If you
haven’t changed your preferred plastic in a while, chances are you’re missing
out on valuable rewards
by Taylor Tepper | July 6, 2019
Loyalty?
Laziness? Sticking with your old tried and true plastic might have you missing
out on some of the best new perks and rewards offerings.
What’s in your
wallet? If you’re like a lot of folks, when it comes to the credit cards you
carry, the answer is nothing particularly rewarding.
Roughly 20 million
Americans have never changed their main credit card, according to a CreditCards.com survey. What they’re missing: a slew of new
offerings over the past few years with bigger cash rebates, more valuable
travel rewards, and better financing terms.
Older cardholders are
particularly likely to stick with a card they’ve had for quite a while: Fewer
than one in five consumers between the ages of 50 and 64 switched up their
primary credit card in a recent five-year span, the Creditcards.com survey
found.
Yet you’re the prime
candidate for the best deals.
Americans between the
ages of 50 and 69 have an average credit score of 700, compared to 634 for
millennials, according to Experian. That means you’re exactly the kind of
cardholder that issuers covet—and who get the sweetest terms.
What’s in it for you?
Travel enthusiasts
can bank a roundtrip flight to Europe just with a sign-up bonus. Cash-back
lovers can easily bump up their rewards by a few hundred bucks a year. And
if you’re typical among the four in 10 of those within a decade from retirement
who carry a balance, you can save nearly $1,000 in interest charges.
Depending on what you
want your credit card to do for you, these are your best options.
Goal No. 1: You want
a no-fuss card and cash rewards
Consumers in a
separate CreditCards.com survey preferred credit cards that offer cash
rebates to those that give you travel rewards by nearly three to one.
It’s not hard to
understand why. Unlike travel cards, cash back cards are typically easy to use
(no complicated point-redemption rules to master) and don’t charge an annual
fee, a universally hated feature.
Fewer
than one in five people aged 50 to 64 changed their primary credit card over a
recent five-year period.
Creditcards.com
Your best option is
the Citi Double Cash, which gives you a 1% rebate when you
charge an item on the card, and another 1% when you pay off the bill. The card
recently added a $100 sign-up bonus to sweeten the deal.
Almost no other
general-use card guarantees you as high a return. If you spend $2,000 a month
on food, clothes, entertainment and other commonly charged expenses (a
reasonable estimate for someone born between 1946 and 1964 based on Bureau of Labor
Statistics data), you’d earn more than $1,000 in cash rewards over
two years.
Willing to juggle
expenses between two cards to earn even more cash back? Add the American Express Blue Cash Preferred.
You’ll earn 6% on the
first $6,000 in groceries you charge—a limit that more than covers what the
typical 55-to-64-year-old spends, according to the BLS—and
1% after that. Filling up at the pump and shopping at department stores get you
another 3%.
There is a $95 annual
fee, but that is offset, for the first two years at least, by a $200 sign-up
bonus.
Assuming the same
$2,000 a month in spending, if you use the Amex for groceries ($6,000 a year),
and the Double Cash for everything else, you’d earn nearly $500 more after two
years than if you used the Double Cash alone.
Goal No. 2: You want
travel freebies
Boomers will shell
out an estimated $6,300 on travel in 2018, according to an AARP report. If you’re among them, you’d likely benefit
from having a travel card.
Fair warning: More
than half of Americans find miles programs confusing, according to NextAdvisor, a
financial product review site.
More
than half of Americans find travel reward programs confusing.
NextAdvisor
First, there’s the
gnarly lingo—a “mile” or “point” on one card most likely means something
different on another. You’ll also need to jump through a hoop or two to redeem
rewards, typically going through the issuer’s travel portal to book flights and
hotels.
Plus, since most
travel cards charge an annual fee, you need to be okay with paying money
upfront to earn more valuable travel benefits later. The typical fee is around
$95, a recent Value Penguin survey found, but can range as high as $550
on some premier cards.
That’s a deal breaker
for many people. The number one priority among credit card customers, according to Experian, is no annual fee.
Airline loyalty card
or general purpose travel card?
Want to forge ahead?
The first question to ask yourself is whether you almost always fly a
particular airline. If so, you’d do well to sign up with their credit card.
Take the Gold Delta SkyMiles. Your first bag flies free, meaning
you’d save $200 on four round-trip flights a year, more than offsetting the $95
annual fee (waived the first year.) You also earn a sign-up bonus of 30,000
miles—enough to qualify for a round-trip cross-country flight—and a $50
statement credit, if you spend $1,000 within three months of receiving the
card.
On an ongoing basis,
you’ll earn two miles for Delta purchases, and one mile on anything else you
charge on the card.
Not a Delta regular?
The United Explorer
Card ($0 for the first year, then $95) and Southwest Rapid Rewards Plus ($69 annual fee) sport
similarly attractive terms and make sense if you’re a frequent flyer on those
airlines.
If you’re not tied to
a particular airline, though, you’re better off with a card that offers equally
valuable rewards on all of your travel spending.
Take the new Barclays Arrival Premier ($150 annual fee, waived the
first year). You earn two miles on any expenditure, even if it’s not travel
related, and each mile is worth one penny when you redeem it against travel
spending, which is at the higher end of reward rate.
Where the card really
stands out: Rather than the typical one-time bonus if you spend a set amount
within the first three months or so of signing up, the Barclay card rewards
annual spending. If you charge $25,000 annually, you’ll earn an extra 25,000
miles; $15,000 gets you 15,000 miles; $10,000 gets you 10,000 miles.
That’s the equivalent
of 3% back on travel spending, which is an unmatched level of ongoing rewards.
Also appealing if you
travel abroad: The card doesn’t charge foreign transaction fees and will
reimburse the $100 cost of Global Entry, giving you expedited clearance on
airport security and customs lines.
Goal No. 3: You want
to pay less interest
Rewards cards are
only worth the trouble if you don’t carry a balance.
Households headed by
someone 55 to 64 years old who have credit card debt owe $6,700 on average. If
you’re making minimum payments on a card with a typical 17% annual percentage
rate, financing is running you more than $1,100 a year.
The
No. 1 priority among credit card customers, one survey found, is no annual fee.
Experian
Two card features
that can help bring those costs down: a zero-fee balance transfer and lengthy
0% interest period.
Chase Slate and the American Express EveryDay fit the bill. Both allow you to
transfer a balance for free if you do so within two months of opening the card,
versus the typical 3% charge, and give you 15 months to pay off your debt.
(Some balance transfer offers give you more time to pay off the debt but will
charge you a fee.)
By paying $447 a
month, you could knock off that $6,700 balance before any interest charges kick
in.
If you’re not
currently in debt, but want to use a credit card for 0% financing for a major
outlay—hello, new deck!—you can find even longer 0% interest periods. For
instance, the U.S. Bank Platinum card has a 20-month 0% interest
introductory period, while the Citi Simplicity offers 18 months.
You must have the
discipline, though, to pay off your bill before interest kicks in.
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