What was the best card of 2014? According to two reputable sources, it was the Citi Double Cash Back.
Both NerdWallet and CardRatings.com praise the card’s unique conceit: Consumers get 1 percent cash-back on the items they buy and an additional 1 percent cash-back when they pay off the card.
“It’s the first (and, so far, only) card on the market that provides a lucrative incentive to make monthly payments in full,” notes Lindsay Konsko of NerdWallet, who calls the card “a game-changing product.”
Citi also is putting EMV chips in all of its consumer and student credit cards, making them safer than the typical magstripes. Other card issuers are putting EMV in some of their products, and apparently EMV chips for debit cards are also on the way.
A NerdWallet article about the past year’s top credit industry trends notes, among other things:
- Free credit scores (from Wells Fargo, Sallie Mae, Hyundai, Kia, PenFed and, yes, Citibank)
- Continuing improvements in mobile payments
- Airline mile devaluations (booo!)
- Increasing credit card debt (hiss!)
Those last two are bummers, to be sure. However, I still believe that credit, properly used, is a good frugal hack and also helps keep you from paying too much for other services over your lifetime.
If you don’t have credit or if you’d like to get a little bit more of it, this is a good time to shop around. Curtis Arnold, editor in chief at CardRatings.com, says rewards card issuers are locked in “a virtual arms race.”
“If you’re only earning 1 percent cash-back or one point or mile for every dollar,” he says, “you’re leaving a lot of money on the table.”
For a list of Arnold’s favorites, see “Editor’s Choice Awards 2014: The year’s best credit cards”; for NerdWallet’s, visit “Credit cards 2014: A year in review.”
But don’t be bullied
Feeling pressured to open a store credit card when all you want to do is pay for a shirt? You’re not alone. According to a recent survey on behalf of Credit.com, 31 percent of consumers feel “bullied” by store clerks during the holiday season.
Apparently these strong-arm tactics can pay off, since 28 percent of the shoppers caved and got the cards.
Before you hit the store, Gerri Detweiler of Credit.com suggests you ask yourself these questions:
How much will I save? It’s nice to pay 10 to 20 percent less. However, you could also look for coupons or coupon codes at sites like Retail Me Not and Savings.com instead of opening a card for what might be one-time savings. Which brings us to…
Will I really use it? If you don’t normally visit this store (hello, holidays!), you probably don’t need this card.
Could this help my credit? Using a couple of cards responsibly can help your score. But if you’ve already got a decent one, and a decent number of cards, why get another one?
Is this the right time? If you’re seeking a major loan (e.g., mortgage, auto) in the next six months, say “no” to any more cards. A drop of even just a few points in your credit score might nix your chances.
Is this a good card to have? Don’t get a card just because it’s offered. Decide which ones are worth having.
How fast can you pay it off?
If you’re currently carrying a balance, do yourself a favor: Stop shopping. Yes, it’s Christmas. But how much deeper do you want your particular hole to be?
Those who think along the lines of, “Oh, what’s another $300?” or “In January I’ll get serious about paying it all off” should avail themselves of Credit.com’s credit card payoff calculator. It puts the numbers in large type and thus in really stark relief.
Those same numbers can be found on many credit card bills under a heading like “minimum payment warning.” But it’s easy to avoid looking at that part of the bill – that is, if you even read the thing. How many people just wince at the total due, check for unexplained charges and make payments? (In fact, how many people don’t even bother to look for unexplained charges?)
Just for fun I plugged some imaginary numbers into the calculator: a $950 balance at 18.99 percent, with $25 monthly payments. Here’s what popped up:
“I will be debt-free by November 2019 (or 4 years and 11 months).”
“Total amount I’ll pay: $1,464.”
Scary, huh? But it might be just the kick in the pants you need to get really serious about paying it all off. (For tips, see Detweiler’s “How fast can you get out of debt?”) It might also get you to stop shopping for a while, or at least to rethink how and why you buy. A Christmas miracle!
Related reading:
- What’s the weirdest thing you ever charged?
