Question about credit cards

[eLiu]

Hi all,
So I'm looking to get a credit card with some kind of rewards (namely, cashback). I'm about to finish undergraduate & I start grad-school in the fall; I'll be turning 32500/yr. As a result, I don't have much credit history to speak of (1 credit card from my current bank), so the cc companies aren't exactly jumping to give me stuff.

Checking a few places (e.g. HSBC), it seems like the offers I'm eligible for fall under 2 categories:
1) cashback, flier miles, rewards program type cards
2) platinum card
And the things I can't get basically land in the category of platinum reward cards.

Basically, I'm having a hell of a time trying to figure out what the heck the difference between platinum & non-platinum cards is. Lower APR?? Are there other platinum perks? Can't seem to figure it out... so I can't work out whether or not I should care about being platinum.

Oh yeah... 2 other things:
1) I pay in full every month
2) I want a 2nd card for the cashback (1% > 0% which is what I get now) & b/c it looks like creditors like you to have a few CCs.

Any advice would be appreciated,
-Eric

 

[jagec]

$32500/yr is quite the stipend. What major?

Right now my favorite rewards card is the Chase Freedom Visa card...3% on gas, groceries, and "quick-service restaurants", 1% on everything else, straight cash back. Check Fatwallet for what's hot right now...I'd imagine that this card is no longer top dog.

 

[LS21]

a visa/mc gold and platinum has some benefits such as extended warranty, rental car insurance coverage, etc that are not available on lower levels

 

[eLiu]

Originally posted by: jagec
$32500/yr is quite the stipend. What major?

Right now my favorite rewards card is the Chase Freedom Visa card...3% on gas, groceries, and "quick-service restaurants", 1% on everything else, straight cash back. Check Fatwallet for what's hot right now...I'd imagine that this card is no longer top dog.

lol thanks, I'm extremely happy with my grad school situation. It's not a school stipend; it's a fellowship through the DOE (CSGF). I'll be in aerospace engineering studying computational fluid dynamics.

Back to CCs... Chase had the same deal. I could get cashback OR platinum, but not a cashback platinum card. Do you know if that actually matters? Or is the rewards part more critical than the platinum part...?

 

[goog40]

Originally posted by: LS21
a visa/mc gold and platinum has some benefits such as extended warranty, rental car insurance coverage, etc that are not available on lower levels

Chase Freedom has all of those benefits, as well as the Citi CashReturns card. I'm not sure if a platinum card means much nowadays, seems like its just a title for marketing.

 

[eLiu]

Can you get a not-platinum card upgraded to platinum after you build more credit?

 

[LS21]

Originally posted by: goog40

Chase Freedom has all of those benefits, as well as the Citi CashReturns card. I'm not sure if a platinum card means much nowadays, seems like its just a title for marketing.

chase freedom is a visa-classified under either Signature or Platinum, depending on what the applicant qualifies for

though the second statement is true - "platinum" and "gold" status dont mean much as they are abundant and easy to get

 

[alkemyst]

Originally posted by: LS21

"platinum" and "gold" status dont mean much as they are abundant and easy to get

QFT...it used to be the gold had better features, rate and limit than the basic card and even more so for the platinum.

Now you have people getting plats with 21% APRs and a $300 limit and no benefits everyday.

I go by features and rate on the card I carry balances on and features and cash back on those I pay off monthly even if their rates are high.

I could care less about color.

The 'black' card (centurion) is about the only color that is a guarantee

 

[Capt Caveman]

Actually, Gold and Platinum do offer additional benefits over standard cards to in regards to increase the warranty of items you buy, provide auto rental insurance, etc.

And yes, you can ask to be upgrade if you currently have a standard card.

 

[CrimsonChaos]

First you will want to read this FTC article. It outlines some of the pitfalls to watch for.

Second, assuming it isn't one of the marketing ploys described in the article, the features of "gold", "platinum", etc.. really depend on which credit card company you are dealing with. In a very general sense, the higher-level cards do sometimes offer lower interest rates and insurance features -- other times it's just marketing. Just be sure to read the fine print on any card you sign up for. Make sure it is a relatively low fixed rate (depending on your credit history), and that there are no annual fees or other charges.

 

[sourceninja]

When I was first starting out, I had a platinum card from some no name bank with a 450.00 limit.

 

[Beattie]

Just wanted to represent the "what do you need a credit card for?" crowd.

 

[dullard]

Platinum used to be better, but now it seems like often it is about the same as standard cards.

The single best card for most people is the Chase Visa Freedom card. I got it myself last year when they were giving away $250 just to sign up for the card. The signup bonus amount varies over time, but I think it has been stuck at $50 for the last couple of months. But, still, a free $50 is quite nice just for filling out a form. After less than a year, I am just about ready to cash in another $250 from that card (1%-3% cash back adds up quickly even if you don't use it much). Even Consumer Reports listed it in their issue this month as one of the top credit cards.

Get that card and forget about the platinum designation. Chase will eventually upgrade you to Visa Freedom Signature. They upgraded me fairly quickly.

It looks like you have planned things perfectly: grad school, pay in full each month, more than one but not too many CCs, etc.

I too did CFD for some of my grad school work. It is both fun and often frustrating. Good luck.

 

[L1FE]

Also, just wanted to point out that a lot of these cards have additional costs. For instance, the Amex Platinum has a $450, which gets you perks like 4 free companion tickets, insurance, etc. While I'm a big points whore (mileage, hotel, MR), I think if you're only on a 32.5k/year stipend, you won't really spend enough to make the points worthwhile. For instance, as a Hilton Amex member, if I spend like $4k/year on average, I might get max 20k hotel points, which is a free night at a podunk Hilton. Woohoo. However, if I spend like $50k/year, that could get me a max of around 250k hotel points, and I can redeem 6 nights at a top level Hilton for 175k (if you're also a Diamond hotel member).

