What is The Best Credit Card
I get asked “what is the best credit card” more than anything else and it is not an easy question to answer. But, I’ll try to answer it to the best of my abilities with some serious caveats, the first of which is my assumption that all credit card points from the big issuers are worth the same at around 1.7 cents per point.
Why There Isn’t a “Best Credit Card”
If I had my way, I would only have one credit card that offered the best bonus categories out there. Unfortunately, that just doesn’t exist and probably never will. When credit cards offer points in exchange for spending money with them, they pay for that. The American Express Platinum offers 5x points on all airfare and they do some fancy accounting and credit you 5 points per dollar while debiting another account for the value they’ve assigned to those points. They’re betting that you’re not like me and only have one or a handful of cards at most and use your Platinum for just about everything. If you use that card for anything else, they only have to give you point per dollar on all other purchases.
Now, American Express and every other card issuer out there gets paid a merchant services fee every time you swipe your card. This fee, along with your annual fee all go into the pockets of the card issuer. So to be profitable, they obviously need to take in more money than they are giving out in rewards.
To have a single card that offers the best bonus in every category would be extremely unprofitable for any bank. Unless there was a massive annual fee, I really don’t think this will ever happen. The amount of points someone could earn with a card like this would likely bankrupt them!
What Are the Best Cards for Each Category
My credit card strategy is designed to earn the most points possible for each dollar I spend relative to the annual fee. For instance, I could certainly earn more points on travel (not including airfare) by using the Chase Sapphire Reserve instead of the Sapphire Preferred, but I don’t spend enough on travel each year to justify the $155 difference in the two’s annual fees which are $95 for the Preferred vs $250 for the Reserve ($550 minus $300 travel credit). To make it worthwhile for me I would need to spend $10,130 on non-airfare purchases to earn more points than the $155 annual fee difference.
Airfare: 5x Points with the American Express Platinum
Hotels: 3x Points with the Citi Premier or Chase Sapphire Reserve
Restaurants: 4x Points with the American Express Gold
Supermarkets: 4.5x Points with the American Express Everyday Preferred on the first $6,000 spent when making 30 transactions per month. OR 4x Points with the American Express Gold
Gas Stations: 3x Points with the Citi Strata Premier
Rent: 1x Points with the Bilt Mastercard
All Other: 2x Points with the Citi Double Cash or Capital One Venture X
Now, there are a lot of caveats to this list like with the Chase Freedom Flex earning 5x points on rotating categories each quarter to getting new cards for the perks like a Priority Pass membership as well as huge signup bonuses like the American Express Marriott Bonvoy Brilliant card.
Earn Points to Fly on Emirates in First Class
How to Choose the Best Card
There are a lot of things to consider with choosing a new card but it starts with evaluating what cards you currently have. When you add a new card you need to think about the overlapping benefits with what you currently have and if it makes sense to add a new annual fee to the mix for similar if not the same benefits and perks. Does it make sense to add the Amex Platinum if you already have the Chase Sapphire Reserve? Depending on what you spend your money on: maybe, maybe not.
The Club at CLT, a Priority Pass Lounge
I’m a big fan of having multiple cards, and it can even help increase your credit score. The best solution is to have one of each card above and only use the one that gets you the most points at each merchant. However, I realize that can be overwhelming if you’re starting from 1 or even a handful of cards. I’ve been helping clients analyze their actual spending and make data driven recommendations on what card or cards they should get. This analysis takes into account their current cards, travel goals, as well as the individual perks of each card, the sign up bonuses and the annual fee.
The best way to approach it is to get the card that earns you the most points in the category you spend the most money on, then once you hit the minimum spending requirement for the welcome bonus, work your way to your next highest spending category and so on.
What Card I Recommend Most
As you can see, there really isn’t a one size fits all card for everyone. Each individual has different spending habits. Some people spend most of their money on dining and groceries, while others spend a lot on travel or shopping. When I work with clients on analyzing their credit card spend, the first thing I say is that I don’t care what you are spending your money on. My job is to help you earn the most points and miles on what you do spend your money on. Everyone I have worked with is different in that regard.
The one thing that everyone has to do is eat, whether that is dining out or going to the grocery store. Without looking at your personal spending, the American Express Gold is usually the one card I can recommend as it gets 4x points on restaurants (up to $50,000 of spend per year) and 4x points on supermarkets (up to $25,000 of US supermarket spend per year). More caveats with this one though: the $250 annual fee. While there is a $325 annual fee, the card does offer $424 back in statement credits in the form of a up to $10 Uber/Uber Eats credit each month as well as a up to $10 dining credit per month, up to a $7 per month Dunkin’ credit, and up to a $100 annual Resy credit. If you prefer to cook at home, think delivery is a terrible value (which it is), or just forget to use your credits, the math changes on what the best card is. Also, for the newly initiated points aficionado, $325 is a lot to stomach just for the privilege of spending your own money.
The American Express Gold is best for those of us who eat food
The Most Well Rounded Card
For those just starting their journey into the points and miles game I would consider two cards if you want a catch all in terms of earning transferable points. Both of these have extremely well rounded bonus categories as well as relatively low annual fees. These are in no particular order.
Chase Sapphire Preferred
This was my very first travel card that earned transferable points and I’ve held on to it all these years. While I don’t use this much anymore as there are better cards out there, I keep it around to act as a ‘hub’ for my Chase Freedom which earns 5x points on rotating categories. Additionally, since I opened this card so long ago it helps my credit score as part of your score is based on your age of credit.
5x points on travel booked through the Chase Travel Portal.
5x points on Lyft rides.
3x points on dining.
3x points on online grocery stores
3x points on select streaming platforms
2x points on travel
Foreign Transaction Fees: None
Annual Fee: $95
Citi Strata Premier
The Citi Strata Premier is one of the most underrated cards out there. I think that is because Citi doesn’t currently have a super premium card out there catering to the traveler that gets you lounge access and a host of other perks (RIP, Citi Prestige which I still have and love but is no longer open to new applicants). Additionally, Citi’s transfer partners aren’t as appealing to the average consumer as Chase or American Express with no domestic airline transfer partners (outside of JetBlue).
3x points on airfare.
3x points on hotels.
3x points on gas.
3x points on dining.
3x points on grocery stores.
Foreign Transaction Fees: None
Annual Fee: $95
Wrapping Up
There is no one size fits all approach to picking a credit card. So much needs to be considered to get the best bang for your buck when it comes to bonus categories and justifying the annual fee. Without knowing what you spend your money on individually, it is difficult to recommend one card versus another. However, you really can’t go wrong with the Chase Sapphire Preferred or the Citi Strata Premier.
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