit and I don't shop there often anymore in the past 5 years). I know SAG-AFTRA is going to start their own credit line soon and I'm with that union, should I wait on them? Or should I ultimately stick with cash?

 

[DinoDB1975]

Diners Club International and Carte Blanche.

In all seriousness, Snake Doctor is right...but using credit is a necessary evil. Whatever card you choose, if you can be fiscally responsible enough to charge everything on it (groceries, gas, utility bills) and PAY THE BALANCE OFF IN FULL every month, do so. If you get mileage points or cash back, so be it. Personally, I'd go with cash back, as sometimes your airline miles will expire and you'll be scrambling to use them, and most likely spending money that you weren't planning to anyways. It'll increase your credit score in time, allowing you to get better loan rates.

 

[DinoDB1975]

I go with my local credit union's credit card that has cashback rewards with an APR of 7.99%. the one thing i noticed with credit union credit cards and the big banks is that credit union apr is fixed and never changes whereas the big banks can change in an instant depending on the prime rate. I've had my credit union card for almost 20 years and its still at 7.99% and from time to time they offer 0% on certain period of time but I always pay the balance so i dont really make use of it. I have a Citibank Mastercard that started out 3.99% during the real estate bust it climb to a whopping 18% i immediately stopped using it, its down now to 9.99% but i still refuse to use it, i just keep it for my credit score and for the just in case scenario.

Just keep an eye on it, or use it to fill up your car once a month. Some credit card companies are now shutting down cards due to inactivity without any warning.

 

[Solidus]

The only credit card that matters.

 

[Skywalker(OG)Kush]

I usually pay on time with automated payments, and I don't really overspend that much. Just wanted to make some cash back on the side that I could use on things outside of Best Buy (that was the card I had previously and all the rewards went to their store credit and I don't shop there often anymore in the past 5 years). I know SAG-AFTRA is going to start their own credit line soon and I'm with that union, should I wait on them? Or should I ultimately stick with cash?

The best credit card is no credit card. Credit union cards will give you the best rates since they are not for profit but you still have to pay interest and that interest means you are paying more then the sticker price for every item you buy.

I had capital one credit card that came with a 6.99 Fixed APR. I made some pretty significant purchases because the interest rate was so low and it was fixed. For a long time my rate was indeed 6.99%, but when the mortgage crash happened that 6.99% fixed rate was changed to a variable rate which resulted in my interest rate doubling & then tripling. They applied these new rates retroactively to all my past purchases (ones i made when the rate was 6.99%). The rate kept going up over a 12 month period my balance ballooned without me making a single purchase. I was so pissed off, I swore never to use consumer credit cards again. Once i paid that ***** off, i was done with with credit cards. I would only consider using a card that had a 12 month interest free promotion period- as soon as the promotion period ends the card would be destroyed.

If you are set on a credit card, just make sure the cash back you get exceeds the interest paid otherwise its not worth it. In most cases, the cash back is less then interest its just there to make you think your getting something in return and to get you to use that damn card. The best credit is free, like best buy's 18 month free financing; The key is you have to payoff the entire balance before the promotion period ends otherwise you will end up paying 19%-22% interest on the entire purchase. Cool thing about best buy is you get reward points on every purchase so you don't have to use credit at all.

Keep in mind, most all brick & motor stores offer a free financing period on large purchases, there is really no reason to ever use a credit card these days. I haven't used a credit card in 3 years, and my credit utilization score has hardly changed.

 

[GeneralZodLives]

Just keep an eye on it, or use it to fill up your car once a month. Some credit card companies are now shutting down cards due to inactivity without any warning.

That happened to my wife. Now I make her use rotate her cards so they all get used. Her credit score dropped a little bit because her debt/credit ration went out of whack when they cancelled that card.

