Best Credit Cards for You & Redeeming Rewards
Credit cards are such an important way to build your credit, which is something you need to establish as soon as you can and keep consistent as much as you can! Credit is what allows you to get approved for a loan, approved for a home or apartment, car loan, etc..
A big way to establish credit early on when you’re not applying for a car or home loan is by credit cards! There is a big fear of those staying away from credit cards so you don’t go into debt or spend absurd amounts of money you don’t have. But let’s break that fear down. Read more about understanding your credit score here.
Here are the different types of credit cards you can have, how to manage your credit and not overspend.
Download the Credit Karma App NOW!
This app is completely free and SO beneficial to stay updated on your credit score, loans and best credit cards for you. Credit Karma will pull your credit score every day if you want it to and will not give you a hard pull that is detrimental to your credit. You are easily able to check your credit score and see the growth or decline from month to month. It also has the ability to check for fraud that is pulled from your social security number and ensure no one is committing fraud to your SSN or accounts.
The best feature Credit Karma offers is the “Approval Odds” that they give you for possible credit cards you may want to apply to. It is able to tell you if you have “Fair Odds, Good Approval, Great, etc” depending on the credit card. This is so important early on when you’re just establishing credit because you don’t want to be getting more than 3 hard pulls a year on your credit and 1 credit card application will be your 1/3 pulls. So you MUST be careful when applying to cards and only apply to credit cards you have good approval odds so you don’t take a credit hit for nothing.
Cash Back Credit Cards
A cash back credit card is a super popular option for your first credit card. There is more than often no annual fee, meaning you do not need to pay any fee to have the credit card to get the benefits. A cash back credit card will reward you on your everyday or specific store/company purchases and give you on average 1-5% cash back.
Yes, this is the credit card giving you MONEY BACK on your purchases just because you’re spending with them. If you utilize your card to its maximum potential you can be getting back hundreds of cash back at a time. If you are using a debit card to make all your everyday purchases it’s time to get a credit card and start getting rewarded on purchases. A cash back card is a GREAT first credit card to start with. It gets you comfortability paying off a credit card statement monthly and usually there is no price to you to have it (annual fee is $0) and you do not need to know the credit rewards super in-depth to redeem them such as a travel card is more intricate.
Chase Freedom Cash Back Rewards - $0 Fee, up to 1-5% cash back
Travel Reward Credit Cards
This is a next step when you get comfortable paying and owning credit cards. Some of the best credit card rewards are those who get rewarded with travel redemption rewards. People have traveled all over the world at no cost due to their accumulation of points from their travel credit cards. Not all travel credit cards will require an annual fee but some of the better ones do, I promise the annual fee is worth it! I pay $95 for a travel credit card per year (Chase Saphire) and it’s SO worth it.
Sneaky Tip for annual fee cards: Call the credit company once per year threatening to cancel your account for a competitor unless the annual fee is waived - just saying it’s been done before and they most likely will do it if you ask. I haven’t done this but it’s a tip I read in a finance book.
What I Use & Redeemed
The #1 card I use is the Chase Saphire where you earn travel points on EVERY purchase and I promise points accumulate if you use the card correctly. Once I opened a travel credit card I stopped using my cash back card and debit card completely and put EVERY purchase on this card. I do this, solely for the rewards.
On my capital one travel card I earned 20,000 extra miles by spending a certain amount the first 3 months of opening the card. These 20,000 miles got me to Mexico for a week for free. If you are ready to be confident in your credit card spending and redeeming your rewards, travel cards can be the most useful to you!
Chase Saphire Travel Rewards - $95 Annual Fee - 1st Year Waived - My #1 Card
Capital One Travel Rewards Card - $0 Annual Fee
What I’ve Redeemed with Credit Cards:
Chase Freedom Cash Back - Over $500 cash into my account
Capital One Travel Card - Over 20,000 miles which was a free trip to Mexico.
Chase Saphire Card - Over 100k+ miles being saved for a big trip or multiple round trips that will be free.
Steps to take to get in control of your credit:
Download and create an account with Credit Karma
Do you have any established credit? Is your file “too thin” to pull a credit score?
Look into credit cards your bank offers and your approval odds via Credit Karma
Apply to 1 credit card - Don’t apply to multiple or you will get hard inquiry pulls each time!
When approved, do not utilize over 50% of the credit you’re allocated (Example - only spend max $250 for a $500 credit limit)
Try to only put small expenses on your credit card and earn rewards. Example - a cash back card you only put gas or grocery transactions on if you are rewarded for those. Don’t treat your credit card like it’s free money!
Pay off your card in FULL every month and ON the due date!
Prioritize & Budget
I cannot reiterate enough the horror stories and credit card debt young adults get themselves in because when they’re given a $5,000 or $15,000 credit limit they go wild. DO NOT DO THIS! Unless you have $15,000 to pay off your credit card balance the next month you should not be doing this. Only spend what you have to pay off your credit card.
Credit cards to give you the safety of giving you 30 days to pay off your balance from the previous month. For example, for December 2019 let’s say I spent $500 on my credit card. This $500 balance isn’t due until 30 days from my closing date. Your closing date will be the last day for your 30 day charges to be on your statement balance. Your statement balance will be the amount you owe and your due date is the date that your statement balance is due.
You do have the ability to call your credit institution and chance your due date. I suggest once you map out when your income is deposited and bills are paid for that you strategically pick a due date. For example, most people get paid on the 1st of every month so you could set your due date to be the 1st versus the 14th when your paycheck has most likely been used.
I 100% advise you to take control of your finances and if credit cards make sense for you, start now! If you’re someone not able to control yourself with a higher credit limit either lower your limit by calling your bank or maybe hold off on opening a credit card. It’s a strategic game but if played right you will benefit in the long run. I talk more about getting in control of your finances HERE.
Everyone’s financial situations are unique. If you want to chat about your unique situation and what I would suggest, let’s talk! You can send an anonymous or personal email here and I will get back to you within 24 hours! Own your finances my friends.
* Referral links have been included in this blog.