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A friend asked if I could help her choose a credit card that rewards her for all the purchases she makes every month. I just had to laugh when she confessed that currently, the only return she gets for her spending is a good argument with her husband every time the credit card statement arrives. She hoped that with my help, a few bonuses at the end of the month might just smooth a few ruffled feathers. I was more than glad to help. After all, this is what I do for a living, and for myself.
To determine the best rewards credit card for beginners, we need to start with a few basic questions
To begin, we’d need to determine her lifestyle, preferred activities and spending habits. Since travel points tend to be the most sought-after rewards, I began with the most obvious questions:
- Do you travel often? Domestic or international? If so, do you generally travel alone or with your family?
- Do you have a preferred hotel chain and/or airline?
- Is cash back a better option for you than travel rewards or gift cards?
- What is your average monthly household budget?
- What are some of the purchases you make on a regular basis?
Her answers to these questions were a great start for us to begin reviewing some credit card options that could offer her the greatest return on her purchases.
She and her husband were, in fact, planning a trip to Aruba in just a few months. She had already looked into airfares with Southwest Airlines, and hotel rates at Hyatt®. Southwest is her preferred airline, and she’s already a member of their Rapid Rewards® program. Also, Hyatt is a wonderful choice for this trip, not just because it’s a beautiful resort, but it’s also located in the heart of the island and is close to many fabulous entertainment hot spots.
Her spending habits are typical for an average household – gas, groceries, dining out, local entertainment and a few trips per year – with fuel and restaurants being her most frequent purchases. And, she figures that she spends about $23,000 a year (around $2,000 a month) on household and discretionary purchases.
The average American consumer juggles two to three different credit card accounts at any given time. So, two cards should be comfortable for her to manage. I found four cards that seemed most beneficial for her, given the information she shared with me. And, just to be clear, I’m not suggesting that she apply for all of these cards. These are just offers to consider adding to, or exchanging for her current credit card.
Here are the highlights of some impressive card offers that may compliment her lifestyle:
- Earn 25,000 points after you spend $1,000 on purchases in the first 3 months your account is open
- Named 2015 Freddie Award Winner for Best Loyalty Credit Card
- Chip-enabled cards with 24/7 fraud monitoring
- Points Don’t Expire, No Blackout Dates, Bags Fly Free®
- 6,000 points after your Cardmember Anniversary
- 2 points/$1 spent on Southwest Airlines® purchases and participating Hotel and Car Rental partners
- 1 point/$1 spent on all other purchases
There is a $99 annual fee, but the Anniversary Bonus points are a nice offset, don’t you think? This card seems like an obvious top runner, since she already has a relationship with Southwest‘s Rapid Rewards® Program, and she does travel fairly often to visit family and friends.
Now, let’s review the features of a great Cash Back card option for her:
Citi® Double Cash Card
- 0% Intro APR on balance transfers for 18 months. After that, the APR will be a variable 13.24%-23.24% based upon your creditworthiness
- There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater
- The only card that earns you cash back TWICE on every purchase with:
- 1% cash back when you buy
- Plus 1% cash back as you pay for those purchasesas you pay for those purchases
- No Category Restrictions, No Caps, No Enrollments in Rotating Categories
- No Annual Fee
Since a credit card that offers rewards would be new to her, she may not want to keep track of spending categories. This card seems like a great entry into the world of points and rewards for her, since there is no cap to how many points she can earn and no category restrictions. Plus, she gets an additional 1% cash back as she pays off her purchases – so she earns cash back twice.
Next is a card that can reward her five times as much for the purchases she makes most – IF she keeps up with the quarterly bonus categories:
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Earn a $25 Bonus after you add your first authorized user and make a purchase within this same 3 – month period
- 0% Intro APR for 15 months on purchases and balance transfers. After the intro period, a variable APR of 14.24% – 23.24%
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
- Enjoy new 5% categories every 3 months like Gas Stations, Restaurants, and Select Grocery Stores
- Unlimited 1% cash back on every purchase– it’s automatic
- Rewards never expire as long as your account is open
- No Annual Fee
Here’s an example of the quarterly rotating 5% cash back bonus category structure:
- Qtr 1 (January 1 – March 31): Gas stations
- Qtr 2 (April 1 – June 30): Grocery stores
- Qtr 3 (July 1 – September 30): Restaurants
- Qtr 4 (October 1 – December 31): Holiday shopping
It takes a highly disciplined consumer who can plan their spending in advance according to Chase Freedom’s calendar of rotating categories every quarter, in order to reap the full benefits of this card. But what a fabulous payback! Plus, with purchases at grocery stores as one of her rotating categories, she’ll rack up a lot of points since she stops at Whole Foods almost every day after taking her son to school.
The last card that I thought might be worth a peek is:
- 2 Free Nights at Hyatt, worldwide in any of their categories after spending $1,000 in the first three months of opening the account
- 1 Free Night at any category 1-4 property each year after your cardmember anniversary
- 3 points for every dollar spent at all Hyatt properties with your Hyatt credit card
- 2 points for every dollar spent at restaurants, on airline tickets purchased directly from the airline, and at car rental agencies
- 1 point for every dollar spent on all other purchases
- Upgrade to Hyatt Gold Passport Platinum membership*
- 5,000 Bonus Points for adding an authorized signer who makes a purchase in the first 3 months of opening the account
- $0 into annual fee, after that $75
The 2 free nights is a great bonus, and if she signs her husband up as an authorized user and he makes a purchases in the first 3 months, she gets 5,000 extra points – that one purchase could earn them an additional free night. So she could easily earn 3 free nights at Hyatt right from the start.
So potentially, she could earn 2 free roundtrip Southwest Airlines “Wanna Get Away” tickets for herself and her husband, 3 free nights at the luxurious Hyatt Regency Aruba Resort Spa and Casino, and enough cash back to offset some of the expenses of their amazing adventure. (Of course, she’s not getting all four cards. I just thought it would be fun to add up everything she COULD enjoy with these cards combined.)
I may have just earned myself the title of credit card counselor and marriage counselor, by helping my friend turn her everyday spending into her second honeymoon.
P.S. This is just a “heads-up” to stop at the Southwest airport kiosk because Southwest Airlines is offering a 50,000 Point Sign-Up Bonus in the airport vs. the 25,000 Point Sign-Up Bonus online.