The Personal Finance Podcast - How to Choose The Best Credit Card (Plus The Exact Credit Cards I Use!)

Episode Date: March 24, 2021

Episode 46: How to Choose The Best Credit Card (Plus The Exact Credit Cards I Use!) Got questions? Ask me on Instagram Here. @mastermoneyco This is the fastest way to get a response from me.  The Capitol One Venture Card Personal Capital Free Wealth Management and Budget App  CIT BANK (Best Savings Account) Why credit cards are a great tool  How to use credit cards to get free money How to optimize credit cards  The best credit cards if you have no or bad credit  How to create a credit card system  Check out all the Stuff I Recommend!  M1 Finance Best Place to Invest  Personal Capital Free Wealth Management and Budget App  CIT BANK (Best Savings Account) ** Some links may be affiliate links and we earn a small commission at no extra cost to you. We only recommend products we truly believe in.  Check us out on social fam!  Twitter Dollar After Dollar Instagram Learn more about your ad choices. Visit megaphone.fm/adchoices

On this episode of the Personal Finance Podcast, we're going to talk about how to choose the best credit card for you. What's up, everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of dollar after dollar.com. And today on the Personal Finance Podcast, we're going to talk about how to choose the best credit card for you. And if you have any questions about this episode, hit me up with your questions. on Instagram at dollar a F-T-R dollar. We just started that Instagram a couple of weeks ago, and a lot of people have found it and got a lot of value from there.

I answer people within a day on Instagram. So if you're interested in asking questions about this episode, head over to Instagram and you can ask your questions there. So today we're talking about one of the biggest topics that a lot of people have questions about with their money. And that is how to choose the right credit card. because credit cards are actually extremely powerful tools. And you hear a lot of people out there say that credit cards are taboo

because a lot of people get them into situations where they don't make the best decisions with their credit cards. And if you've had a past history where you've gotten into significant credit card debt, you think a credit card is just a magic wand that you can wave and get free stuff or free money, then maybe this is not the best episode for you. But if you have chosen to be responsible with your finances thus far and you want to start either building credit or getting rewards with your credit cards, then you absolutely should listen to this episode because credit cards are an extremely powerful

tool and you can get a lot of free money with credit cards if you use them correctly. And coming up, we're going to have a bunch of different episodes on how to optimize credit cards. But today, I'm going to show you how to choose the best credit card for you and what type of reward options are out there as you go through this process. Because it's extremely important to understand that. because the credit card will make the majority of your purchases for you as you go about life. And if you choose the right ones and understand how to choose the right ones, then you can make an amazing decision for you and your future.

Because credit cards allow you to travel. They allow you to get cash back. They allow you to buy certain things on discounts. And so it's a powerful tool to use to build wealth. Because over time, if you do the math on how much money you're going to save by utilizing credit cards, it's a significant sum. And a lot of people, if they do this right, can get over $1,000 cash free every single year. So I'm going to show you how to choose the best credit card first.

And then in future episodes, we're going to talk about how you can maximize those rewards so that you get the best benefits and the best bang for your buck when utilizing credit cards. So let's get into it. Now, before we jump into the deep dive of how to choose a credit card, I want to lay a couple of ground rules here. The first one is, like I said on the opening, if you've had problem with credit cards in the past, then credit cards are probably not for you until you prove to be responsible. Now, people can be financially rehabilitated. That's absolutely possible.

But if you've gotten into significant credit card debt and you haven't proven to yourself that you can actually be responsible with credit cards, then I don't recommend just getting a credit card just to maximize rewards. Because the negative impact that that would have, if you go the other way, is a tremendous detriment to your wealth-building ability. Now, when you're looking to get a new card, one of the rules is don't accept credit card offers that come in the mail. Because what a lot of people do is they'll see credit card offers come in the mail, and they'll just take the first one,

especially when they're looking for a new card. You want to do your research on what the best card for you is, because it's actually a big decision. Because if you're making the majority of your purchase is on that card, you want to make sure that you're maximizing your rewards, which is the next ground rule before you get started. is to squeeze every reward you can out of your card. Now, credit cards have a massive amount of rewards if you know how to use them.

