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New credit card user looking for some tips

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Anonymous
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Re: New credit card user looking for some tips

One crucial point made thus far is that the two cards you apply for in the next few months are ones you want to keep forever.  Remember, the whole reason to add these is because you want four cards total early in your credit life -- so that 15 years from now (say) you will have four tradelines that are 15 years old each.  This insulates your AAoA from being dropped to low numbers, even if you have to open a new card and a mortgage and a car loan within a year.

 

Citi Double Cash is a great choice for the long game. No annual fee plus 2% cash back on all purchases not covered by one of your better bonuses.  That turns out to be an extra 1% on decades worth of purchases.

 

Amex Blue Cash I think is a nice other choice.  3% on groceries is pleasant, and you can always switch it to Amex Blue Cash Prefered down the road if you get to a place where you are buying enough groceries to make the 6% cashback worth the $75 fee.  On the other hand, you may find that you have 5% CB on groceries half the year with your Discover + Freedom. 

 

The important thing is to spend a month thinking about it and get the ones you really like (and which have no annual fee).

 

The one caveat I will make about rewards cards (and cashback in particular) is to remember that card issuers are not philanthropists.  They issue these cards because they induce people, often unconsciously, to spend more money than they otherwise would.  Your unconscious mind thinks "it's ok to go out to dinner, because I am earning some cash back."  But EVERY dollar spent on a CB card that is not absolutely necessary is a loss -- you are losing the huge amount of money that dollar would grow into if you put it into a Roth IRA, for example.

 

So just be careful to take a critical look at what you are spending your money on, every now and then, to see whether you are being led down the garden path of spending money that you wouldn't if you had to watch bills leave your wallet.  The goal is not only to pay in full (keeping your spending within your monthly income) but to actually spend much less than you bring home, so that you can save the difference.

 

 

Message 11 of 12
Anonymous
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Re: New credit card user looking for some tips

@credityguyindixie I really appreciate that response. I definitely like what the Citi double cash brings to the table in the long run. After reading advice from other members on this post and across the board I understand these cards will stick with me forever, and I feel like the Chase Freedom and Discover are a good start, but as pointed out I should add 1-2 more. I may do the Citi double cash right now since I was pre approved for it already, then the amex in a month or so. 

 

The point about spending is a VERY valid one. I am definitely not going to be spending outside my means and will be spending under my means as much as possible haha. I thank you for reminding me of that very critical point about how dangerous credit can be though. It can be an ugly game if you don't pay attention to how much you are spending and use the credit unwisely. Thank you to everyone for helping me out and if anyone feels like there's anything else I should know please feel free to mention it!

Message 12 of 12
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