Finding The Best Credit Card Offers For Your Situation

Free?I often get emails from readers asking me what the “best” credit card offer is. I write back and say there isn’t one, which I’m sure doesn’t win me any friends, but it’s the truth. There is no best credit card for everyone, but I’ll certainly say that the best offer for you probably wasn’t that Citibank offer you got in the mail last week.

Yet, time and time again, people sign up for whatever credit card happens to be most available to them, even though they’re often just handing wads of cash to the credit card company for the convenience. I think a credit card can be a valuable purchasing tool if used correctly and in a healthy fashion, but you’re simply losing out if you don’t select a good card for primary use.

So how do you find a good one? First of all, do a little self-evaluation…

Will you likely carry a balance on the card?
If you will be carrying a balance on the card regularly (in other words, you won’t be paying the full balance on the card each month), then the interest rate trumps every other factor about the card. Here’s what to look for in a credit card offer:

Introductory rate How much is the rate at first? Hopefully, this will be 0% or something very close to it. An introductory rate above 5% is not impressive.

Length of introductory rate How long does that rate last? The longer, the better.

Billing and grace period Two-cycle billing is bad; avoid it if you can. Also, the longer the grace period, the better.

Balance transfer rate and timeline Many cards give you the opportunity to transfer a high balance on another card to this card at that low introductory rate. However, read the fine print – the interest rate on the transfer may be different, as may the period, as compared to the introductory offer.

Long-term rate The long-term rate is less important than the introductory rates. Especially notice the adjusted rate if you’re late with a payment.

On many offers, the amount is based on the prime lending rate, which you can easily find by Googling for “prime rate” – as of this writing, the prime rate is 8.25%. So, if an offer mentions prime plus 12.99%, your real rate is actually 21.24% – ouch.

How will you use the card?
If you do pay your balance each month, then the bonus offers become much more relevant for you. Here’s some advice on how to find the perfect credit card offer in your situation.

Carefully evaluate your spending Look through all of your expenditures in the last three months or so, and group them not only by type but also by where you made the purchase. The largest groupings you have are the areas you should look for bonuses on. For example, my biggest expenditure over the last three months is our automobile – for gas, oil, and such things.

Check directly with major credit card companies Don’t Google for offers – almost any term combination you type in will result in a bunch of spam for substandard offers. Instead, go directly to the major banks that offer cards – Citibank, Chase, CapitalOne, and Bank of America, for starters – as well as directly to the major credit companies – American Express, Visa, MasterCard, and Discover – to find offers.

Focus on offers that match your spending Since you’re not going to carry a balance, your primary focus should be on cards that offer significant rewards. Look for ones that align well with your spending and also with your lifestyle. For example, I’m a heavy commuter and I put a lot of miles on my vehicle, as does my wife, so for us, the Citi Driver’s Edge Platinum Select is a very good choice. On the other hand, perhaps you are very very diverse in your purchases, so a direct cash back credit card like the Citi Dividend card might be appropriate.

The key is to look at a multitude of offers and really try to balance what they offer with what you actually spend, not with your perception of what you spend. If you do this – and keep the balance paid off – you’ll end up money ahead for having used the card.

Isn’t recommending a credit card bad advice?
Credit cards are only what you make out of them. If you make bad decisions, credit cards can certainly amplify the mistakes, but if you make good choices (like keeping the balance paid off), they can be incredibly useful tools that make your shopping much easier and can put money back in your pocket.

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  1. Tyler says:

    I just got my first credit last month (I am 24 and own a house). For me, I wanted to “make my FICO higher!” I am now realizing how stupid this is.

    For those that get a credit card to just “boost” your FICO score, please reconsider. FICO score is an I-Love-Debt score. You honestly don’t need a FICO for anything, including a mortgage! If you want to buy a home, do so with a mortgage company and offers MANUAL UNDERWRITTEN mortgages. If you want a car, save up for one! Want that diamond necklace? Save up for it! For me, no debt is the single best way to live life free.

    Chasing a “few pennies” on every dollar spent with reward cards is not worth it for me. Instead of trying to get the free money from credit card companies, I am dedicating my time to finding more ways to earn money. Right now, it’s working. Also, borrowing money that I really do not need does not make sense.

  2. David Hunter says:

    In contrast to Tyler I will say, if you can be dedicated to paying it off each month (Hint your available credit should not be higher than your monthly salary… This is just asking for trouble.) Then why not get a cashback credit card. It is literally money for nothing, although you do have to be careful that you aren’t being charged extra for the credit card transactions, which for example cheap airlines in the UK tend to do.

  3. Tyler says:

    David, yes it’s true it’s money for nothing. But slip once and the interest you must pay will diminish all those returns you made on your card.

  4. I can’t think of a reason why anyone who would answer the question “Will you likely carry a balance on the card?” affirmatively should get a credit card at all… anyone know of a reason?

  5. Michael says:

    One reason might be for balance transfers. If you’re trying to pay off cards those 0% transfer options are really nice.

    Transfer the balance, close the old card, and pay it off.

