So, now that we know where to look for credit cards, I want to share with you the final part of making my decision. While interest rate is not a major issue, it does come into play and I will be looking over the terms of the card I choose. When looking at credit card terms, you should always see a table like the one below. Click to enlarge.
This is a standard disclosure for all cards. This example came from a Bank of America credit card. Notice the major important numbers: interest rate for standard purchases, balance transfers, and default. The default APR will go into effect if you make late payments or do not follow standard credit card procedure. Variable rate information discusses potential rate changes in the future. The grace period is how long you have from the billing date to make your payment. Minimum finance charge and annual fee are self explanatory.
Two good resources for understanding the dozens of pages of disclosures are Bankrate’s 15 Must Know Credit Card Terms and the Credit and Charge Card pamphlet from the Federal Reserve of San Fransisco.
That in mind, I have limited my selection to just a few cards. The Discover Cashback Bonus card has come up a few times in my searches, so I will give it a closer look. Chase Freedom has come up a few times, but that is the card I am dumping, so it is off the list. Blue Cash from Amex looks highly rated by Consumer Reports. I have the Citi Dividend Rewards card. It has 2% cash back on top categories, but 1% on everything else. I think I can do better than that. Finally, I am looking at the Charles Schwab rewards credit card. That gives me four cards to examine in greater detail.
Discover Cashback Bonus Card – 5% cash back in rotating bonus categories and 1% on everything else. The 5% number is a big draw, but most of my purchases will probably not qualify. I can do better than 1%. A big plus is the 5% categories, but Discover is the least widely accepted major credit card. I want to be able to use one card everywhere, and I am not sure if this is it.
Blue Cash From American Express – 1.5% on all purchases plus 5% back on groceries after spending $6500 in the calendar year. Enticing, but I am not so sure about the $6500 threshold. I am also leaning away from Amex because it is not as widely accepted.
Citi Dividends Reward Card – I have had this card for a long time. This card features 2% cash back on bonus categories but only 1% on standard purchases. I like the card, but decided to move on a while back due to the low payout rate. The card has a $50 minimum for payment, which is fairly standard. It is a MasterCard, so it is widely accepted. This card also has a $300 annual cap on rewards. I have never hit that cap, but I want to be clear in case it ever comes up.
Charles Schwab Card – This card was suggested to me by someone I know. It is a little more obscure, but it looks great. The card has a flat rate 2% cash back on every purchase. The rewards are deposited into your Schwab account monthly, so I don’t have to wait to hit $50 to cash in. It has to be tied to a Schwab personal account, but I have one already so that is not a worry. There is no annual fee. It is also a Visa, so it can be used anywhere around the world. Schwab does not charge a foreign exchange fee, which is a perk when I can get out of the country.
So there it is. As my marketing professor would say, this is my “choice set” of card. I will pick on of them to be my card in the next few days. I want to take a non-binding poll of readers to see what you think. If you are reading this in an RSS reader, you may have to visit the site to vote.
