School me on credit

[deleted245139]

So...
I've prided myself in being financially responsible with 0$ credit card debt between my wife and I because... Well we only have 2 cards between us. One from a credit union I've had since high school with a low ceiling, and a generic Chase card.

After my first year out maximizing savings, I think we need to generate some credit beyond that we have.
Both of us Thur far have done a decent job with scores >700.

In hunting for a card, I'm genuinely confused. There are SO many options. They say to purchase a card to fit a life style?

So... We are minimal travelers as our kids are young, and relatively boring regular people. My wife stays at home with our daughters. I think gas/grocery/cash back would be what we need. We also use Amazon alot and are prime members (I've looked at the Amazon black card).

How do I do this?
Which cards are the best?
Thanks ahead of time!!

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[Brigade4Radiant]

Well first why are you looking to raise credit to buy a house? Keep in mind a FICO score above 760 won't give you better interest rates. You can raise your credit score just by requesting more credit. I personally wouldn't use a credit card for the sake of using it since I hate debt and I don't see a point paying 16% apr for food and clothes.

If you want a credit card it must be rewards and before I give you suggestions answer me this:

Does your family travel a lot?
How much are you looking to spend?
Are you willing to pay an annual fee?

 

[dchristismi]

If you use amazon a lot, sounds like that’s your best option.

I have a handful of cards, mostly travel-related, but the biggest thing about credit is time, and that’s not really something you can manipulate. Look for bonus points before you go for anything... lots of cards have sign-up bonuses. And of course you’re going to pay any credit cards off each month, so poke around. Many of the higher reward cards do come with annual fees, but sometimes it’s worth it, depending on your goals, but you probably knew that. (For example, I have a chase sapphire reserve, which has a high fee, but it comes with enough perks that the card pays for itself. It’s money I would have spent anyways, and I get to treat myself with nice hotels from the points without paying for them. )

ThePointsGuy (google it) regularly rounds up good options.

 

[BoardingDoc]

I hate debt and I don't see a point paying 16% apr for food and clothes.

Your post makes me worried that you're under the impression (as many people are) that carrying a balance and paying interest instead of paying your full monthly balance every cycle somehow enhances your credit score. It doesn't. Getting a credit card and using it regularly for purchases DOES help your credit. I put literally everything on my credit card. It's free points for something I need to buy anyway.

 

[BoardingDoc]

(For example, I have a chase sapphire reserve, which has a high fee, but it comes with enough perks that the card pays for itself.

+1 to chase sapphire reserve. Got 100k bonus points for signing up and the 450 annual fee is essentially only a 150 fee seeing as you get 300 in travel credit which includes things like uber rides. Solid card.

 

[Brigade4Radiant]

Your post makes me worried that you're under the impression (as many people are) that carrying a balance and paying interest instead of paying your full monthly balance every cycle somehow enhances your credit score. It doesn't. Getting a credit card and using it regularly for purchases DOES help your credit. I put literally everything on my credit card. It's free points for something I need to buy anyway.

Yeah I know that however the cards were not designed. Yes rewards cards can make you bank and give you free perks if you pay it off correctly however most people and doctors included are awful with credit cards and for a person with a score of >700 who is a physician there are other ways to build credit than just using a credit card to use it.

 

[enalli]

Yeah I know that however the cards were not designed. Yes rewards cards can make you bank and give you free perks if you pay it off correctly however most people and doctors included are awful with credit cards and for a person with a score of >700 who is a physician there are other ways to build credit than just using a credit card to use it.

It's not difficult to pay it off correctly. You just log in once a month and pay the full balance. There is even autopay in case you want to log in once ever and have it taken care of.

I put everything on my credit card for a bit more security--if some shady charges happen, it's easier to dispute them on credit than on debit.

 

[Siggy]

+1 to chase sapphire reserve. Got 100k bonus points for signing up and the 450 annual fee is essentially only a 150 fee seeing as you get 300 in travel credit which includes things like uber rides. Solid card.

Citi Double Cash:
2 % cash back
No annual fee
Free FICO scores
They have a website where you can put in purchases and they'll track it to see if they can find a better price (90 day price protection).

 

[DoubleBogey]

Get a card with cash back that can credit your account - free cash. Pay off the balance every month if full. I put all my groceries, utilities and other purchases on the card.

If you get CME, you basically get free cash as your employer will cut you a check for the amount.

I like cards with no annual, no apr if you pay off the full monthly balance. It’s easy to track what you’re spending and budgeting, with anti theft monitoring.

 

[deleted480308]

Why do you think you need to build your credit?

You know what’s better than a good credit score? Being debt free

As long as you have a card that you can swipe when traveling or shopping, you don’t need anything more

 

[VA Hopeful Dr]

Why do you think you need to build your credit?

You know what’s better than a good credit score? Being debt free

As long as you have a card that you can swipe when traveling or shopping, you don’t need anything more

I mean technically that's true. But you know what's better than a card you can swipe when traveling and shopping? A card that gives you free benefits that you can swipe when traveling or shopping.

I personally use the Capital One Venture card. It reimburses anything it thinks is a travel expense (can get cash back as well). I used my points 2 years ago to go to on vacation. Then last year to pay for movers.

That said, getting a credit increase is a super easy way to up your credit score. My score when up 40 points in one month when my credit limit went from 10k to 25k a few years back.

 

[TooMuchResearch]

Fidelity Visa rewards 2% cashback for most purchases. Chase Amazon Visa (5% cashback on Amazon for prime members) for Amazon.

