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.
Conclusion
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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I think people start with the Chase Freedom. I started with it when just beginning this hobby.
If your friend travels only domestically, I’d go with the Citi Double Cash. But that’s no good for overseas travel because of the FX fee. So if he ever travels abroad (or is even thinking about it) I think I would recommend the Barclay Arrival+ card. $400 signup bonus, 2x back on everything, and if he travels a lot it will be easy to cash in the points even with the new $100 minimum redemption. If he eventually gets tired of paying the annual fee he can downgrade to the no-fee version and get a Double Cash card, keeping the Arrival for foreign travel only. But even if he sticks with the Arrival+ he should come out way ahead if he puts all his spending on that card. If he spends $50K/year, that’s $1,000 back per year. The $95 fee is a drop in the bucket.
Good for you for realizing that the “best” card for you might be a disaster for someone else. I think the CSP is a TERRIBLE choice for first card unless you know your friend really enjoys the gaming aspect of life. I’ve come around to recognizing the value of UR points, but getting good value out of them can be confusing, time consuming, and stressful. Sure, UR points are flexible, but nothing is as flexible as cash.
Understand the simplicity angle, but maybe a Chase Freedom Unlimited?
If they have $100k in assets (IRA?), then the BofA Travel Rewards. Think there’s a post about this somewhere …
Again, understand simplicity angle. But would be sad to get just one SWA card. The second one unlocks so much value!
I have a similarly stubborn friend who carries around a Freedom but doesn’t use it because she likes to see her real-time bank account balance (apparently the simplicity of subtraction and a service such as Mint or Personal Captial is lost on her, even though she has a PhD in a scientific discipline).
It sounds like a 2% visa card with no AF is the way to go. If the Sallie Mae card was still available I’d tell someone to give that one a shot. If people shop at Costco I’d recommend that card.
In a simpleton’s mind if they redeem $200 in cash back they’ll look at that as a win. Obviously this isn’t the optimal route, but for those who want a set it and forget it strategy this may be the way to go. I personally don’t travel nearly as much as some of your other readers do and I can appreciate how time consuming it is to learn the ins and outs of the points and miles game.
My mother in law is one of these types and her go-to card is her Capital One Venture. I told her it’s not worth keeping the card and to just downgrade to keep AAOA in tact and then opt for a 2% card (like the Citi DC) which has no AF and will allow give her the same 2% cash back but without any travel redemption strings. She gave me that deer in the headlights look and I mentally did my best to retreat and not get into a drawn out explanation that would just overwhelm her. If it works for her, then so be it. If they’re really that interested they know where to go for answers. Like you, I won’t push the issue. They know I’m a resource if they need answers.
I know there’s really no right or wrong answer here, although I do believe there is a happy medium that can be found with anyone’s situation. I think that averaged out people would find that at least 2-3 credit cards is the sweet spot. Your friend with no credit cards is losing out on more than just cash back… zero extended warranty for example is a big one in my book.
my feedback… i would go easy on the work ‘simpleton’
my feedback… i would go easy on the word ‘simpleton’
You’re right, I didn’t mean it in a derogatory manner. Really just meant to say folks who keep it simple. However, people who have the ability (credit, income) to be protected by credit cards and don’t have at least one are IMO being foolish.
I always start people off with the SW card. Easy to use and understand and a great sign up bonus. Plus you get something for AF. You can easily get 5 free flights out of that depending on where you go and if you plan it properly. No other card offers that many free flights!
That and the IHG card as a holder. If a couple each gets one they get a weekend in NYC etc. every year for $100. Those 2 are a great pairing for people that want it easy.
I would also include the discover it miles card, since its essentially a 3% cash back card for the first year, and then 1.5% after that. Not as widely accepted as the double cash mastercard, but it also has some good perks that the double cash doesn’t have like wifi reimbursement, 0% interest for 12 months, discover deals, and a few other perks.
Problem with Discover is it’s not as widely accepted as Visa/MC. In this example we’re only given the option of one card and I agree w/ Shawn on the 2% Citi DCB Visa. I have two Discover IT cards so I’m definitely not knocking them.
Plus, people who don’t have credit cards are for the most part not interested in anything other than swiping a card and having that be the end of it. For some, as soon as you even begin to discuss promotional opportunities that to you and me are exciting and easy to understand, they get visibly uncomfortable or flat out disinterested.