And most people don't. Most people get a credit card and they just accumulate points. And they don't understand that there's a bunch of different things that you can do with your credit cards with those points. You can get discounts when you shop. You can get coupons. You can get free tickets to concerts and things like that. So there's all types of things that you can do with your credit cards. And you just want to have a full understanding and maximize every valuable benefit.

that you have. The cool thing is even some credit cards, if you can't get tickets to a big event, some credit card providers can actually get you a liaison who can get you tickets to things like the Super Bowl or a national championship or tickets to a major concert. And that's the cool thing about credit cards. They have all these hidden benefits that people don't know about. And then the next one is once you pick a credit card, just pick a good one and move on. Stop thinking about it and overthinking and try to switch back and forth and try to optimize your credit card strategy. That's ridiculous. Now, we'll get into other episodes like the travel hacking episode that we're going to have in the future. That's going to talk about how to maximize those credit cards and you may want to jump around a little bit.

But up front, when you're just getting started and picking the best credit card for you with your everyday purchases, there's no reason to try to optimize everything and overthink this. Pick a card, move on. That's what you want to do. So now that we've laid out the groundwork, I'm going to get into some of the best ways to choose a card, some of the best benefits for choosing a card. And I'm also going to get into the cards. use. And another thing that we're going to talk about is if you do have a bad credit score or you

you had a bad history with credit cards, there's a specific credit card that you can actually utilize that's going to allow you to still build credit with your credit card, which is one of the major benefits of having a credit card. And you don't have to have a high credit score or even any credit to be able to get that type of card. So let's get into it. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where Indeed comes in. When it comes to hiring, Indeed is all you need. Instead of struggling to get your job post noticed, Indeed's sponsor jobs help you stand out and hire faster. Your post jumps up to the top of the page, making sure it reaches

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And a lot of them that you want to open up may require a credit score that is 700 or above. So you want to pull your credit score just to see if you have a credit score that allows you to get some of these peak level cards. And if you don't, don't fear because I'm going to show you how to build up your credit so that you can go ahead and get some of these cards. And we've had an episode in the past on how you can build your credit fast. So if you haven't listened to that episode and you have a low credit score, go ahead and listen to that episode because it's extremely impactful. And having a good credit score will impact your finances, thousands of dollars over your

lifetime. So you want to make sure you understand how it works. Now, when you check your credit, if the number is not what you expected, then see what's causing the problem. because if you can figure out what's causing the problem, you can go ahead and make an impact on your credit score to raise that credit score so you can take advantage of the things that come with having a great credit score,

like lower interest rates when you buy a house or credit cards. And this is why having a good credit score is important because it does literally save you thousands of dollars. That's why we say that. And then you want to go ahead and just dispute any errors that are on your credit report. So when you pull your credit report, you definitely want to look for errors

because a lot of times that will happen. And if there's an error on your credit report, you can dispute those errors. So you can get a free copy of your credit report every 12 months. And there's a bunch of places you can get one. You can Google search it. And there's a free one like annual credit report.com, which is a federally authorized website. And that's just a great way to check it every 12 months. Even some of your credit card providers will give you, you know, a rough idea of what your credit score is.

I know Capital One does it with their credit wise app. And a bunch of other providers do that as well. just to have that number in mind so you know how to make financial decisions. Now, the next thing you want to do is identify what type of card you need. What goals do you want to get out of this card? Do you want discounts on certain things? Do you want cash back? Do you want to travel the world for free?

Or do you have a low credit score and you want to build up your credit score? Because that's an option for you. So if you want to rebuild your credit, if that's a thing that you want to do, or if you're a college student or you're just starting off and need to build credit from zero, then there's something called secured credit cards. And what secured credit cards do

is you actually put a deposit down when you open up this card. So this is why it's for people with low credit scores who want to build up their credit or no credit at all because you're putting a deposit down and what that does is it minimizes the risk for the bank. It minimizes the risk for the bank

because they have your deposit there. so if you don't pay your bill, they at least have that deposit to withdraw on just in case anything goes wrong for them. And then some people want to transfer a balance over to like a low interest balance credit card. And that helps people with a high interest rate on credit card debt to be able to just transfer it over. So that's another option that you can utilize credit cards for. And they have transfer balance credit cards that you can look for.

