Many people look at credit cards as inherently evil. By
tempting people into spending money they don't have, many
cardholders have gotten themselves into big trouble by maxing out
their cards, only later realizing that they will in fact have to
figure out a way to pay them back.
But if you're a responsible borrower, then
credit cards offer you a smorgasbord of different
. Let's take a look at some of them.
Unless you're a pro athlete or in a high-demand profession, you
probably have never been offered a signing bonus. But
increasingly, card companies are paying high-dollar value rewards
tied to spending certain amounts after you sign up.
One of the most lucrative deals available right now comes from
) , whose Chase Sapphire Preferred card offers 40,000 bonus
points if you spend $3,000 in the first three months you have the
card. You can use those points to get $400 in cash or $500 toward
) Thank You Premier card gives you 25,000 points for spending
$2,000 within three months, which you can use for $250 in gift
cards or $333 in airfare. Moreover, both cards waive their annual
fees for the first year.
Savvy travelers know that using a credit card can give you a much
better exchange rate on foreign-currency transactions than
changing money at an airport kiosk or other specialty store. But
what many people
realize is that some cards tack on
extra fees for foreign transactions
, and those can add up. With
) charging up to 1% and issuing banks sometimes adding on as much
as 2% more, you can end up with a nasty surprise when you get
back from your trip.
But an increasing number of cards now waive those foreign
has a long-held reputation for not charging fees for overseas
also has a universal lack of foreign fees. Both the Chase
Sapphire Preferred and Citi Thank You Premier avoid fees, as do
dozens of others.
If you're traveling internationally, check with your card
company before you go. If you have multiple cards, be sure to use
the one that saves you the most on fees.
Meanwhile, even domestic travelers can benefit from the
increasing number of airline-linked cards that let you save on
baggage fees. If you regularly check your baggage, look at your
airline's card offerings to see if the savings justifies any
Playing the category game
It used to be that you could easily find cards that would give
you 1% of your purchases back in cash rewards. Now, you can get
much bigger rewards -- but you have to shop around, because those
high rewards are only available for certain categories of
purchases, and those categories tend to differ from card to
Blue Cash line of cards
. The basic version gives you 3% cash back for grocery-store
purchases, 2% for gas and department stores, and 1% everywhere
else. But the preferred version, which comes with a $75 annual
fee, boosts the grocery cash-back to 6% and gas and department
stores to 3%. If you spend a lot in groceries, then the extra
annual fee may end up paying for itself.
Other cards from a variety of issuers, including
Bank of America
) , Chase, and Discover, offer savings categories that change
throughout the year. For instance, Discover currently offers 5%
cash-back on up to $1,500 in gas, movie, and theme park purchases
between July and September. Chase's Freedom card has similar 5%
rewards for restaurant purchases. But next quarter, those
categories will change.
Keeping track of which category is featured at any given time
can be a hassle. But for cost-conscious cardholders, the rewards
can be well worth it.
Let the banks pay you
Obviously, banks don't offer rewards out of the kindness of their
hearts. They profit from merchant-generated fees, and they also
want you to spend more. They also hope that you'll buy plenty of
things that offer smaller rewards.
But if you're
aware of all the benefits you can get
-- and these are just a few of the many perks out there -- then a
little searching can give you the best card to match the way you
spend. That's a nice change from worrying about how much
Managing your credit well is an important way to reach
financial security, but you also have to have the right
investments on your side. Meanwhile, be sure to check out our
premium investment report on Bank of America to learn what our
senior bank analyst's thoughts are on B of A and the entire
Fool contributor Dan Caplinger plays the credit card game
like a master. He doesn't own shares of the companies mentioned
in this article. You can follow him on Twitter @DanCaplinger. The
Motley Fool owns shares of Mastercard, JPMorgan Chase, Citigroup,
and Bank of America, and has created a bear call spread position
in American Express. Motley Fool newsletter services have
recommended buying shares of Visa and writing a covered strangle
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services free for 30 days. We Fools may not all hold the same
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insights makes us better investors. The Fool's disclosure policy
gives you the credit you deserve.
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