The best credit card for people who pay their balance off every month
BillShrink.com lets you compare credit cards based on all your specifics (miles vs. cash, where you shop the most, etc) and tells you what the best card is for your specific habits. MOD EDIT  Looks like billshrink.com is shut down.  From their site: Dear BillShrink customer, As you may have heard, BillShrink.com was shut down on July 31, 2013.   While we’re sad to say goodbye, we hope we’ve been able to help you be   better informed and save some money along the way! The good news is   that much of the innovative award-winning BillShrink technology will   still be available via our StatementRewards platform (made available   to customers by our partnering financial institutions). Moreover, we   expect to re-launch a new money-saving service in the future. To see   more of what we’re up to, visit Truaxis.com. We have deleted your personal information as of July 31. We will   retain your email address only to announce a preview of the new tool.   If you do not want us to retain your email address, you can opt out in   the form below. This opt out feature will be available until September   31, 2013. If you have already opted out previously, you do not need to   opt out again. If you have any further questions, contact us at   info@billshrink.com. Thanks, The BillShrink/Truaxis Team The answer for this question varies from person to person. However most cards give lousy rewards percentage-wise. Take a look at where your money is being spent each month (say with a tool like mint.com), and seek out a card that rewards you in categories where you already spend a lot of money.  Many people here have suggested cards with high gas rebates, and that's great if you drive more than anything else. However, the important thing is to pick what benefits you most. "I'm not going to recommend a specific card.  New card offers pop up all the time.  My answer would be out of date in a month! As a general rule, if you pay off your balance every month, you should be looking at a cash-back or a rewards card. Cash-back cards will give you some money (say 1%) of every dollar you spend.  Some will give you larger amounts of cash-back for certain types of spending (e.g. groceries). With a Rewards card, you usually get ""points"" or ""airline miles"", which can be redeemed for merchandise, flights around the wold, concert tickets, etc. With these types of cards, it makes sense to do as much of your spending as possible with the cards, so you can maximize the benefits. Which specific card is best will depend on your shopping habits, and which bank is offering the best deal that week.  I recommend you start at http://www.creditcards.com to compare card offerings.  For cash-back cards, you can also go to http://www.creditcardtuneup.com, enter some details of your spending, and see which one will give you the most cash back." PenFed Platinum Cashback Rewards Visa Card is another good choice. Pros: Cons: The answer today is the Fidelity Rewards Amex.  This card pays the highest cash back (2%) on ALL purchases. The answer gets more complicated if you like miles, or you want to use one card for groceries and gas and another for restaurants, etc.  But the Fidelity Amex gives you 2% on everything you purchase, automatically deposited into your Fidelity account as cash (no coupons to rip off, or checks to deposit). For people who are already a Costco member. The American Express TrueEarnings Business Card is a good choice. Note: If you don't own a business, just use your name as the business. The business card is better than the regular TrueEarnings card. Pros:
"I also feel it's important to NOT get a credit card. I'm in my mid 30's and have had credit cards since I was 20, as has everyone I know. Every single one of those people, with the exception of my dad, is currently carrying some amount of credit card debt - almost always in the thousands of dollars.  Here is the essential problem with credit cards. Everyone sets out with good intentions, to use the credit card like a debit card, and pay charges off before interest accrues. However, almost no-one has the discipline to remember to do this, and a balance quickly builds up on the card. Also, it's extremely easy to prioritize other bill payments before credit card payments, resulting in a balance building up on the card.  It's almost magical how quickly a balance will build up on a credit card. Ultimately, they are simply too convenient, too tempting for most human beings. The world, and especially the North American world, is in a massive debt crisis. It is very easy to borrow money these days, and our culture is at the point where ""buy now pay later"" is an accepted practice.  Now that I have young children, I will be teaching them the golden rule of ""don't buy something until you have cash to pay for it in full!"" It sounds like an over simplification but this one rule will save you an incredible amount of financial grief over time." I think it depends on how you're approaching paying off the credit card. If you're doing some sort of debt snowball and/or throw all available cash at the card, it's not likely to matter much. If you're paying a set amount close to the minimum each month then you're probably better off getting a loan, use it to pay off the card and cut up the card. Well, I'd do the latter in either case... Mathematically it would matter if the interest rate on the card is 10%-15% higher than the personal loan but if you're throwing every spare dime at the card and the some, it might not matter. Another option if you have the discipline to pay the debt off quickly is to see if you can find a card with a cheap balance transfer, move the balance over and close the inflexible card. "Curious, why are you interested in building/improving your credit score? Is it better to use your card and pay off the bill completely every month? Yes. How is credit utiltization calculated?    Is it average utilization over the month, or total amount owed/credit_limit per month? It depends on how often your bank reports your balances to the reporting agencies. It can be daily, when your statement cycle closes, or some other interval. How does credit utilization affect your score?  Closest to zero without actually being zero is best. This translates to making some charges, even $1 so your statement shows a balance each statement that you pay off. This shows as active use. If you pay off your balance before the statement closes, then it can sometimes be reported as inactive/unused. Is too much a bad thing?  Yes. Is too little a bad thing? Depends. Being debt free has its advantages... but if your goal is to raise your credit score, then having a low utilization rate is a good metric. Less than 7% utilization seems to be the optimal level.  ""Last year we started using a number, not as a recommendation, but as a fact that most of the people with really high FICO scores have credit utilization rates that are 7 percent or lower,"" Watts said. Read more: http://www.bankrate.com/finance/credit-cards/how-to-bump-up-your-credit-score.aspx Remember that on-time payment is the most important factor. Second is how much you owe. Third is length of credit history. Maintain these factors in good standing and you will improve your score: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx" "I think this advice to carry a balance each month is nonsense.  You're just wasting money that way.  Personally, I have always paid off my credit cards every month for as long as I can remember, and my credit score is only 8 points below the max.  The bigger factors by far are: It might be good advice to charge a small amount each month on your credit cards each month in order to keep seldom-used accounts active (remember, longer payment history is better), but there's no reason not to pay off the balance to avoid the interest charges.  In short, the ""ideal balance"" to carry month-to-month on a credit card is zero." I would take a closer look at each provider. I have one credit-card provider who when there is a large portion of credit available, they frequently offer promotions on balance transfers so you fill that credit, sometimes it can be 0% for xx months, or a very low % until paid off in full. If this is the case clear that card fully and balance transfer the remainder to get an even lower interest to make the repayments eaier to clear. These are unrelated.  If I subscribe to the paper and pay a month by check, they will just keep billing and delivering the paper.  The virtual card would work for a service that will cancel when the billing attempt fails. i.e. A service that won't just keep active without being paid in advance. If the card has no annual fee, you can keep it for as long as you like and you will never get charged. I advise you to GoPaperless so you stop getting the $0 bills every month. Many cards have the fee waived for the first year. If you have such a card, you should make sure to cancel it when you stop using it, or when the fee waiver expires. Over time, you'll have more loans, maybe a few store cards, mortgage, car loan, etc.  I'm a fan of maximizing one's wealth, and the small rebate/reward adds up over time, so I'm not against the store cards, so long as you always pay the bill in full.  As far as FICO is concerned, what they 'like' to see may not necessarily be optimum for you. I'd suggest you go about your business, and over time use the few cards that combine to give to the best benefit combination that works for you.