I chased some rewards cards to travel for vacation in med school but haven't lately.

 

[Angry Birds]

It's not difficult to pay it off correctly. You just log in once a month and pay the full balance. There is even autopay in case you want to log in once ever and have it taken care of.

I put everything on my credit card for a bit more security--if some shady charges happen, it's easier to dispute them on credit than on debit.

I also pay for everything using my credit card, but I make sure to pay off the full balance every few days. I don't think it's a good idea to just log in once a month to pay off the balance...

The reason it's not a good idea to do that is the credit bureaus check your balance once a month on a random day... You don't know what day that is. So, let's say they check your balance on the 14th, and you pay off your card on the 15th... They will see a balance of $5k and say, "wow, this guy is using 40% of his credit limit," and give him a low credit score... Credit utilization ratio is important, so that's why it's important to keep your balance low at all times.

White Coat Investor can correct me if I've said anything wrong.

And here's a good meme on this topic:

 

[BoardingDoc]

I also pay for everything using my credit card, but I make sure to pay off the full balance every few days. I don't think it's a good idea to just log in once a month to pay off the balance...

The reason it's not a good idea to do that is the credit bureaus check your balance once a month on a random day... You don't know what day that is. So, let's say they check your balance on the 14th, and you pay off your card on the 15th... They will see a balance of $5k and say, "wow, this guy is using 40% of his credit limit," and give him a low credit score... Credit utilization ratio is important, so that's why it's important to keep your balance low at all times.

White Coat Investor can correct me if I've said anything wrong.

And here's a good meme on this topic:

View attachment 227414

What you're saying is completely correct. That said, why don't you just raise your credit limit so that your average monthly ratio never exceeds 30-40%? Paying attention to your ratio is only important/necessary if you have poor credit and/or a low credit limit.

 

[Angry Birds]

What you're saying is completely correct. That said, why don't you just raise your credit limit so that your average monthly ratio never exceeds 30-40%? Paying attention to your ratio is only important/necessary if you have poor credit and/or a low credit limit.

I agree with you. That wasn’t my real percentage. Just an example. But yeah good point !

 

[EctopicFetus]

I have a fidelity visa which gives me 2% back on everything I buy and it is cash. I put it in my investment account. The other card I use a lot is the Southwest Visa.

I have 3 kids and a wife. The big benefit is 2 fold. 1) you get a little less than 2% back in miles and they really have no blackout dates. The real win is the companion pass.

In order to get it you have to get 110k points per year between spending and travel. We spend a decent bit and I travel for CME and other stuff and never had issues. This is the time of the year to do it. They give you 50k in points so it is easy to get and starts from the moment you hit the companion pass and goes thru the following year.

The companion pass means when I travel and my wife comes with me no matter how much the ticket costs my only cost is $11.20 round trip for govt fees.

We easily travel 3-4 times per year together which at 300/trip is 1k per year and that doesn’t count against me and my points (which I use to book travel for my kids).

Now that SW is flying to the Caribbean and Mexico it is an even better deal and rumor is they will be flying to Hawaii soon. If SW is near where you live it is hard for me to imagine as high earning (and spending) docs there is a better card out there if you have someone you travel with.

 

[BAM!]

Why do you think you need to build your credit?

You know what’s better than a good credit score? Being debt free

As long as you have a card that you can swipe when traveling or shopping, you don’t need anything more

Building credit helps with more than just loans. Having a good credit score will get you better rates for home and auto insurance. It's not necessarily about debt.

 

[EMedGrrl]

Fidelity Visa rewards 2% cashback for most purchases. Chase Amazon Visa (5% cashback on Amazon for prime members) for Amazon.

I chased some rewards cards to travel for vacation in med school but haven't lately.

This. You can also get a Fidelity Visa that will put the 2% directly into a 529. Growth is tax-free if used for educational expenses, you can direct what sort of funds you want to invest the $ in, and you can transfer beneficiaries if kid #1 gets 100% scholarship for school and you decide you want to go back for another graduate degree. The other bonus of direct-to-investment is that the $ never passes through your hands, so you're not tempted to spend it on something else. Our family has made $45k over the last 10 years in income and growth - just on 2% of our monthly credit card bill - hopefully enough to pay for a couple textbooks...

P.S. This only actually helps if you pay off the card faithfully and don't pay interest!

 

[whatisthisstuff]

Amex blue cash rewards card is a no brainer in my book. $75 dollar annual fee, 6% cash back on groceries (up to 6k) and 3% cash back on gas. Make 400+ a year for the mundane stuff you are going to buy all the time anyways. Never paid interest on a credit card in my life which hasn't been remotely difficult or complicated.

 

[Janders]

Make me the 4th to suggest the fidelity 2% cash back card as a perfect general purpose card-- no fee, 2% on everything, I have it go straight into my Fidelity investment account on a monthly basis... but could go straight to 529 if desired.

If you are a big traveller, or willing to pay for a card (that will likely pay itself off if you spend enough), I would suggest a more specialized card as mentioned above.

 

[TooMuchResearch]

I actually move the fidelity cash to my checking account. I have no other money with fidelity and don't want to maintain a small investment account there.

 

[deleted109597]

There are plenty of them out there.
If you're 1099 and have S Corp'd, then what my accountant prefers is a separate business card for all of those expenses. Just makes bookkeeping easier. I use my Southwest card, since I live in Texas. I spend enough to get a companion pass for my wife, and multiple free flights per year.
There are likely better deals out there. Lots of websites to choose from. Use your best judgement.