As with clothes and taste in entertainment, we grow out of certain spending vehicles as our financial needs and responsibilities change over time. When it comes to credit cards, this particular adjustment might not be as natural as others. It might be difficult to determine exactly when a new credit card is needed or which card to get when you do eventually come to this realization. To help prevent the financial damage and lost rewards potential that come with using the wrong credit card, here is a list of the best credit cards for different periods of life.
College. For many people, college signals the beginning of financial independence. While your parents may still pay for your tuition, room and board, and meal plan, you need a way to make everyday purchases. And since you are preparing for the real world, you must begin building credit so as to be able to one day take out a loan, get a mortgage, buy or lease a car, or even be considered for some jobs. A credit card will help you do both of these things.
Recommendation: Citi Dividend Platinum Select Card for College Students. This card has no annual fee and offers 0% APR on purchases for seven months; 5% cash back on purchases made at supermarkets, drug stores, gas stations, convenience stores and for utilities for six months; 2% cash back on rotating spending categories and 1% on everything else. (Note: While Citi says a co-signer is not required for approval, the new credit card law–the CARD Act –restricts people under the age of 21 from obtaining a credit card unless they have a co-signer or declare on the application that they have the income or assets necessary to at least make minimum payments.)
Having a baby. Your financial needs change drastically when you have a baby; just think about your new expenses: diapers, baby food, baby clothes, cribs, strollers, and car seats. To help reduce this fiscal burden, get a credit card with cash back on such purchases. You’ll also want to start thinking about your child’s future, and a credit card that makes automatic deposits to a savings account would certainly come in handy.
Recommendations: Blue Cash Everyday Card from American Express. The Blue Cash Card has no annual fee and provides 3% cash back at supermarkets, 2% cash back at gas stations and department stores, and 1% cash back on everything else.
Another option is the Fidelity 529 Credit Card. This credit card from Fidelity provides essentially 2% cash back on all purchases, which can be automatically deposited into your Fidelity 529 account in $50 increments. A 529 account is a tax-deferred college savings account that many parents open for their kids at birth.
Buying a home. Your financial outlay is not complete when you close on a new house. Rather, you most likely also have to furnish the house, buy some new appliances, and make repairs. To help minimize the cost of these substantial expenses, get a 0% credit card so you won’t have to pay interest. Just make sure you pay down most, if not all, of your balance before the conclusion of the low-interest introductory period because your card’s interest rate will jump significantly at this time.
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Recommendation: Citi Diamond Preferred Card. This card has no annual fee and offers 0% APR on both purchases and balance transfers for 21 months.
Mid-life crisis. While we certainly don’t advise increasing your spending simply because you reach a certain age, if you’re going to do so, do it in the most-cost effective way possible. Credit cards can help you save in two different ways. First, a 0% credit card can help you avoid costly interest on big-ticket purchases (e.g. a car or boat). Second, a travel rewards credit card can help you save on that travel you always wanted to do but never got around to.
Recommendations: Citi Diamond Preferred Card. Again, no annual fee and a 0% APR on purchases and balance transfers for 21 months.
Another option is the Chase Sapphire Preferred Card. You earn 50,000 bonus points after spending $3,000 in the first three months, enough for $625-worth of airfare and hotel accommodations.
Retirement. Retirement is when you should do whatever it is you want to do. After all, you hopefully have both the time and the money. You don’t want to blow through that nest egg too quickly, however, so get the best rewards credit card for your intended spending categories. If you’re going to travel, get the best rewards credit card, but make sure it doesn’t have foreign transaction fees. If you want to attend a lot of shows, sporting events and concerts, get a charge card like the American Express Gold Card, which provides exclusive access to tickets.
Odysseas Papadimitriou is the CEO of the leading credit card comparison website, Card Hub.