credit cards: the good, the bad, and the best one for you

Photo Credit: Varshesh Joshi

Photo Credit: Varshesh Joshi

Time warp back to 2009, and you’ll find yours truly, a recent college grad ready to take on one of the scariest financial plunges for any young 20-something:  opening a credit card. 

I had heard of all the risks, and while scared beyond reason that I would forget to pay one month and a) be penalized with extremely high interest and b) ruin my credit, I still signed up because I thought I needed it to build credit. 

I began by using it only for gas, but after a law was enacted in 2011 that caused most companies to end their debit card rewards programs, I started paying for most of my expenses with my credit card.  Hey, if I was going to be spending the money anyways, I might as well earn a little cash back on it, right?

If you’re a follower of Dave Ramsey, you’d know that he would probably call me an idiot for doing so.

Per his philosophy, credit cards are the root of all evil, causing you to spend more and pay ridiculous amounts of interest if you aren’t responsible with them.  And for that, he’s got a point:  According to this MIT Study, participants were more willing to purchase an item when they had a credit option versus cash.  And if you don’t pay your balance off each and every month, you will get charged a ludicrous interest rate, the average hovering upwards of 16%. Yikes.

However, I love my credit card.

Last year alone, I earned almost $300 in cash back rewards just for spending money on items like groceries and gas and charitable contributions. In fact, I earned $20 in December on a purchase of UGG boots after I found my card was offering 10% cash back on all Zappos purchases. (I had just bought the same ones from a brick-and-mortar store 2 days before, so yes, I took those back.) And while these rewards won’t make me (or you) rich, a free flight each year doesn’t sound awful, does it? 

And that is why using a credit card isn’t inherently a horrible idea. Have you ever heard someone say that it’s not guns that are bad but the people that use them? Well, that applies to credit cards as well.

If you can control your spending, then having and using a credit card can have some great benefits.  If you can’t, then don’t open one – it’s a black hole that will suck you dry.  Here’s how you know you can handle having a credit card:

  • You pay off your balance EVERY month

  • You stick to your budget

  • You don’t rob Peter (the money designated for debt payments, savings, etc.) to pay Paul (the good folks at Nordstrom or Best Buy)

If you would have a hard time doing any of these, then stay clear – a few rewards points that the credit card company offers is not worth the risk of high interest payments or overspending on shoes. 

However, if you have the willpower to not go ape s#*! while having one, then you can actually use a credit card to your advantage. Like me ;)

Now we come to the most important question about credit cards on everyone’s mind (and one my roommate asked me and what spurned this blog post):  which is the best one when it comes to rewards?  Since you’ll be paying your balance off every month, the interest rate offered doesn’t really matter (in fact, I don’t even know what mine is); thus, finding one with the best rewards points should be your main focus when selecting a card. 

I did a little research for you and came up with my list of the best rewards cards currently offered on the market.  Take a look and see if you find one that better suits your needs than your current one (I did!).



Annual Fees:  $0 for the first year, then $95 each year after

Why It’s Great: 

This card definitely has the best travel reward offers, especially if you book travel through their Ultimate Rewards center and can qualify for the initial bonus points.  Here are the details:

  • 2x the points on restaurant and travel purchases (with 1 point on all other transactions)

  • 50,000 bonus points if you spend $4,000 in the first 3 months after opening a card, which translates into $625 towards travel if you redeem through Chase Ultimate Rewards

  • 5,000 bonus points after you add an authorized user and make a purchase within the first 3 months of opening an account

  • 20% off travel if you book airfare, hotels, car rentals, and cruises through Chase Ultimate rewards

  • 1:1 point transfer with participating frequent travel programs, like Southwest Airlines Rapid Rewards or Marriott Rewards (meaning if you have 10,000 Chase Sapphire Preferred points, you can transfer these and have 10,000 Southwest Reward points)

Best For:  Those who spend significant amounts on restaurants and travel or earn rewards with participating travel programs. 



Annual Fees:  $0 for the first year, then $59 each year after

Why It’s Great: 

I love this for the flexibility – not only do you earn 2 miles for every dollar spent, but you can use the points for any travel purchase, not just through their travel affiliates. Here are the details:

  • 2 miles for every dollar spent on purchases

  • 40,000 bonus points if you spent $3,000 in the first 3 months of opening the credit card, which is equal to $400 in travel rewards

  • Can be used on any flight, car rental, hotel stay and more

Best For:  Those who a) want flexibility with their travel rewards redemption or b) won’t be able to hit the $4,000 3-month purchase threshold with the Chase Sapphire to earn the additional introductory bonus points



Annual Fees:  $0

Why It’s Great:

I like this card because while it not only offers a decent rewards program, it also throws in a few “extras” the others don’t (hello, free In-Flight WIFI). Here are the details:

  • No annual fees

  • Earn 1.5x miles on each dollar you spend on purchases

  • Will double the miles you earn in your first year (thus, 20,000 miles become 40,000 miles)

  • Get $30 of free In-Flight WIFI per year

  • Freeze It Protection – if you lose your card, you can freeze the account in seconds

  • Free FICO Score Tracking

Best For:  Those who want good travel rewards without the annual fee



Annual Fees: $0

Why It’s Great:

This is actually the credit card I use, mainly because I also bank with Chase, and it was the best option for me at the time when I opened a credit card.  I love it because of the 5% cash back categories, and their fraud monitoring is top notch.  Here are the details:

  • No annual fees

  • Earn 5% cash back in certain categories that rotate quarterly, plus 1% cash back on all other purchase

  • Earn $150 bonus when you spend $500 within the first 3 months of opening the card

  • Earn $25 bonus when you add your first authorized user and make a purchase within 3 months of opening the card

  • Potential to earn higher benefits if you purchase items through Chase Ultimate Rewards

Best for:  Smaller spenders or those who wish to have a supplementary card for the 5% cash back categories



If you want to get the best bang for your buck and can manage to hit the spending thresholds in the first 3 months of the Sapphire card, then coupling these together is a great option.  You can use the Sapphire card for all dining & travel and the Freedom for the rotating 5% cash back categories. Best part?  You can transfer rewards points between the two cards; thus, whatever you earn on the Freedom card can be moved to the Sapphire and used to book travel under the Ultimate Rewards program (where your points are worth 20% more). 



I’d like to say there are responsible college students who could handle a credit card, but let’s be honest:  when you’re 20 years-old and drunk on a Saturday afternoon, using your credit card to buy a Slip-n-Slide, a year’s worth of Jello, and an inflatable shark doesn’t seem like such a horrible idea. 

Just stick to the debit card until you’re actually out in the real world making money.  The whole “you need to build credit” excuse is simply bologna.

Again, just as a reminder, know your limits:  if you cannot trust yourself with a credit card, then don’t get one.  The rewards can be great, but they will not cover any excess spending or high interest you may have to pay if you aren’t responsible.

For the rest of you, I hope this helps you in finding the best credit card for your needs.  To be honest, I was pretty set with my Chase Freedom card, but after doing the research, I may add the Chase Sapphire card to my line-up as well – my kitchen remodel this summer will definitely put me over the $4,000 bonus point threshold, and I’ll take $625 towards travel any day.

Now it’s your time to share:  What credit card do you use and why? Do you think you may switch in the near future?

Photo Credit: Michael Ramey

Photo Credit: Michael Ramey