 

[dw316]

Wait, do you get charged interest if you make your payments per month? I'm still trying to understand how it works, since finances isn't my strong suit. I think I understand that APR is the percentage they charge you for interest if payment is late, but if there are no annual fees and you pay on time, aren't you charged nothing? Forgive my ignorance on the matter, I've basically had the Best Buy Mastercard, now Visa for over 10 years now never really thinking about what the small details meant since I shopped there a lot before, but the past 5 years, I haven't so I wanted to change my service, especially since it had a $60 annual rate on it.

 

[Skywalker(OG)Kush]

Wait, do you get charged interest if you make your payments per month? I'm still trying to understand how it works, since finances isn't my strong suit. I think I understand that APR is the percentage they charge you for interest if payment is late, but if there are no annual fees and you pay on time, aren't you charged nothing? Forgive my ignorance on the matter, I've basically had the Best Buy Mastercard, now Visa for over 10 years now never really thinking about what the small details meant since I shopped there a lot before, but the past 5 years, I haven't so I wanted to change my service, especially since it had a $60 annual rate on it.

APR is calculated on a daily basis.. So unless you payoff your balance daily you will be paying interest

 

[DinoDB1975]

That happened to my wife. Now I make her use rotate her cards so they all get used. Her credit score dropped a little bit because her debt/credit ration went out of whack when they cancelled that card.

^Exactly. Exact same scenario happened to my wife as well. She had a card with a very high credit limit with no balance, and once closed without any forewarning, her credit score dropped a bit due to the skewed debt/credit ratio you mentioned.

 

[dw316]

APR is calculated on a daily basis.. So unless you payoff your balance daily you will be paying interest

Oh wow, I never knew that. So on every purchase, you're paying a little something extra for the service of credit. I'm confused, when I look at the Interest and Fees category on my credit card statement page online, it says $0. Where does it get tacked on?

 

[dw316]

^Exactly. Exact same scenario happened to my wife as well. She had a card with a very high credit limit with no balance, and once closed without any forewarning, her credit score dropped a bit due to the skewed debt/credit ratio you mentioned.

Does cancelling a credit card cause your credit to dip like that? Or only if its closed due to inactivity?

 

[DinoDB1975]

Wait, do you get charged interest if you make your payments per month? I'm still trying to understand how it works, since finances isn't my strong suit. I think I understand that APR is the percentage they charge you for interest if payment is late, but if there are no annual fees and you pay on time, aren't you charged nothing? Forgive my ignorance on the matter, I've basically had the Best Buy Mastercard, now Visa for over 10 years now never really thinking about what the small details meant since I shopped there a lot before, but the past 5 years, I haven't so I wanted to change my service, especially since it had a $60 annual rate on it.

It depends on the terms of the specific card you are using. Often times you have a "grace period" from when you charge your purchases where no interest is charged.

 

[Skywalker(OG)Kush]

Oh wow, I never knew that. So on every purchase, you're paying a little something extra for the service of credit. I'm confused, when I look at the Interest and Fees category on my credit card statement page online, it says $0. Where does it get tacked on?

If you were to call you credit card company up now and ask them for the payoff balance they would then tell you the amount of interest accrued up until 4/25/2016. That interest and fee will show up once they generate your monthly statement

 

[Collectorcol]

Never had one... Never want one.

 

[DinoDB1975]

Does cancelling a credit card cause your credit to dip like that? Or only if its closed due to inactivity?

Yes.

For the sake of simplicity, you have two credit cards, both with $1,000 credit limits. On one card you have a zero balance, on the other you're carrying a balance of $500. Your debt to credit ratio is $500 to $2,000, or you're using 25% of your available credit.

You decide to cancel your card with no balance. Your debt to credit ratio is now $500 to $1,000, or 50% of your available credit. Your FICO score will adjust accordingly, downward.

 

[dw316]

If you were to call you credit card company up now and ask them for the payoff balance they would then tell you the amount of interest accrued up until 4/25/2016. That interest and fee will show up once they generate your monthly statement

But for my past statements, I've been looking through them and they all show $0 int he interest on purchases and interest on transfers and fees categories since I paid each month in full on time. Does it get added somewhere else? My purchases listed seem to show the right amount after taxes and such.