Odysseas Papadimitriou
Odysseas Papadimitriou, CEO of Evolution Finance, Inc., based in Washington, DC, parent of CardHub.com, an online credit card comparison website.
The come-ons are tempting. There are credit cards that offer 2% cash back on all purchases…cards that offer 5% or even 6% cash back in certain spending categories…cards that offer hundreds of dollars just for signing up and using them for a while…and cards that charge 0% interest for as long as 21 months.
But in the fine-print–laden world of credit cards, even those with desirable features can have pitfalls that cardholders must avoid to get the full benefit. We asked credit card expert Odysseas Papadimitriou to look at the pluses and minuses and choose the best cards for 2016 in a range of categories (with no annual fee unless otherwise noted)…*
Best for straightforward cash back: Citi Double Cash MasterCard offers 2% cash back on all purchases, with no caps on how much you can earn. Rewards can be claimed as a check, statement credit or gift card whenever a $25 reward threshold is reached. Rather than getting 2% back immediately on purchases, cardholders earn 1% on each dollar spent and then another 1% on each dollar when paying the bill. Unredeemed rewards balances expire if additional rewards are not earned for 12 months. Annual percentage rate (APR) interest on unpaid balances: 12.99% to 22.99% following a 15-month 0% introductory rate. Citi.com
Best travel rewards: Citi ThankYou Premier MasterCard offers three points per dollar spent on travel-related expenses, including airfares, trains, hotels, car rentals, gas, road tolls and campgrounds…two points on meals and entertainment…and one point on other purchases. Points are not capped, do not expire and can be redeemed in a range of ways, including gift cards. Example of maximum rewards: You spend $1,667 on a round-trip flight and hotel, which gets you 5,000 points that you redeem for a $50 Home Depot gift card—equivalent to a 3% return. ThankYou Premier has a $95 annual fee, but it is waived in the first year, and if you spend at least $3,000 in the first three months, you get 50,000 bonus points, enough for a $625 travel credit or $500 in gift cards. APR: 13.99% to 22.99%. Citi.com
Best gas card that can be used at any gas station: PenFed Platinum Cash Rewards Plus Visa pays 5% cash back on gas purchases if you join the Pentagon Federal Credit Union (join by making a donation of as little as $14 to a specified nonprofit)…and establish another account with PenFed, such as a money-market savings account…or a checking account with direct deposit and a $250 minimum balance…or a home-equity loan/line of credit. (If you do not have one of the accounts listed above, the card gets you 3% back on gas and you must pay a $25 annual fee.) Rewards are not capped and are automatically credited to your account. APR: 9.99% to 17.99%. PenFed.org
Best single-brand gas card: Marathon Visa pays a 25-cent rebate on each gallon of Marathon gas you charge during months when your total charges are at least $1,000—that’s a 12% discount if gas costs $2.15 a gallon, the recent national average. You will earn 15 cents back per gallon (7%) in months that you charge between $500 and $999.99…and five cents (2%) in months that you charge less than $500. A Marathon Cash Card, redeemable at Marathon stations, will be sent whenever your rewards balance reaches $25. Marathon stations are in many southeastern and central states. APR: 16.99% to 24.99%. Marathon.com/Visa
Alternative: Chevron/Texaco Visa deducts three cents per gallon (which is 1% at $2.15/gallon) off your statement when you purchase gas at Chevron and Texaco stations plus an additional 20 cents per gallon in months when you spend at least $1,000 (9%) or an additional 10 cents per gallon in months when you spend between $300 and $999.99 (5%). Gas credits are capped at $300 per year. APR: 26.99%. ChevronTexacoCards.com
Best for grocery purchases: Blue Cash Preferred from American Express pays 6% cash back on up to $6,000 a year in grocery-store spending—that’s a potential $360 back a year, more than enough to justify the $75 annual fee. Cardholders also earn 3% cash back on gas…1% on most other purchases…and a $100 initial bonus for spending at least $1,000 on the card in the first three months. Cash back is received as a statement credit. APR: 12.99% to 21.99% following a 15-month 0% introductory rate. AmericanExpress.com
Best for low ongoing interest rates: Simmons Bank Visa Platinum recently had the lowest APR among cards that do not charge an annual fee—7.25%. Simmons typically offers among the lowest rates, although some other cards have lower introductory rates for limited periods. SimmonsFirst.com
Best card for a low introductory rate: Citi Diamond Preferred Visa has a 0% introductory rate that lasts 21 months for new purchases and balance transfers. Its balance transfer fee is 3%. APR: 11.99% to 21.99% after the introductory period. Citi.com
Best card for balance transfers: Chase Slate has no transfer fee—in contrast, most cards charge 3% or more—no annual fee and a 0% introductory rate for transfers (as well as for new purchases) that lasts 15 months. APR: 12.99% to 22.99% after the introductory period. CreditCards.Chase.com
Best card for a variety of perks: Chase Sapphire Preferred Visa provides a vast array of perks that are especially attractive now as many other cards cut back their perks. It extends many manufacturer warranties for an additional year…provides coverage of up to $500 for items stolen or damaged during the first 120 days of ownership…and supplies trip-cancellation insurance of up to $10,000 per trip and lost-luggage reimbursement of up to $3,000 per passenger for you and immediate family members, to name just a few perks. Cardholders earn two points per dollar spent on travel and dining…one point per dollar on other purchases…and 50,000 in bonus points for spending at least $4,000 in the first three months. Points can be redeemed for travel expenses or transferred to certain frequent-flier and hotel points programs, among other options. The $95 annual fee is waived in the first year. APR: 15.99%. CreditCards.Chase.com
Best card for college students: Journey Student Rewards from Capital One offers 1% cash back on all purchases, plus 0.25% bonus for paying the card’s bill on time, for a total 1.25% cash back. (Cardholders do not need to pay the bill in full to qualify for the bonus.) That’s a very generous rewards program for a card issued to students who have very limited credit histories. Rewards are uncapped, do not expire and can be received as a statement credit or check. APR: 19.99%. CapitalOne.com
Best for people who have low credit scores or limited credit history: Harley-Davidson Visa Secured Card is a “secured card”—cardholders deposit between $300 and $5,000 in a savings account with the credit card’s issuer. The amount deposited serves as the credit limit. Unlike many other secured cards, this one has no annual, monthly or account-processing fee. It even has a rewards program, though one that’s useful only for Harley fans. Cardholders earn one point per dollar spent. They can request a $25 gift card when they reach 2,500 points. The gift cards can be redeemed only in Harley dealerships or at the company’s online store (H-D.com/store). APR: 22.9%. H-DVisa.com
Chase Ink Cash Visa offers 5% cash back at office-supply stores and on cell-phone and Internet bills, on up to $25,000 spent per year…2% cash back at gas stations and restaurants, on up to $25,000 spent per year…and 1% on everything else, with no limit. Cardholders can earn a $200 bonus by spending $3,000 in their first three months with the card. Other small-business cards, including Chase Ink Plus, have slightly more generous rewards programs—but unlike Ink Cash, they charge annual fees. Rewards don’t expire and can be account credits or electronically deposited into bank accounts. APR: 13.24%. CreditCards.Chase.com
*Fees, interest rates and other details of programs change frequently.
