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Choosing That One Card
I have a friend who is not very excited about using credit cards. In fact, this friend actually uses cash or a debit card for everything. Yes, I have had discussions with this person about the benefits of rewards cards in the past, but we are friends and thus I don’t push the subject. It never pays to take someone past their comfort zone.
Yesterday this friend said that they might be thinking about getting one credit card. After I picked myself off of the floor, I started thinking about which one I would suggest. This post isn’t really about telling you which card you should get, but sort of walking through the steps one might take to determine which card to use and also for you to provide your thoughts and feedback.
Choosing A Card
My friend flies does love to travel and flies Southwest semi-regularly, but doesn’t really have a ton of points in any one program. With this information in mind, I thought of three cards that might be worth considering:
- Chase Southwest Card: This card may not seem like the one card to carry around, but a lot of people do. Remember this friend values simplicity and this might be the card for that. With 50,000 bonus points to sign-up, my friend can get a nice chunk of free travel up front and continue to earn points going forward.
- Chase Sapphire Preferred: Many of you would say that my friend should sign-up for the Sapphire Preferred. After all, the bonus is the same and Ultimate Rewards points can be transferred to Southwest and other places. My friend would also earn 2X on dining and travel. This card does add a complication factor though since points are flexible. (Yes, it seems counter-intuitive.)
- Citi Double Cash, Fidelity Visa or other 2% Card: Right now this friend isn’t earning any cashback. By substituting in a 2% card, this person could earn cash and then use it for travel or anything else. This is as simple as it gets. A no annual fee card with a fixed earning structure.
Narrowing Down Options
For most people I would probably recommend the Sapphire Preferred for at least the first year, but I know my friend well and I sort of want a product that will last for the long term. I think Ultimate Rewards could be a hassle and I don’t know if my friend would want to pay an annual fee going forward. The same issue arises with the Southwest card.
Right now I am leaning towards recommending a straight 2% cashback card. Currently my friend isn’t earning anything and this will mean he/she will be doing 2% better than before. Yes the lack of a sign-up bonus does hurt (assuming my friend gets a Double Cash or Fidelity Visa), but I doubt that will make a huge difference to this person.
A Hybrid Strategy
One other strategy I am thinking about recommending is a ThankYou Premier/Double Cash strategy. My friend could sign-up for the ThankYou Premier with a 40,000 ThankYou point bonus and use that card for a year and then downgrade to a Double Cash if they don’t want to pay the annual fee. Yes, some of their earnings will be 1X on the ThankYou Premier, but they get a nice bonus plus 2X and 3X bonus categories.
If my friend did that, I could suggest they use their ThankYou points to book travel at 1.25 cents each to keep things simple. That would give this person $500 worth of travel from the sign-up bonus and decent value going forward. Again, this isn’t maximizing 100%, but there is something to be said for simplicity.
Choosing Your One Card
If you are like my friend and want the simplicity of one card, but also want some sort of rewards, you are not alone. The good news is that you have a ton of options as long as your credit is good and you pay off your bills in full every month. If that is you, then determine how simple or complicated your strategy needs to become. Then look at which rewards programs provide the best benefit for your goals and start from there. The correct answer to which card is best will be different for different people.
The truth is, there is no single magic card that will work for everyone. If my friend is getting nothing now, a simple 2% card is a huge win. Sure there may be ways to do even better, but in the complicated world of multiple cards and spreadsheets to track everything that I live in, there is a tiny bit of attractiveness in the “one card wallet” lifestyle.
Which card do you think is best if someone only wanted to carry one and valued simplicity? Do you agree that a straight 2% cash back card can be a great solution for many people? What other factors should be considered when making this decision? Let us know your thoughts in the comments?
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