Wednesday, January 26, 2011

My Credit Cards - Rewards Are Rewarding!

I have a small handful of credit cards, and I'd like to talk about my personal experiences with them and which I like best.

The first card I ever had was the USBank College Visa which I applied for after reading an article about credit scores. My parents had never spoken to me about the importance of establishing credit, and it hadn't really occurred to me before then to open a card. A couple of years ago it converted to some sort of rewards card, but the cash back is less than 1%. I use this card about twice a year, just to keep it active. I also recently added my husband as a joint user (not an authorized user, they did a credit check) so that it would extend his credit history as well. We now each have 8 years of perfect credit history from this card, and a nice $17,000 credit limit grown slowly by about $1500 increase every 6 months.

In 2006, I realized I could be earning rewards for my credit card spending! My extended family all lives in South Africa, and we typically flew NWA/KLM airlines to get there, so I opened up a mileage rewards card for that airline with USBank. That has since converted over to the FlexPerks card. Before it converted I managed to get one first class trip to Vegas out of the card - not exactly overseas. Since it's converted, I can also get cash back for my points instead of travel. It equates to 1% cash back, and there are often opportunities for bonus points. You also get double points on cell phone and airline charges. Since the card converted in 2009 I have received $650 in cash back! That has been greatly assisted by bonus points. I have not spent that much money! But if we're ever going on vacation together, I'd be happy to book it and you can pay me back. Going in on a birthday present for someone? Sure, I'll buy, you can write me a check for your half :) I have a nice limit on that card of $16,500.

Worth noting: if you ever pay your USBank credit card a day late, you can call customer service and get the late charge reversed once a year. USBank's customer service is excellent, and I also really like their website. Since I have checking accounts with them, I can have my rewards deposited into my checking account instead of applied to the card. This comes with the additional benefit of a quick turnover - it takes just a few days for the credit to appear on my statement online.

When my husband and I first started dating and I had to start cooking real meals for dinner (I'd be perfectly fine with some steamed asparagus and brie on crackers after having a big lunch, personally) I started shopping at Costco a lot more often. As you're probably aware, Costco only takes American Express or debit cards. Not one to lose out on rewards, I applied for the American Express Blue Cash card. It rewards 5% cash back on gas, groceries, and drugstore purchases. Unfortunately, Costco is not included and is rewarded at the everything else rate of 1.25%. When I first got the card I think this was 1.5%. Again, unfortunately, these rates only apply after you spend $6500 per annum. Until you reach that mark, it's just 1% and .5% respectively. The year that I got married and put our honeymoon on this card, I knocked the $6500 out of the park quickly. After that it made sense to put any purchase I could make with American Express on this card. I've gotten cash rewards twice now: $232.17 and $226.97 applied to my balance. I really loved this card for awhile, but it no longer compares to my....

Fidelity 2% American Express! This is my favorite card. I've been coveting a 2% card for awhile now. You need really great credit to be approved for this card, from what I understand. I initially was after the Schwab 2% Visa, but waited too long and it no longer exists. Luckily, this card is still around. I opened a Roth IRA with Fidelity and I now make every purchase I can with this card. The 2% really adds up quickly, and overall works out better than the Blue Cash card because there is no limit you have to reach first. It is also gets the same rewards rate at Costco, which is a good chunk of my monthly bills. The rewards are redeemed in increments of $50 and deposited straight into my Roth IRA. So far I have redeemed $200. Again, this is thanks in part to booking the flights and hotels for a recent trip with my siblings who then reimbursed me for their parts.

In looking up the Fidelity 2% American Express online so that I could link to it, I just noticed that they also now have a Visa Rewards Card! While my 2% American Express is great, as you may know, American Express is not accepted everywhere. Sometimes I have no choice to put purchases on my FlexPerks Visa for just 1% rewards. It looks like this Fidelity Visa offers 1.5% on purchases up to $15,000 a year, and 2% after that! I'm going to do some more research, but I think I might have to apply for this.

I have a couple of other cards that I don't really use. One is an Alliant Credit Union Visa for $2500. I have accounts with them with great rates, and since they pull credit when opening a simple checking or savings account it made sense to accept a credit card offer at the same time. I've never charged anything to it though. I also have a Chase card with a $2500 limit that I opened with my sister in law back when it was Washington Mutual. This was mostly to do her a favor in meeting her goals, but I also used the balance transfer offer which I paid off over the next year. It gave me some breathing room on other bills, but for a 3% fee I'm not sure if it was worth it. I never had any problems with it, but don't have a whole lot of experience with it either.

During the credit repair process, when my husband's credit finally reached 650 we applied for a Bank of America credit card in his name. I had read a lot on MyFico about the 99/500 offer. Basically, we applied for a card we knew he'd be declined for, but were countered with an offer for a $500 secured card where you only had to actually put $99 down. The card was then supposed to convert to unsecured after 9 months of good payments. Unfortunately, the economy changed drastically during that time. He's had the card since December 2008, but it has never converted. It also comes with a $29 annual fee.

I have added him to my USBank card and Blue Cash card, so the purpose of the BOA card (to establish credit) is no longer terribly relevant. If you're trying to reestablish your credit and don't have any other options, I would recommend this card. For our financial position now, though, I don't think paying the annual fee makes sense any more. It will still appear on his credit for 10 years after we close it, and it's not the oldest card appearing on his credit report. We've just paid the annual fee, so maybe we'll leave it alone for the next year, but I think we'll close the card before they charge us another $29.

Those are all my credit card experiences, and over $1300 in rewards in the past 2 years! If you can get them, I highly recommend the Fidelity Rewards cards. Between their American Express and Visa you should be set, and it's really fun playing with the calculator they have here in the upper right hand corner. If I spend $20,000 a year and invest the $400 in rewards at a rate of 7% until retirement in about 35 years, it becomes $57,788! Since I pay my entire statement balance and never owe interest, that truly is free money for me. Amazing!

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