Cashing in on Credit Cards—How to uncover the card that’s right for you

By Gail Osten
December 2013/January 2014 View more Finance

N2013_12_01_001FINAN Gone are the days when one bank credit card was pretty much like any other. Now there is a dizzying array of cards categorized by low interest rates, rewards, frequent flyer/traveler, cash back and balance transfers, all with numerous variations. I was even tickled to see one card offer double points on any Carnival cruise purchase.

Choosing the Right Card

Let your interests and habits guide the type of card you carry. If you typically forget to use gift certificates until they’ve expired, rewards cards with expiration dates may not be for you. Maybe a hassle-free cash back card is a better bet. I get money back from my Costco AMEX every year and all I have to do is spend.

Advantages and Disadvantages

There are advantages and disadvantages to all cards. Some may offer generous points or miles, but carry high annual percentage rates (APR) or membership fees that offset any savings. Time limitations to redeem points also vary. And terms and benefits can change. Be choosy before applying for just any card.

Many Cards, Many Variables

For the sake of this article, let’s examine some ways to evaluate the choices for reward-type cards.

If you pay your bills in full, and like receiving coupons or discounts, consider a rewards credit card. Spending equals points, and when enough points are accumulated, you can cash-in the benefits. The better reward cards offer bonus points—often in the thousands—when the application is approved.

Comparison Tools

CreditCards.com is a useful website that allows you to compare the benefits of various credit cards. More than 40 reward cards alone are evaluated in the “excellent credit” category. There are also entries for less-than-excellent credit. Here’s a sample of one entry and my personal assessment:

• One-time $100 bonus after spending $500 on purchases within the first 3 months [Works for me since I’m no big spender].

• Earn unlimited 1.5% cash back on every purchase, every day [OK, but could I do better?].

• Redeem the cash back earned for any amount, any time [Love no limitations].

• Your cash back doesn’t expire [Thank goodness].

• 0% intro APR on purchases and balance transfers until November 2014 [Nice].

• No annual fee [Works for me].

Want someone to wade through the credit card possibilities for you? Michael Pruser of comparewallet.com assessed what he personally sees as the best credit cards of 2013 in cash back, travel, and balance transfer cards.

Let’s look at cash back cards as rated by Comparewallet.com. Many cash back cards turn 1 percent to 5 percent of what you spend into cash. Some programs are tiered, that’s where the cash back increases proportionately to amounts charged. Others limit the larger percentage to everyday items.

In terms of top cash back rewards cards, Pruser picked Chase Freedom, The Blue Cash Everyday Card, BankAmericard Cash Rewards Credit Card, Citi^® Dividend Platinum Select^® Visa^® Card-$100 Cash Back, Capital One Quicksilver Cash Rewards Credit Card, and Discover It. You can see why he chose these on the comparewallet.com site.

“If you want to know what the best cash back card is for you, assess your spending habits over the course of the year and find a rewards program that lines up with them,” Pruser advises.

Finally, a nice service from Creditcards.com matches your credit profile with hundreds of credit card offers and invites you to apply for cards you are more likely to qualify for. You can be matched with special offers with a soft credit check, which does not affect your credit score. Each soft pull is noted on your credit history file, but is only available for you to see and is not reported to lenders.