(CBS News)If you're looking for the perfect credit card, don't just focus on the interest rate: It's the perks that make the difference.
On "The Early Show" Monday, Lynnette Khalfani-Cox, author of "Perfect Credit" and founder of the free financial advice blog "Ask The Money Coach," spotlighted cards she says are the best for your lifestyle, in large part depending on which stage of life you're in.
Khalfani-Cox says most people just look at the interest rate right off the top when selecting a card. But, she points out, you really have to go well beyond that in choosing one. You have to think about how you'll actually be using the card in your life. What benefits will you be getting? What does it have to do, or does it fit with your lifestyle? Do you have to pay off the balance all at once, or can you pay it down from month-to-month? All these things are important to pay attention to, given where you are in life.
Khalfani-Cox says most people just look at the interest rate right off the top when selecting a card. But, she points out, you really have to go well beyond that in choosing one. You have to think about how you'll actually be using the card in your life. What benefits will you be getting? What does it have to do, or does it fit with your lifestyle? Do you have to pay off the balance all at once, or can you pay it down from month-to-month? All these things are important to pay attention to, given where you are in life.
COLLEGE GRADS
You really want to make a great start to your credit in terms of managing your debt wisely, and you don't want to get into the habit of using it solely for convenience. The first thing to do is to separate your needs from your wants. So, when you're looking for the right card, it pays to think, "What can I reasonably pay off every single month? Am I going to be using this on beer and pizza runs or on furniture, electronic and travel?" Think about the long term effects of your charges, so you don't rack up debt.
I recommend three:
You really want to make a great start to your credit in terms of managing your debt wisely, and you don't want to get into the habit of using it solely for convenience. The first thing to do is to separate your needs from your wants. So, when you're looking for the right card, it pays to think, "What can I reasonably pay off every single month? Am I going to be using this on beer and pizza runs or on furniture, electronic and travel?" Think about the long term effects of your charges, so you don't rack up debt.
I recommend three:
The first is the Orchard Bank Classic Mastercard. It has a low APR (a variable rate of 7.9 percent), and a lot of great features to keep you on track. The card offers e-mail and text message reminders to pay your bills and stay within your credit limit, regular credit bureau updates that enable college grads to build credit quickly. and customer service by phone and the web that enables grads to track purchases and maintain a budget.
The second one I'd recommend is for people who are trying to furnish their first apartment. I's the SONY card from Capital One. It's great because you get the maximum bang for your buck in terms of spending. First, you get a 0 percent APR for up to 10 months, which is great to start with. Any electronics or gadgets you buy earn you bonus points, so it's great for a young adult who wants to buy a new entertainment center, and you get extra bonus points on any SONY purchases.
The third one is really for the college grad who's interested in going out there hitting movies, dining out a lot and generally being social. The CITI Forward card is good for that, since you earn bonus rewards points wherever people congregate socially -- like bookstores, restaurants, etc. If you go out and charge those expenses on the card, you're automatically maximizing its value in points. In addition, if you go paperless and sign up for online bill payments, you get extra points. The rewards points can then be used at the same places you're going out. Not only will they give you coupons to those places, but discounts, as well.
NEWLYWEDS
Anybody who recently got married knows getting married is super-expensive. The average wedding in the U.S. costs about $25,000 and, more often than not, a lot of people who walk down the aisle put their wedding tab on their credit cards. You don't want to start out your married life with big financial bills that can lead to arguments and even worse. I would emphasize choosing cards that give you plenty of time to pay off your bills.
I recommend two:
Anybody who recently got married knows getting married is super-expensive. The average wedding in the U.S. costs about $25,000 and, more often than not, a lot of people who walk down the aisle put their wedding tab on their credit cards. You don't want to start out your married life with big financial bills that can lead to arguments and even worse. I would emphasize choosing cards that give you plenty of time to pay off your bills.
I recommend two:
The Discover More card is great because it does two things. First, if you want to use if for the wedding expenses themselves, you have an automatic 6-month 0 percent APR on all new purchases. If, however, you used a different card and didn't have this one, you can do a balance transfer to it and for 18 months, you'll get a 0 percent APR, so you have a year-and-a-half to pay off the photographer, reception, limo rental, you name it. It gives you a lot of time to pay off your balance.
If you're eligible for the PenFed Promise Visa card, it's another great one for newlyweds for a number of reasons. Top qualify, you must be a United States Government employee, member of the United States Military and Uniformed Services, employee or volunteer of the American Red Cross, member of the National Military Family Association, or a family member/housemate of a current PenFed member. First, it's a credit union offer, which is credit owned and operated by its members. So, if you don't qualify for this one in particular, you should look into other credit union offers that you do qualify for. With the average credit card rate at about 15 percent, the PenFed Promise Visa card offers an APR of 7.49 percent for all purchases, and if you do a balance transfer, offers a 4.99 percent APR, which lasts for three years. The other big thing about this card is that you're not going to get nickled and dimed using it. It has no late fees, additional fees or annual fees. It's a really good card for people who are tired of big banks who charge additional fees on regular activities. For couples who are just starting out, invariably, there are things that you have to buy for your house that you don't get off of your registry in the first couple of years, and this will give you a 3 year time period to pay things down with a low APR. It gives you a good head start.
