As I am reviewing cards, it might help you, Humble Reader, to know what I, Not-So-Humble-Author include in my criteria when I am reviewing a card. While having lots and lots of cool pictures on the credit card helps (and if you want an affinity card, then Bank of America, which bought MBNA, the owner of the affinity market, is probably the best one for you), it does not truly determine whether or not a card is one that should be in your wallet.
So, what, then, do I consider, if not the cool pictures?
- No annual fee: There are too many cards out there which can offer you what you’re looking for without having to pay the annual fee. The annual fee is effectively your way of saying, “Credit Card Company executives, I want to give you money for giving me the right to make you more money.” There is a rare exception to this rule, which I will discuss in a future post.
- Low interest rates: While you should have a zero balance, the reality is that about 45% people carry some balance, with a median balance of $2,200.
- Cash back that accrues immediately: If there is a choice between a 1% reward that gets discounted immediately and one that gives you a check at the end of the year, take the one that gets discounted from your bill immediately. Because of the time value of money, money in your pocket now (or, in this case, less money out now) is worth more than money in your pocket later.
- Rewards that are equivalent to cash: Unless the reward is equivalent to cash, you can always take the cash and buy the reward. An example of this is an airline miles card which gives out miles at the equivalent of .75 cents/dollar spent. If you can get a 1% cashback card, then you’re generally better off using it and buying the airline ticket with your saved money.
What do you look for in a credit card? Tell me by leaving a comment below.
