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Help me think through getting a new credit card.

KatieS7094 10 10 April 12, 2016 at 08:41 AM in Finance
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Hi friends,

I've spent quite a bit of time researching new credit cards. I have it narrowed down to 4 (ha!) and need help deciding on one.

Some background. I have excellent credit (820 this morning). One current credit card that I sparingly use and pay off immediately. I'm a cash person. I would consider myself pretty financially conservative. I'm not a credit card person at all, normally.

However, in the next few months, we'll be spending approximately $12,000 on a few things (small house renovation, small medical procedure, and a vacation [for which I've already bought the airfare]). I have the cash to pay for it in full, but am thinking I should take advantage of a rewards card to pay for these things.

Narrowed down to:

1. Chase Freedom (with the rotating 5% categories and $175 signup bonus)
2. Chase Freedom Unlimited (with the 1.5% back on everything and $175 signup bonus)
3. Chase Sapphire Preferred (50,000 bonus points on first $4k, approx. $500 I think)
4. Citibank Double Cash (2% combined cash back)

Looking at it now, The Chase Sapphire Preferred is the no-brainer, but I dislike the $95 fee next year. I refuse to pay a yearly fee. I know I can downgrade at that time but am worried I'll forget or something and am not looking forward to messing with it. And I'm not one to open a credit card just for short-term use, so fundamentally I dislike the idea, although an extra $500 isn't too shabby. Wink

Any input or things I'm forgetting?

Thanks--sorry if this is a hassle for forum members. I really did read through as many posts as possible.

KS

5 Comments

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#2
You can be financially conservative and be a credit card user at the same time. You sound like you've got your spending under control so I see no reason not to start using credit cards responsibly and earn rewards. As long as you always pay the statement balance in full before the due date there are no downsides.

Spreading your rewards too thin across multiple cards could make it more difficult to reach minimum amounts to actually redeem rewards.

Your credit score is high enough that you could do some churning (sign up for multiple CCs for bonuses) without reducing your ability to get a good rate on a loan, if needed.

The $500 bonus on the CSP is pretty significant and you can just product change to another Chase card before the AF comes due to avoid the fee. The Citi Double Cash would be the simplest card and 2% everywhere would definitely add up if you use it for your everyday purchases. The Chase Freedom cards are also quite popular if you don't mind keeping track of rotating categories.

I would sign up for a CSP and spend $4k on it to get the $500 reward then product change to a Chase Freedom card with no AF. I would also get a Citi Double Cash card right away, but wait to use it until I hit the $4k spend on the CSP. When you have the Citi Double Cash and the Chase Freedom, use whichever gives the highest cash back at the time.
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#3
CSP for the obvious bonus UR points and great card for travel. I would also get the Chase Freedom for rotating 5% CB. Depending on when you plan doing a home reno if you plan on buying from a home improvement store I would highly consider Discover IT since you'll able to get double bonus (e.g. 10%). I believe the Home Improvement Store category is from Jul-Sep 2016. I would also honestly get the Citi DC 2% as well for all other purchases. This would be a simple standard start on maximizing CB. If you have a Costco Membership the new Citi Visa that is coming out also has great perks.

I also agree that you can be financially conservative and use credit cards. I would say you're simply more old school. If anything else you are being more fiscally smart with your money by optimizing your CC points/miles/CB.

Let's say all your spending that you do that can be charged on a CC is $20,000 this year. Lets assume you are just using points for cash back at 1 cent per point.

$20,000 Cash = $0
$20,000 with standard 1% CC = $200
$20,000 with 2% CC = $400
$20,000 with average of 3% CB = $600
$20,000 with average of 5% CB = $1000 (you would have to take advantage of the bonus Discover 10% CB the first year or make use of CB sites on top of optimizing your CC)

Top that off with 50k CSP bonus points and talk about beer money. You don't have to get too deep in the game to get a decent return.
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#4
All great comments and I very much appreciate the comments about being simultaneously a CC user and financially conservative. I agree that I'm likely more "old school," too. I've been saver all my life. Smilie

So, realistically, how much of a ding is it going to be to open to CCs at once? I don't anticipate needing any loans in the foreseeable future (already have a home mortgage, own two nice/newer cars outright), but call me crazy, I like my high credit score and take pride in it. But again, boingyman makes a great point about perhaps not being so fiscally smart to do things this way in terms of potential rebates.
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#5
It doesnt affect your credit score much. Over the past 10 years ive opened/closed around 50 credit cards. Just opened 2 cards within the past month...credit score still around 780.

I just sold my 51k amex points for $570 to a broker...already had too many other points for flights...this was simply for cash money...ill gladly take a ding to credit score for those easy returns.
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#6
Thank you. I went ahead and applied for/was approved for a CSP. I immediately got an email from Credit Karma alerting me of a credit inquiry and asking if I wanted to check my score. Yesterday it was 820, right now (after the Chase credit inquiry) it is 814 (TU) and 807 (Equifax). So, in case anyone was interested in a real comparison, there it is.

Thanks again everyone.
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