Making any financial change can be annoying. Whether it is switching banks or switching credit cards, there is a fair bit of work that needs to be done in order to transition from one institution to another. Is it worth it? Oftentimes, yes it is – especially if you're paying fees.
I'm currently in the middle of deciding if I should sign up for a different credit card. For some background, my wife and I put everything onto our credit card. All of our daily spending, everything that we order, and even any bills that will allow us go onto our credit card. We don't carry a balance, we pay it off in full every single month, so we don't do it because we can't afford to purchase these things.
We use our credit card this way for a few reasons. First, we like that there's a digital record created of everything that we purchase. It easily syncs up with a program like Mint to keep a spending record of all our purchases. Second, purchasing things through a credit card give us protection that purchases through cash or a debit card would not. And finally, there's the potential for rewards. So with that in mind, here's what I'm looking for when I'm considering a new credit card.
Switching for Better Credit Card Rewards
The only reason I'd sign up for a new credit card is for the credit card rewards. I don't carry a balance on my credit cards, so I'm not worried about a higher credit limit, low interest rates, or spreading my debt out amongst several providers. I'm only in it if there's something in the deal for me. I currently have a Capital One Platinum Mastercard. I get .5% back on the first $3,000 I spend annually, and then 1% on everything beyond that. I've mentioned this before, but I really only care about getting cash back. I don't collect any sort of points or rewards, so straight cash back is what I prefer.
For cash back cards, there's really only two other cards that I'm considering at the moment. The first is the Capital One Aspire Cash Platinum Mastercard. Like all the other cards I look at it, doesn't have an annual fee. It also doesn't have the first $3,000 limit like my current card, and you get an additional 25% back ontop of the 1%, effectively making it 1.25% back on all purchases. It's not as good as some of the cards available in the US, but it is one of the better ones available in Canada. The reason that I'm attracted to this card is because it would be a very low hassle switch. I already have a Capital One Mastercard, and I'd end up with a Capital One Mastercard. I've never had a problem with my Mastercard in terms of rewards, features, or protections, so I'm quite comfortable with the company, so it'd be an easy switch for me. The main reason I wouldn't go with this card is because there could be something better out there.
The other card that I'm considering is the Costco American Express. It has much better rewards. You get 1% back on everything, 2% back on gas purchases, and 3% back on restaurants. I don't spend a ton of money on gas or eating out, so it won't make a huge difference in terms of the rewards I get. Based on the trends that I've seen in Mint, gas purchases would net me about $18 more per year, and restaurants around $50. Like the Mastercard, it also has no annual fee. If I combine those rewards with the fact that I can use it at Costco (where I currently cannot use a Mastercard, just debit/cash), In total it would be an additional $90 in cash back rewards over my current card. My main hesitation is that American Express cards aren't accepted at as many smaller places as Mastercard/Visa.
One final option that I am considering is signing up for both. As long as I spread out the sign ups 3 months apart, my credit score will not take a huge hit from applying for multiple credit sources. This way I can maximize the benefits from the AmEx where applicable, and then use the MasterCard for the rest. This is a less elegant solution as it means my rewards are split up amongst two different providers, but it may maximize my credit rewards.
What credit card do you have, and why?