A Peek into My Wallet, Part I

There is no right credit card for everyone – the best credit card for you will depend on how much you generally spend each month, the type of purchases you make, and what benefits are most relevant to you.  While you should definitely review other credit cards if you are looking for a new one (I found Ask Mr CreditCard to be a great place to start), here are the ones I have and why they work for me:

United Mileage Plus Student Visa – This was my first credit card.  I got it in college, and apparently it is not offered anymore.  There is no annual fee, but it only gives me one mile for every $2, half of what is given by most standard airline credit cards.  Because it is my oldest credit card, though, I still keep it to maintain my credit score, and have a monthly automatic payment for my cable bill set to it so that there is always activity on it and Chase does not close my account.

Citi Gold/ AAdvantage World MasterCard – I got this card to replace the United Visa as my primary credit card.  There is a $50 annual fee, but it gives me 1 mile per $1 I spend, so as long as I spend at least $5,000 per year, the annual fee is justified.  (The math: Considering the general standard conversion of 1 mile to 2 cents, I need to earn at least an extra 2,500 miles on this credit card every year to recuperate the $50 cost over the alternative, my United Visa card.  And if I spend $5,000 per year, I will earn 5,000 miles on American, or 2,500 more than I would have earned on United if I used my Visa card.)  And as a cardholder, I can also redeem miles at lower rates for certain domestic flights – 20,000 miles instead of the normal 25,000.

If you are interested in this card, or any other airline card, I suggest you sign up for the airline program first and wait for credit card offers to come in the mail (or at least that was the case during the better economic times).  Once I decided to get this credit card, I started checking my mail for better deals, and after 2 months I got one – it had the same terms and conditions as the offer available online, including the annual fee waiver for the first year, but with a bonus 25,000 miles for signing up (versus the 15,000 offer online)!

Discover More Credit Card – This Discover card is a really good deal as a secondary credit card.  It gives only up to 1% cash back on regular purchases – less than my Citi/American Airlines card, which, given the conversion rate, effectively gives me 2% – and is not accepted in all places, making it not-so-great to have as your sole/ primary credit card.  But every quarter it offers 5% cash back bonuses for certain purchase categories, and every so often there might be other bonuses too.  In the quarter ending this month, for example, this Discover card was giving a 5% cash back bonus on home improvement stores, department stores, and clothing stores, not to mention the bonus for restaurants in June I wrote about a few weeks ago.  And July to September, you can get a 5% cash back bonus on purchases (up to $300) at gas stations, hotels, theme parks, zoos, and bookstores.  That’s an extra $15 – not that much, but much better than the $3 you would get for spending $300 on a 1% cash back card.

5% cash back is probably one of the best deals on credit cards out there.  Having this Discover card as your secondary card, you should always remember to use it for purchases eligible for bonuses (remembering to check them every quarter), but go ahead and use your primary card for everything else (provided it gives you 1% or more in cash back).

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