Credit Cards

How Lifestyle Drives Credit Card Perks

EPF Last Update: May 17, 2020

Choosing the right credit card is not a question of which offers better rewards. Instead, the best question is “what credit card reward program best fits my lifestyle.” Countless articles argue that one credit card is better than another. These reports ignore the simple truth that the nuances of the individual’s situation and goals are as varied as the hundreds of offers in the marketplace.

In this article, we’ll look at how you can choose the perfect credit card based not on broad appeal, but rather based on your unique financial position. We’ll explore how using your self-defined, long-term plan will enable you to select a card that accelerates your goals or helps to erase debt gradually.

Choosing to Correct The Past

The first decision to consider when selecting the right credit card is whether you want to focus on the past or the future. Credit card holders with high existing balances, reduced credit from previous mistakes and a weak debt profile may want to concentrate on fixing their credit history. Choosing a credit card designed to help restore credit and defray prior balances is an effective way to erase the errors of the past.

One active player in the field of debt-correction is the U.S. Bank Secured Visa Card. This secured credit card helps restore credit. The card offers a credit line up to $5,000 if the holder can provide as much in the form of deposited collateral. This aspect is critical because it has the effect of curtailing excessive spending and keeping the card holder under control. After a 12-month period, the card holders spending is evaluated. If the payment history is adequate, the owner can upgrade to an unsecured card thereby earning the ability to improve a credit score over time. As with most cards in this family the APR (19.24%) is high. However, the annual fee of $29 is affordable.

Credit card users seeking to correct the past may also want to consider cards with a high balance transfer offer. With this method, the cardholder moves the existing high balance from an old card onto a new card. The new card offers small, or even a 0% APR on the amount of the balance transfer. This reduced rate allows the holder to pay old balances without the added burden of high-interest rates. Chase Slate is the most impressive option for this goal. The card offers a 0% APR for the first 15 months of balances from transfers and new purchases. Keep in mind that the transfer limit is $15,000. Additionally, if you believe you will need a period longer than 15 months to pay off past debts consider first that this card carries an APR of 13%-23%.

The Citi Simplicity card is optimized for those requiring a longer period to pay off balance transfers. This option permits a 0% APR for 21 months. The APR is identical to the Chase Slate card. Be aware that the card carries a transfer balance of 3%. Late fees are non-existent, and there is no annual fee. Secured cards and balance transfer optimized cards are excellent options for those working to repair past credit problems. If you’re committed to rebuilding credit and correcting the past, these cards are for you. However, remain vigilant, the credit card companies use an enormous amount of data to construct these offers, and they’re aware that most balance transfer customers are not likely to eradicate their debts in 15 or even 21 months. Therefore, be sure that you have a realistic plan to eliminate all debt within the required period otherwise you’ll face heavy APRs.

Choosing to Optimize The Future

Credit card companies want your business, and they’re willing to pay for it. Those with a strong credit history can enjoy incredible benefits and savings. The question you must ask yourself is, “how does my spending profile indicate which card is best for my budget?” The aspect of lifestyle becomes an important consideration.

For those with a family and children, a strong cash back offering is best. Better still are credit cards that offer healthy rewards on everyday spending categories like groceries. The Amex Blue Cash Preferred has always offered the strongest rewards for standard categories. The card’s most powerful aspect is a 6% cash back bonus on all groceries up to $6,000 a year on spending. The Capital One Quicksilver also offers a respectable flat 1.5% cash back without an excessively high credit score prerequisite.

While cash back is a benefit everyone can enjoy those with more particular lifestyles will benefit from deeper research where the net cash value is even greater. If you’re a frequent traveler the Chase Sapphire Preferred card has excellent value. Cardholders will earn 2 points for each dollar spent on travel or dining. The value compounds as users opt for the Chase Ultimate Rewards booking service where points increase by 25%. One additional value comes in the form of a bonus totaling 50,000 points earned after spending $4,000 within the first three months of opening the account. Coupled with the 25% jump earned through Chase Ultimate Rewards this nets out to a value of $625 on travel. If you can accurately project your future spending on travel and dining, do the math and choose this card.

Finally, for those who are uncertain of their future spending patterns consider the Chase Freedom card. The 5% cash back offering is robust, and the applicable categories rotate so that the user enjoys an even spread of perks. These categories include things like restaurants, groceries, gas and even wholesale clubs. Go for the $150 bonus by spending $500 within the first three months of opening the account.

When choosing a card take a moment to understand your spending patterns. The best value for one consumer is a poor choice for another. Start with your personal budget, examine the high spending categories and decide from that information which way to go.

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