5 Rules About Credit Cards
- Interest rate doesn’t matter if you don’t carry a balance.The interest rate is irrelevant as long as you’re paying off your entire balance each month. Don’t keep a balance, please – if you are, stop reading now and use credit card payment calculator to pay it down quick.
- Use a rewards card.The vast majority of people should use a rewards card. If you’re already spending money, you should be rewarded for it. Exceptions are people who can’t qualify, who should instead use a secured credit card.
- I prefer travel cards over cash back.Most people would benefit more from travel rewards than from cash-back. I describe the details of why in my book. For some reason, people get really mad when I make this recommendation, but I don’t care.
- I prefer general rewards cards, not airline-specific cards.Unless you fly a majority of flights on the SAME airline, I prefer a general travel card instead of an airline-specific card (like a United card). For example, I fly Jetblue and Virgin a lot, so I want a travel card that I can redeem on multiple airlines, not just one.
- Annual fees are not Satan’s spawn.I know it may be blasphemy to personal-finance “experts,” but I’m willing to pay an annual fee! OMG! In some cases, there are no-fee versions of the card, so you should always calculate if you spend enough to justify it. Still, $65/year is just not that significant to my financial situation any more.
What you want from the best credit cards
The bottom line is we all want to get free flights and free hotels. For example, when I go on vacation, travel for friends’ weddings, or travel between NYC and SF.
Alternatively, I want to upgrade to business class when I travel abroad.
And I don’t want to be nickel-and-dimed for idiotic things like blackout dates, penalties, and fees.