- Cards and consequences
- Got a credit card? Get another one
The question I ask myself is….How old will I be when this loan is paid off? For me anyway it was/is an eye opener. Say your considering buying a brand new car instead of a gently used one. And car loans are anywhere from 5 to 8 years these days so if you are 25 when you start…you will be anywhere from 30 to 33 when you are free of the obligation. But what condition will the car be in? With CC debt it gets even crazier….
Yep. Especially when cars now cost more than starter homes used to cost. When you’re in your late 50s and think “I’ll be halfway through my 60s before this is paid off…” — well, it does give one pause.
I agree – that’s a great question. Also helps to think about where you want to be in that time frame? Still paying that debt or…?
People should never trust any list of “Top Cards” in any given year. The Citi Double Cash card doesn’t even offer a sign-up bonus. Many other cards that offer 2% cash-back offer sign-up bonuses of several hundred dollars.
True, but the signup bonus is a one-time thing. The 2% keeps on going, year after year.
Yes, but why sign up for a card with no sign-up bonus to get 2% when plenty of cards offer a sign-up bonus *and* 2%? That’s the point I’m making. Lots of cards pay 2% and offer a sign-up bonus. I think they make lists of top cards based on the ones they want to sell, personally.
I found out last night that my credit card was skimmed… again. It is turning into an annual Christmas event for me. I’m so bummed, I thought I was being really careful and spending cash as much as possible. I even wiggle the card readers at gas pumps to make sure that they are firmly attached before I swipe my card.
Thankfully, the bank is extremely understanding and I won’t be liable for any of the $8 that the criminals managed to get (they also tried to run $1800, which was declined by the card).
It is just frustrating.
Last year I had three cards compromised in just a couple of months. Maddening. Which is why I wrote “Got a credit card? Get another one,” which is linked under “Related reading”: People think one card is enough but what if it gets compromised? This happened to me when I was traveling in England — I had another card, and also a decent amount of cash, so I wasn’t worried. If I hadn’t had a second card? Could have been some problems.
They watch this card pretty closely, to the point where when I had unexpected travel (to a funeral) I had to call them from the car rental place to confirm that it was me.
I totally agree that it is a benefit to have more than one card. And cash, especially when traveling overseas.
Do your readers know that AAA sells “trip packs” of foreign currency that they can get before travel? It is nice to not have to face currency exchange fresh off of the plane…
I didn’t know that myself. Thanks.
Whenever I travel (six trips this year!) I call the card companies in advance, lest I be really embarrassed when it’s declined in NYC or Phoenix or Kansas City or wherever.
I have a couple of cards with cash back programs – I prefer them to anything that involve air miles. Amazon offered me $50 in gift card credit for opening a card with them – a Chase Visa card. And using the amazon branded visa at amazon gets me 3% back – so that was worthwhile.
This week I was looking at buying a kindle while they were on sale – and up pops a new ad offering me an immediate $40 in gift card money if I open a “amazon.com” card – so my kindle ended up being 50% off the normal price! I will likely close the amazon.com account in 30 days – I don’t need another card, and it doesn’t seem to have any exciting cashback options.
I refinanced my mortgage a year ago, and rates aren’t going down lower than what I have, and my car loan is at 0% – so I’m not particularly concerned about any potential dings to my credit score for opening a new account – might as well take advantage of the free money!
I just got an email telling me that my Chase Amazon card limit had been doubled. I am not sure what to think about this. Is it a good thing? Can/does it affect my credit rating? I have a US bank card as well and I never carry a balance.
I used to work for a credit card bureau, so to answer your question, yes it could. If the powers that be feel that you have too much available credit, even if you are not using it, your score could get dinged. Our credit bureau included info on the major factors affecting your score, so if your score goes down, hopefully the accompanying info will specify that.
thanks for the info
I find that it pays to be a deadbeat and pay your cards off each month. We get 6% on groceries and prescriptions acquired at the grocery store with our American Express. Discover offers 1% and another 5% on changing categories. From October through the end of the year, anything bought online gets us 5% cash back. That’s when I do all my Amazon Christmas shopping (with free shipping, of course). In addition, when you shop through a vendor on Discover,com, you earn another 5 to 10%.
We have decided to save our rewards for three years to help replace our fence. Last year, we got our great flat screen TV from Tiger Direct for free. Currently, we are planning to save our rewards for two or three years to help replace our fence.