And then my favorite way to utilize credit cards is travel or cash back. Travel rewards cards and cash back cards are the cream of the crop when it comes to credit cards. My wife and I just built a house. And we have furnished a number of things in our house with cash back from credit cards. I mean, thousands and thousands of dollars of things with cash back credit cards. How did we do that? By putting all of our bills on our credit cards, as many things as possible. We obviously can't put a mortgage or something like that on your credit card.

But as many things as possible on a credit card and build up the cash back. See, we haven't been able to travel in the last year. and we'll have an episode all about travel rewards cards. We haven't been able to travel the last year, so we've used a lot of those points that we've accumulated for cashback. And that cashback has been able to furnish our house for free with a number of different items. So think through these options,

and then what you want to do next is narrow down the right card with the right questions. So if you're looking for a secured card, you want to think through, will this card build my credit up? If it will, and you look through the option to say, yes, this card will build my credit, then it might be a good option for you. Is there an annual fee on the card?

Because a lot of times if you're just trying to build up your credit, you want to try to avoid annual fees as much as possible. Because you're trying to put yourself in a good financial situation so that you can build wealth for your future. And a wealthy life is not truly dependent on credit score. It's absolutely not. But you have to have an high income if you don't have a high credit score to really truly build well.

And a lot of high income individuals who pay cash for everything, sometimes they don't have a crazy high credit score. But if you can't pay cash for everything, then you're going to need to increase that credit score. So it's a very major wealth-building principle to save you those thousands and thousands of dollars every single year. And then the next question is for a secured back credit card is can I graduate to a better credit card later on? So once you build that credit score up, how long does it take you before you can actually graduate to a better credit card? And what that means is sometimes if you want a specific card within, say, a specific bank like Chase or something like that, then maybe you want to look at a secured credit card by Chase so that you can jump up to the Chase Sapphire, for example.

And then some additional questions you want to ask yourself if you want to transfer a balance from one credit card to the other so that you have zero interest on your balance. How long is the zero percent interest period? Because a lot of times when you transfer a balance from one card to the other, and this is a great option for most people because a lot of people who are in credit card debt have a 20% to 30% credit card interest rate and they need to transfer their balances to be able to pay that down. much faster. So if that's you, then this is a fantastic option for you. But how long do you have to pay that down? And what's your plan going to be to pay that down? Because it's going to hit the high interest rate once again if you don't pay it down in time. And a lot of zero percent APR cards also offer rewards. So what type of rewards do they offer? Because if they have rewards and you get a zero percent interest rate that you can pay down your card and actually get yourself a free loan so that

you can build your credit in addition to getting rid of that balance, then that's a win. situation. And then questions you want to ask yourself for rewards cards is how do I spend my money? Because a lot of rewards cards give you bonuses for certain categories. So for example, there's a number of cards coming out that give you big bonuses on gas and groceries. A major staple in most household. And gas and groceries are something that you can get, say, 5% back. So every $100 you spend, you get $5 bucks back on gas and groceries. That's a major, major reward system there. Because over time, if you think about it, it's going to build up. Or if you spend a lot of money and travel and go to hotels or you own a business,

those are major things to consider. If you spend a lot of money in your business, you can get $30, $40, $50,000 cash back at the end of the year. That's like giving yourself a free bonus at the end of the year. Or it's like having an emergency fund in case something goes wrong in sticky situations. Then a lot of cash back and rewards cards will have an annual fee. Well, what's the annual fee? You've got to think through that.

I only had a card at one point that had a $300 annual fee. So once I got the bonus and I got the reward system down, I realized this fee just isn't worth the perks that come with the credit card. So I ended up having to close the card. But what's the annual fee? Is it $95, which is very common now? Is it $0? It just depends on what you get.