PARENT
You want to look for something that's going to benefit your child financially over the long-haul. We all know that kids are going to constantly ask you to do one thing: spend, spend, spend, but a responsible parent needs to teach their kids that there are four ways to deal with money: save, spend, invest or donate it. One of my picks helps you do three of those things: save, spend as you make charges, but also invest in your kid's college education:
You want to look for something that's going to benefit your child financially over the long-haul. We all know that kids are going to constantly ask you to do one thing: spend, spend, spend, but a responsible parent needs to teach their kids that there are four ways to deal with money: save, spend, invest or donate it. One of my picks helps you do three of those things: save, spend as you make charges, but also invest in your kid's college education:
The first card is the American Express Fidelity Investments 529 College Rewards card. A 529 is a state-sponsored college savings plan. With this card, instead of earning points or miles that you can use right away, you essentially have a college savings account at Fidelity Investments. For all of the charges you make, two percent of your spending gets diverted to your kid's savings account. That money will grow tax-free until your kids reach college age, and then, if you use it for higher education, you don't pay taxes on it. If instead, you do decide to use it for something different than education, you'd pay regular income tax on it.
The other card I recommend is, if your kids are a little older, maybe teenagers. It's called the MTV Visa Card from Capitol One. What's great about this card is it's a rewards point system that enables you to rack up points quickly on anything that has to do with entertainment. If your kids are eating out all the time or you go to a restaurant, you earn 2 points for every dollar spent. For anything entertainment-related, you earn 5 points per dollar spent. It's a rich rewards program.
STARTING OVER
Somebody who is starting over might have been through either personal or financial adversity. Maybe they've been downsized, gone through a foreclosure or a divorce. There are the five "dreaded Ds," as I call them: divorce, downsizing, disability, disease or a death in the family, and any one could lead you to having to rebuild your credit rating. In these cases, sometimes a traditional credit card isn't the best thing for you. Instead, there are things called non-traditional credit cards. I mentioned the Orchard card before for college students, but there's a different version of the card:
Somebody who is starting over might have been through either personal or financial adversity. Maybe they've been downsized, gone through a foreclosure or a divorce. There are the five "dreaded Ds," as I call them: divorce, downsizing, disability, disease or a death in the family, and any one could lead you to having to rebuild your credit rating. In these cases, sometimes a traditional credit card isn't the best thing for you. Instead, there are things called non-traditional credit cards. I mentioned the Orchard card before for college students, but there's a different version of the card:
The Secured Orchard Card. It's secured by Mastercard and issued by HSBC. It's for those who have bad credit or those who need to rebuild or start over with thinner credit than they'd hoped, or those who have no credit files at all. What's different about a secured credit card as opposed to a traditional one is that you put a certain amount of money into the card, and that becomes your minimum credit. It requires a minimum deposit of $200 and, if you put that down, that will become your credit limit. Frankly, this type of card even works for somebody who might not have been approved for a traditional unsecured credit card. In essence, you, as a consumer, have paid in advance for the things you're going to buy, but what's great is, it helps you build your credit rating for the future. I recommend you put a recurring bill, like your cell phone bill or utility bill on the card and pay it off every month. This creates a good payment history for your credit file, and helps offset whatever setbacks you might have had in the past. With over 14 million Americans out of work, it's hard to pay your bills when you're out of a job, but this card has a great reputation in the marketplace to help you get back on your feet.
My second recommendation is another prepaid credit card called the VISA RUSHCard. It's similar to the secure Orchard card, but has other advantages: While the card has an activation fee and a monthly maintenance fee, there are no overdraft charges, and you avoid the risk of getting into credit card debt. In the meantime, you are rebuilding your credit. The RUSHCard also allows for direct deposit from your paycheck, so it's a good way of keeping track of any spending. This card isn't for everybody, but really for somebody looking to start over due to bad credit. It's for somebody who doesn't trust themselves with credit, but wants to get better.
RETIREES
You don't necessarily need to get a new card, but certainly, if you look at the lifestyle issues that people face when they retire, there are changes. Many have more time on their hands and are more likely to travel around the world or to visit their grandkids, who may be in a different state. For them, I recommend two cards:
You don't necessarily need to get a new card, but certainly, if you look at the lifestyle issues that people face when they retire, there are changes. Many have more time on their hands and are more likely to travel around the world or to visit their grandkids, who may be in a different state. For them, I recommend two cards:
First is the Capitol One Venture Rewards Card. One of the downsides to traveling a lot and using cards is getting hit up with a lot of fees. This card bucks that trend and doesn't have any foreign transaction fees, which can add up. You can also use any frequent flyer miles you generate on this card on ANY airline, and there are NO blackout dates whatsoever. A lot of cards have frequent flyer miles only for specific dates or on preferred carriers. This works on them all, all of the time. Plus, your miles never expire. That's huge.
The one other card I'd recommend is an investment-related card geared toward retirement. It's the Fidelity Retirement Rewards Card from American Express. This card links to an IRA, an individual retirement account, and two percent of all of your purchases goes into this account to save you money for your retirement. So, if you spend $100, $2 goes into your account. That's a really good deal, because it helps you save. Every statistic will tell you that Americans aren't saving enough for retirement, so anything you can do to augment your retirement savings is worth it, and this is a pretty painless way to do it.
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