So after my lengthy conversation about credit cards with Brandon, I decided to take the plunge and apply for one of the best rewards cards out there. At this time, I only have two main credit cards that I use. I primarily use my MBNA WorldPoints Platinum Plus Alumni Card, and that gives me 1 point for every $1 in net retail purchases. I can then use that for cashback, gift cards (like Amazon), airlines, etc. I just calculated it out — for 10,000 points I can get $80 in cash, which comes out to only 0.8% cashback! Truth be told, the only reason I got the card in the first place was because of the obnoxious gold color and kick-ass Sparky logo. I love showing off my pride for ASU everytime I buy something. =) Oh yeah, and as a sign-up bonus I got a cool bright gold ASU camping chair that is perfect for tailgating. My other card is a Capital One Platinum card, which has no rewards or special offers. I plan to replace that one soon. I did read, however, about Capital One being the best credit card for foreign purchases — if I ever decide to go overseas again and use a credit card, I may want to hold on to Capital One. Although, last time I was in the Philippines I took cash and never used a CC once.
My philosophy up to this point has always been the following: The best way to increase your net worth is by saving more (or making a higher salary, and then saving the same percentage as before). Other things like rewards from credit cards, etc, were all extras that I really didn’t think about. And besides, how much can an extra $200 or $300 a year really compare to an extra 5-10 grand that you could save from your paycheck? Well, now I’ve changed my philosophy. I still stand by my previous statement, and maintain that the best way to increase your net worth is to actually save more. But the extras really do add up =)
Anyways, there are a few rewards cards out there, and most give anywhere from 3-5% cash back on groceries, gas, and drugstore purchases. There is usually a cap on the amount that you can collect in a year, after which most people switch to another rewards card. Some people have other cards that give rewards for things like airline purchases, restaurants, hotels. But since I only eat out maybe once a week, and about 80% of my monthly expenses can be contributed to groceries and gas, I figured I should find a decent rewards card that would at least cover these items.
So I came across the following on one of my favorite money blogs:
HSBC Direct Rewards Card
Pros: 5% back at groceries, gas, and drugstores with $500 annual cap. 1% back on purchases over $3,000.
Cons: Rewards only paid out annually. Only 0.5% on first $3,000 of purchases. Relatively unknown card issuer. People report having FICOs of above 700 and still being denied.
And sure enough, most people complained about being denied. I figured, what the heck, so what if I’m denied, 5% back on groceries and gas is ALOT, and $500 is a high annual cap! And guess what? I got the “Congratulations Heather L. Stanfield, your application was approved!” So I guess I passed whatever hard credit pull they do.
I’m now looking forward to getting the card in the mail and getting started on that cashback!