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Elusive Best Credit Card is Old School & K.I.S.S.

Best Credit Card

Best credit card is an oxymoron. There has never been the “ten best credit cards,” or even the “one best credit card” you gotta have. Four decades ago there were two choices: “classic” and “gold.” To get a “gold” card with a minimum $5,000 credit line, you had top be making at least $25,000 per year. Realistically, the choice of the best credit card was income driven and your willingness to cough up a $40 or $50 annual, as opposed to the $15 or $20 for the classic Visa or Mastercard.

Today, if you google “perfect credit card” you’ll get 630 million links or results and searching “best credit card” produces 4.4 billion results. Incidentally, the highest ranked credit card sites are paid listings generally offering some good advice while featuring cards from issuers who pay them, usually $150 – $200 per approved account by big issuers, according to RAM Research.

What is the best credit card?

The best answer is no credit card says Senior Analyst Robert McKinley.

Otherwise the answer depends on many variables far beyond just your credit score, and more on your life stage

If you are young adult or student, and want to build credit for a future low-rate car loan or mortgage then obtaining a secured credit card could be a good move, or hopping on you parent’s account as an authorized user, with the account history included in your credit reports. Another option is finding a sub-prime card offering a decent credit line of say $1000 or more, with reasonable fees. Avoid sub-prime cards with both an annual fee and monthly fee.

if you are in the prime of life and travel extensively for business and pleasure then look at cards with points and miles – the perks can serve you well, especially if you are loyal to a certain brand, but it requires a lot of research. Also note reward card programs can change quickly, so always think short-term, not long term, notes CardBuzz.

If you are a retiree you most likely want convenience and no hassle, perhaps a card with no annual fee and a grace period, and better yet some cash-back. Most retirees value the time they have left so they prefer not to play the credit card game, according to Bankcenter.

K.I.S.S.

Professor Cardworthy says: “keep it simple stupid.” The way to find the best credit card for you is the same as 30 years ago: interest rate, interest rate, interest rate. A credit card is the most expensive loan a bank offers since it carries the highest risk. It is an open-ended, revolving credit line, unsecured and therefore faces a higher default rate, write-off rate and most susceptible to fraud. 

The number two area is the grace period, and one of the best features offered by the vast majority of credit card issuers. By paying the balance in-full by the due date you can avoid all interest charges.

Number three is to be careful taking up a free balance transfer or 0% introductory rate offer. Make sure you read all the fine print and mark your calendar. While most of these offer a 0% APR for a  a year or longer, they may carry a fee, perhaps 3% or 5% of the balance transferred. While it legally is called a “fee” it essentially is “prepaid interest.”

Number four is a variable interest rate versus a fixed interest rate. Three decades ago 95% of credit cards carried a fixed interest rate, today 95% offer a variable interest rate, based on the prime rate. If prime rate is going up then a fixed rate is best, when rates head lower than variable is best. But it can all change within short-time period, usually one to two billing cycles.

The last point is the annual fee. In 1986 an annual fee was standard practice but came under heavy competition in the 1990s and was largely driven from the market. Today, the annual fee is usually assessed in exchange for a lower interest rate and poor credit, or to pay for the extra goodies like miles or points.

While the “perfect” or “best” card is a myth and one of the most highly used forms of click bait on the Internet, there is a card perfectly suited for you.

Look at the forest, not the trees notes CardTrak.com.

It might be in your backyard from a local credit union or community bank, not from the front pages of USA Today online.
 
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Sources: CardData; RAM Research; CardTrak; CardFlash; Cardworthy; CardWeb; PYRPTS; CardBuzz; Bankcenter; PYVNTS; Ruebud Media; Red3 Media