How quickly will you earn rewards? A lot of credit cards, a lot of the good ones that are cashbacker travel, you earn a major bonus if you spend X amount of dollars within the first three months. So for example, a very common one is you get 50,000 points or $500 is what that amounts to. If you spend $3,000 within the first three months or $1,000 a month. So for a lot of people, they spend more than $1,000 a month on staple items like groceries and gas and their bills and things like that. So you're able to hit that mark and get a free $500.

Do you like free money? Because I love free money. And that is why it's a big perk for most people. And then over time, you're going to earn additional points. and if you accumulate these points, you're going to earn additional points where you can make big purchases on things that you want. And then another question to ask is,

how complicated is this card? Because what you don't want to do is become completely confused and wonder, why am I getting charged these fees? How do the point systems actually work? Is it easy to use these point systems or do I have to go to jump through all these hoops and get frustrated just so I can travel across the country?

And it doesn't matter if it's a personal card or it's a business card. You want to go through these questions and ask yourself, how am I going to utilize this card? And then the last step is just to apply for the right card for you. Now, in a second here, we're going to get through the cards that I personally use, my favorite credit cards. I don't get paid by any of these companies.

It's just the cards that I personally use that I want to give to you and give you guys that value. So you want to figure out which one can give you the maximum amount of rewards for how you're going to use that card. So narrowing your choices down is pretty easy to like the top two or three. And then picking one within that top two or three is the hard part. So which one can maximize your value for you? If you've already found a clear winner, just go for that card.

If you found a completely clear winner, go for the card, don't overthink it and move on. Just let's do it. But if you haven't, then you want to narrow down your choices in a couple of different ways. And it's really just looking at what the maximum amount of rewards is for that card. I mean, you can do a side-by-side comparison if you want to. I think websites like NerdWallet can do that or the points guide.com can do that. And those will allow you to at least see the perks side by side. and then if there's one that just shows up to be a clear winner, which usually there is for you,

then you just choose that card. Now, let's get into the credit cards that I use. Now, what I want to do is give you the four or five cards that I utilize, and I'll give you a bonus one for business, just because I think it's really helpful for people just to narrow down their choices if they want to pick a card that's best for them. And I'll explain why I use each of these cards and what it truly is for. Now, like I said earlier, none of these companies pay me. None of these banks pay me. This is just something that I wanted to share with you guys so that you can have a better understanding of where to start looking. And these cards may not be for everyone. They're not

for everyone, especially if you're trying to build up credit, but they're a great way to see how you can kind of go about choosing a high quality card. Now, with my personal credit cards, and this is not a rule of thumb or anything, but with my personal credit cards, I stay within two banks. I stay within chase because they have a great reward system where you can transfer points from card to card. So let's say you have two chase cards and you want to go travel somewhere. Well, I can take the points from both chase cards, combine them, and then use all of that for one trip. And the same goes for the other bank, which is Capital One. And Capital One also has the same system where you can use points from various cards and combine them and get your rewards or whatever

else you want. So I love the transferability of these banks and how they utilize their points. And I think this point systems that they use are extremely easy to get your reward system. There's two different ways that you can get your points on these two banks. And we'll explain that in a second as well. My favorite overall credit card for personal finance is the Chase Sapphire. Now, if you've never heard of the Chase Sapphire, it's great for travel or cashback. The Chase Sapphire, I think, has a $95 fee. But the sign-up bonus for the Chase Sapphire, It always ranges between 50 to 60,000 points if you spend $4,000 within the first three months. So like we talked about earlier, spending $4,000 in three months, but if you think about your electric bill, your water bill, your groceries, your gas, your miscellaneous spending, the money you blow out when you go out.

You know, there's all of those pieces that come into play. And it's going to add up typically for most people to about $4,000. Now, if you're super frugal, maybe you don't spend that much on credit cards. after you take out your rent and things like that. But if you're the average American who puts a lot of their bills on credit cards, this is a great option for you because you're going to get a free $600 just by signing up and utilizing a credit card. And it has a bunch of different perks on the Chase Sapphire.