  6. Ira says:

    I get really annoyed by people who say that credit cards automatically make you in debt. I use my credit card all the time, but I have never made a purchase on one that I didn’t have the cash for. If I want to buy something, I think about what it costs the same way no matter how I pay. “No debt is the single best way to live life free.” I don’t consider myself as having debt.

  7. 60 in 3 says:

    Tyler, I’ve had credit cards for 15 years now and never carried a balance. That’s just part of being financially responsible for me.

    Also, people might need a credit score for other reasons. For example, some jobs check on your credit. If you want to rent an apartment, you might need good credit. It’s not just for buying stuff.

    Credit cards are actually a wise financial tool if used correctly. You can earn rewards plus they’re an interest free loan for 30 days. Again, assuming you pay off the balance each time.

    Finally, watch out for cards with rewards programs that will encourage you to spend more. I have an Amazon rewards card and I finally decided to stop using it as my main card since the thought of “ooh, if I buy this I can get another $5 free on amazon” was too much of a temptation.

    For me, the best reward card is one with a simple cash back program. I don’t know what my spending habits will be years from now, and I intend to hold on to these cards for years. So I don’t really target any specific spending area.

    Gal

  8. Dean says:

    I’m surprised that no one has mentioned annual fees. There are many cards out there that charge these and there are many that do not. A good way to save money is to avoid those cards that charge them.

  9. Dave says:

    I’ve never paid a cent in interest (or fees) to a credit card company, and have been paid $400 cash in rewards.

    It’s just important to develop sound financial habits BEFORE you get a credit card, rather than after.

  10. Total agree that credit cards are not the devil of people. It’s just another financial tool you can use to get rewards for spending.

  11. Tao Jones says:

    No credit cards = no temptation to do stupid things with credit cards.

    I’m a “spendy-natured” person, so just like a former alcoholic won’t keep a bottle of booze around — I won’t keep a credit card around.

  12. Rob in Madrid says:

    When my Wife and I moved to Madrid from Germany last year we made the decision not to take any credit (other than a corporate Amex which she needs for traveling). Some people can handle credit, others can’t. We are defiantly in the latter. We’ve had consumer debt for years and this finally gave us an opportunity to finally start over fresh and I don’t’ want to start out by digging our selves in a hole again.

    Very very few people are disciplined enough to pay to pay the balance off monthly. Why put yourself in harms way. I had a family member who converted their mortgage to a line of credit 10 years ago to save 3% a year and just hit the financial wall; they came very close to losing the house they’ve lived in for 25 years. I’ve been telling him for years that lines of credit are dangerous things and he keeps telling me that the interest rate is much lower on a LofC than a regular mortgage. This is becoming quite common in Canada as the banks have aggressively promoted mortgage backed lines of credit.

    Unless you are very disciplined and naturally frugal don’t put your self in harms way.

    We’ve had consumer debt for years and this finally gave us an opportunity to finally start over fresh.

  13. martha in mobile says:

    I agree that it all has to do with your spendy-style. I became disciplined with credit cards only because I wanted to live up to my new husband’s absurdly high opinion of me — that was 15 years ago, so now it’s a habit. We use a 1% cash back (starting with the first dollar), no fee credit card. The interest rate? Who knows? We don’t carry a balance, so it’s not relevant. What is relevant is that we have received over $3,000 over the past several years. It’s not a whole lot, but it is nice.

  14. Lorie says:

    I think of credit cards as necessary financial tools. In fact, when my daughter turned 16 I helped her get her first credit card so that she could establish her own FICO score. You have to have self accountablity with CC’s just like anything else in life. If you don’t have that then you really shouldn’t have one(credit card).

    I don’t carry a balance with my cards, as soon as the bill comes in, it is paid in full. My card of choice is my Capital One card with a 6.9% finance charge.

  15. ccboffin says:

    I must respond to Tyler’s comment about getting a credit card to boost your FICO score.

    Seriously, as long as you utilize your credit sensibly, credit cards can be a very useful tool.
    (Provided there is a grace period, no annual fee or usage fee)

    As for your FICO score, its an essential part of 21st century life and will continue to be more important.

    FICO is not an “I love debt” score, its a very sound measurement of your credit utilization and history – to wit, your character.

    You may not *need* to borrow money, and let’s all hope that’s the case. But if you do, does it not make sense to get the best possible deal if you do?

  16. Bill says:

    My vote – Pursue the 0% cards and use as a financial tool. God bless the folks who can pay off their cards. Goals, Goals, Goals.

  17. amanda says:

    Instead of opting for a card with 1% cash back rewards, I got one through Upromise that offers 1% back towards my student loans. In the past few months, I’ve earned about $50 towards my loans. Not a huge amount but a great way to make business trips (flights, hotels, etc.) work for me.

  18. Titika says:

    As several others have said, credit cards can be useful if you are careful to avoid unnecessary purchases, pay them off every month, and have ones that don’t charge fees. I used to use debit exclusively, but have recently resumed using my credit card for regular purchases because of the rewards. I am frugal by nature, but make sure to keep myself in line by recording the credit card purchase in my check register immediately (with a CC notation by it) so I always know I have the money to pay it off, and then I go to the card’s website and pay it off approximately once a week.

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