With rewards points, it's even more convoluted, but the basic premise is that a lot of the stuff you can redeem points for are cheaper paid by cash. Additionally, you have to actually want to SPEND those points to GET something. With cash back, it's money in your pocket (or rather, money subtracted from your balance). My recommendation is that you get the cash back.

 

[dullard]

Originally posted by: L1FE
My recommendation is that you get the cash back.

All your points are correct. I would like to add that almost half of people NEVER use their rewards points (source Consumer Reports latest issue), but they almost always use free cash. The points either are for items you don't really want, are too much hassle, you forget about it, expire, and/or just have too many restrictions. Cash is king when it comes to most reward cards.

 

[eLiu]

Beattie: Two reasons come to mind: 1) it'll help me build a credit history, 2) I don't like using cash or making sure there's enough money in my checking acct. Credit lets me charge stuff and pay it all at once with 1 check (no worries, I'm frugal enough that this behavior doesn't result in excess spending). So since I want to use credit cards, I might as well get a card that will do something for me.

dullard: Yeah I'd been looking at the Chase Freedom card; it seems pretty exciting, especially the Signature version. Good to know that they'll upgrade me, since I don't think I qualify for the Signature right now, lol.

I'm pretty excited about CFD Don't see much of that around here, good to know I'm not alone, haha.

L1FE: Yep I was planning on getting cashback only. I don't forsee myself having enough time/money to make travel/hotels/etc worthwhile. I mean I won't even be owning a car. And the rewards points type programs sound silly after I read up on them... definitely cashback ftw.

 

[Demon-Xanth]

I never even bother to look at the name of the card, first thing I do is flip the offer over and check the interest rates and fees. If there's two digits before the decimal place I laugh and discard. If there's an annual fee, discard.

 

[Viper GTS]

Originally posted by: eLiu
Beattie: Two reasons come to mind: 1) it'll help me build a credit history, 2) I don't like using cash or making sure there's enough money in my checking acct. Credit lets me charge stuff and pay it all at once with 1 check (no worries, I'm frugal enough that this behavior doesn't result in excess spending). So since I want to use credit cards, I might as well get a card that will do something for me.

dullard: Yeah I'd been looking at the Chase Freedom card; it seems pretty exciting, especially the Signature version. Good to know that they'll upgrade me, since I don't think I qualify for the Signature right now, lol.

I'm pretty excited about CFD Don't see much of that around here, good to know I'm not alone, haha.

L1FE: Yep I was planning on getting cashback only. I don't forsee myself having enough time/money to make travel/hotels/etc worthwhile. I mean I won't even be owning a car. And the rewards points type programs sound silly after I read up on them... definitely cashback ftw.

One thing to keep in mind with Visa Signature cards (not just the Chase Freedom, this applies to most if not all Signature cards: They don't report the actual card limit to the credit bureaus (since they don't technically have a pre-set spending limit). The downside to this is that the bureaus interpret your maximum statement balance as being the "limit." So if you have a $10,000 card but you've never had a balance over $1000 your utilization is going to be 10x as high as it should be. Have a $500 balance at the end of the month? Congratulations you have 50% utilization instead of 5%. This can be murder on your credit score if you have only a few cards and small limits.

I would stick with the non-signature version unless you really stand to benefit from the Signature.

Viper GTS

 

[eLiu]

Originally posted by: Viper GTS

Originally posted by: eLiu
Beattie: Two reasons come to mind: 1) it'll help me build a credit history, 2) I don't like using cash or making sure there's enough money in my checking acct. Credit lets me charge stuff and pay it all at once with 1 check (no worries, I'm frugal enough that this behavior doesn't result in excess spending). So since I want to use credit cards, I might as well get a card that will do something for me.

dullard: Yeah I'd been looking at the Chase Freedom card; it seems pretty exciting, especially the Signature version. Good to know that they'll upgrade me, since I don't think I qualify for the Signature right now, lol.

I'm pretty excited about CFD Don't see much of that around here, good to know I'm not alone, haha.

L1FE: Yep I was planning on getting cashback only. I don't forsee myself having enough time/money to make travel/hotels/etc worthwhile. I mean I won't even be owning a car. And the rewards points type programs sound silly after I read up on them... definitely cashback ftw.

One thing to keep in mind with Visa Signature cards (not just the Chase Freedom, this applies to most if not all Signature cards: They don't report the actual card limit to the credit bureaus (since they don't technically have a pre-set spending limit). The downside to this is that the bureaus interpret your maximum statement balance as being the "limit." So if you have a $10,000 card but you've never had a balance over $1000 your utilization is going to be 10x as high as it should be. Have a $500 balance at the end of the month? Congratulations you have 50% utilization instead of 5%. This can be murder on your credit score if you have only a few cards and small limits.

I would stick with the non-signature version unless you really stand to benefit from the Signature.

Viper GTS

Wow, good to know. Can I fix this by doing like some kind of cash-advance type of thing for a huge amount (e.g. 10k in your example) and just pay the money back immediately? Kinda spoofing the measurement.

 

[Viper GTS]

Originally posted by: eLiu

Wow, good to know. Can I fix this by doing like some kind of cash-advance type of thing for a huge amount (e.g. 10k in your example) and just pay the money back immediately? Kinda spoofing the measurement.

Yes, you can. But it's only worthwhile if you can do it at 0% with no transfer fees. A typical 3% transfer fee on $10K makes that a very expensive "fix."

Viper GTS