Hey everyone. In Sweden right now, about to go Swedish Timber Rafting thanks to a free mini-Eurotrip funded by United and their amazing stopover + multi-jaw routing rules (San Francisco –> Denmark –> Lithuania =/> Sweden –> San Francisco for one roundtrip 60,000 mile ticket). Time for another weekly HCC post!
Last week I walked through deciding which cards to get for the signup bonus – and this week is the opposite, deciding which cards you should get and keep forever.
This is the foundational building block of your credit strategy, so it’s rather important. The cards you will keep forever are the ones that are going to build your credit score and keep it solid and strong while you embark on getting a ton of crazy signup bonus cards.
There are a few considerations when it comes to these foundational cards that you intend to keep forever, and first on this list is cards that have no annual fee.
Since you’re going to have a ton of credit cards open at once, and more likely than not several premium reward cards that you opened for the signup bonus and other special offers, it almost never makes sense to justify getting an keep-forever card with an annual fee.
This is because you’ll have to keep paying that fee in perpetuity, and chances are good whatever ‘premium’ benefits you’re getting by paying that fee are matched or outmatched by one of the temporary premium cards with a waived first-year annual fee you currently have open and can use for daily spend with more reward.
So that said, our list is now segmented to the list of cards that have no annual fee. Wonderful!
Second on the list is having cards that can complement the sign-up bonus cards you’ll be getting. Two prime examples of this are the Chase Freedom and the AMEX EveryDay cards. Chase’s flagship reward program is known as Ultimate Rewards, and you generally earn outsized Ultimate Rewards signup bonuses (60-70,000 at times) on their Ink line of business cards that can then be transferred to a slew of programs such as United and Southwest.
The problem is if you don’t transfer the points by the time you close your Ink card (which has a hefty annual fee), you’ll normally lose those points…unless you have the Chase Freedom card open, which has no annual fee and can hold the Ultimate Rewards you gain through signup bonuses on Ink and other Ultimate Reward points-earning cards until you do decide to use them. Epic win! (Note: You can’t transfer Ultimate Rewards points to other loyalty programs with a Freedom card alone – you’ll have to open another premium card like the Chase Ink cards when you’d like to do that. But you can hold them in perpetuity with your Chase Freedom card until that date.)
The AMEX EveryDay card does the same thing for American Express’s Membership Rewards program. It’s the only card with no annual fee that is part of the Membership Rewards program, meaning that this is the only way to save the points you earn with all of AMEX’s other fantastic cards, such as the Platinum and Gold cards, without paying an annual fee until you decide to transfer them, possibly with one of AMEX’s lucrative transfer bonus deals that pop up here and there.
What’s more, the AMEX EveryDay card even goes one step further and outshines the Chase Freedom in one regard: you can transfer points to other loyalty programs even without any other premium cards open at the same time, unlike the Chase Freedom. Epic win!
After all of that, you’re going to want to look at everything else the card offers, such as a great rewards program or cashback rate, great special redemptions, and auxiliary benefits.
One example here is Chase Amazon Visa, which I’ve kept for half a decade and absolutely love, as not only does it offer 3% cashback at Amazon, and 2% at gas stations, restaurants, and drug stores, but it also has a fantastic (unadvertised) fixed-redemption rate of 25,000 points for $400 towards any flight you’d like to purchase (which scales, meaning you can spend 50,000 for $800), which means the points jump in value from 1 cent to 1.6 cents. This means, in turn, that you’re effectively getting 4.8% cashback at Amazon, and 3.2% at gas stations, restaurants, and drug stores. Not bad at all!
Another example is the Capital One Quicksilver card, which has no foreign transaction fees (like all Capital One cards), a free monthly credit score, a flat 1.5% cashback rate on all purchases, and 20% off all Uber rides until May 2016! This last benefit is a gold mine. Even holds true for Uber rides in any country – used quite successfully in Mexico City just last month.
The AMEX EveryDay actually also falls into this category, as it offers a 2X points bonus on grocery store purchases, as well as a 1.20X points earning rate for each month in which you use the card for 20 or more transactions. As with other AMEX cards, it also comes with a stellar extended warranty policy for free, adding an extra year on top of the manufacturer’s warranty for most any product you purchase with the card. Purchase protection, reimbursing you for accidental damage and theft of items within 90 days of purchase, as well as return protection, reimbursing you for items you’re unable to return to the seller within 90 days of purchase, are also stellar benefits offered with this card.
And one more example I’ll throw out here is the Discover It Miles card, which just came on the scene, offering 3% in points on all purchases for the first year, 1.5% every year thereafter, and $30 in statement credits towards any wifi service on a plane per year, which is pretty awesome. I’m considering getting it just for this last benefit, as it effectively means a free $30/year for free in perpetuity, which fits in just great with our intention to keep this card forever. Sure, $30 isn’t that much in one go, but I don’t mind getting that every year for the rest of my life. Thousands of dollars in value before I die! (though chances are the offer will change before that happens and/or credit cards won’t even exist anymore, but whatever).
And finally – don’t overlook the opportunity for a decent sign-up bonus. This shouldn’t be your first priority, since no annual fee cards as a rule have significantly watered-down signup bonuses compared to premium reward cards, but these can certainly be nothing to laugh at at times. The Chase Freedom card is known to offer up to 20,000 Ultimate Rewards points (which is worth up to $400 when transferred to airlines in conjunction with having a premium Ink Card open), and the AMEX EveryDay comes with 10,000 Membership Rewards points. The CapitalOne Quicksilver comes with a $100 signup bonus, and the Amazon Visa has been known to send out targeted offers of up to $100 in Amazon credits as well.
So in sum, look for these three things when picking credit cards to keep and hold forever:
1. No annual fee
2. Can compliment your temporary signup-bonus cards
3. Great rewards rate and other perks.
4. Decent signup bonus if available
Happy credit card acquiring!