Chase has a bunch of reward systems built into it that allows you to be able to get discounts on tickets and things like that. And they also have discounts on if you travel a lot, it's fantastic for hotels or rewards on rental cars or flights or other options as well. And Chase has a vast array of different credit cards. Things like specific airlines credit cards go through Chase. Specific retailers credit cards go through Chase. And a lot of the big names that you can think of like Southwest or all these of the companies use Chase points and that you can combine them with the Sapphire. So that's the cool thing about that. The Sapphire is super flexible. There's a lot of things that you can do with it. Within the same

family, the business card I use is the Chase. ink card, and it works the same way as the Sapphire. Don't need to go into a bunch of details on that. And then the Chase Freedom Flex card is another great one. And that's a great one for cashback. Because the cashback value that you get out of the Chase Freedom Flex is awesome. And the bonus on that one is you get a $200 bonus by just spending $500 within the first three months.

So if you don't spend a lot of money, that's a great one to look at because you get $200 for spending $500 within the first three months. And you can earn 5% cash back up to $500. $1,500 each quarter. And the best part is there's no annual fee. So if you don't want to spend money on an annual fee, then that is the best card for you. Because it's one that gets you rewards points.

You get cash back all the time on all different types of purchases, and there's no annual fee. Whereas the Sapphire has a $95 annual fee. And the Chase, Inc, I believe, also has a $95 annual fee. And then two, I'll give you from Capital One. There's the Capital One venture card, which is amazing for travel, And reimbursing travel rewards with the Capital One venture is absolutely fantastic.

You actually go ahead and put your travel on the credit card and just reimburse yourself on the back and with the points. So you don't have to budget out how many points do I need here? How many points do I need there? You just go ahead and spend the money on travel. Say you buy a hotel for three nights. After you're done staying at the hotel, you just tell Capital One, hey, I used this hotel. Can I use my points for that?

Boom. Free hotel for the last three nights. Or you can get cash back with it as well. which I just used my venture to buy furniture for the house. There's all kinds of things that you can do with it, and it's a fantastic card to use. Now, that one has a $95 annual fee because the bonus is bigger when you sign up.

That one, you get $60,000 if you spend $3,000 within the first three months. They also have one that has no annual fee that has less of a bonus and you build up less points over time. But I think it's called the Capital One Venture One. And that was the first one I got because I just didn't want to spend an annual fee when I was getting into the credit card reward system, just to see how it worked. So if you're new to the credit card reward system,

you're still kind of uncomfortable with it and you don't want to spend $100 annual fee, then this is a great option for you, is the Capital One Venture One. And then they also have a great business car, which is called The Spark, which we use for another business, and it's fantastic as well.

And Capital One has another great cashback card called the Quicksilver. And the Quicksilver is one that is similar to the Freedom Flex, the Chase Freedom Flex, and they work pretty much the same way with no annual fee. These are the cards that I utilize. The Sapphire and the Venture 1

and the Chase Inc. are the three that I use the most. The Chase Inc. for business. The Sapphire and the Venture 1 for travel rewards and cashback rewards. And they are the ones that I really have been using for years. Like, I haven't just been using these cards for a couple of months. I've been using both those cards for years

because they have so much benefits to them. And I truly believe in them. So, again, if you guys have any questions about this episode or anything related to how you can figure out how to choose the best credit card, hit me up on Instagram. You can shoot me a DM, you can leave a question in the comments.

It's at dollar, A-F-T-R-dollar. Thank you guys so much for listening, and we'll see you on the next episode. Thank you guys so much for listening. And if this is your first time listening, consider subscribing so you never miss an episode. And share this episode with a friend. And don't forget to leave a rating and review on iTunes as well,

because our goal is to bring as much value to you as possible. And we're trying to spread this message that money can buy freedom. That's what money is there to do is to buy more freedom. So thank you again so much for listening, and I hope you have a great day. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-Ojo.

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