This week, I’m sharing my favorite personal banking tips with you.
Let’s get to it.
When my book was originally published, I named names. This is why some banks will never, ever partner with me. Oh well!!
My old favorite credit card: Citi PremierPass card
Anyway, in the first chapter on credit cards, I shared the details of my favorite credit card at the time: the Citi PremierPass card. In fact, I had used it as my primary credit card for several years and recommended it to hundreds of thousands of people.
That’s changed now.
Citi tightened up on its credit-card lineup, dropping several of their most compelling rewards. This was highlighted in a devastating column in the New York Times.
Hilariously, Citi actually mailed out a note to cardholders trying to spin the reduction of benefits into something like ‘exciting new features’ — but it was obvious to anyone with a pulse that the most compelling rewards were being removed.
And so I began an exhaustive search for a new credit card. Because I spend a significant amount on my credit card, I expect significant rewards. Also, I consider it a fun game to find the 99.99999th percentile best card in the world. This is why women find me irresistible.
Today, I’ll share my new favorite credit card. I consider it the best credit card on the market — even better than my old Citi card — and in addition to using it myself, it’s the card I’m recommending to my readers.
First, 6 rules about credit cards
- Interest rate doesn’t matter if you don’t carry a balance. The interest rate is irrelevant, as long as you’re paying off your entire balance each month. Don’t keep a balance, please – if you are, stop reading now and use my credit card payment calculator to pay it down quick.
- Use a rewards card. The vast majority of people should use a rewards card. If you’re already spending money, you should be rewarded for it. Exceptions are people who can’t qualify, who should instead use a secured credit card.
- Travel credit cards are better than cash back. Most people would benefit more from travel rewards than from cash-back. I describe the details why travel credit cards are better here. For some reason, people get really mad when I make this recommendation, but I don’t care.
- General rewards cards are better than airline-specific cards. Unless you fly a majority of flights on the SAME airline, I prefer a general travel card instead of an airline-specific card (like a United card). For example, I fly Jetblue and Virgin a lot, so I want a travel card that I can redeem on multiple airlines, not just one.
- Annual fees are not Satan’s spawn. I know it may be blasphemy to personal-finance “experts,” but I’m willing to pay an annual fee for my credit card! OMG! This is why you can call me RTR: Ramit The Rebel. In some cases, there are no-fee versions of the card, so you should always calculate if you spend enough to justify it. Still, $65/year is just not that significant to my financial situation any more.
- I am merciless about using my credit card perks. Credit card benefits can easily be worth $1,000/year. DO THIS.
What I want from the best credit card
My bottom line is this, the best credit card is the one that gets you the most free flights and free hotels. For example, I want a card that rewards me when I go on vacation, travel for friends’ weddings, or travel between NYC and SF.
Alternatively, I want to upgrade to business class when I travel abroad.
And I don’t want to be nickel-and-dimed for idiotic things like blackout dates, penalties, and fees.
So with that in mind, here is…
The best credit card for 2016
The best credit card for 2016 is the Starwood Preferred Guest® Credit Card from American Express.
When I first discovered this card, I actually wasn’t sure how many places accept AMEX. But after using the card for nearly a year, I’m happy to report that I use my AMEX 95% of the time. (I always carry a Mastercard or VISA backup, just in case.)
This is the best travel card on the market. Here’s why:
4 Starwood perks that matter most
- Flights + hotel points: Whenever you spend money, you earn points, which you can redeem for flights (on virtually airline) and hotels (in the Starwood program)
- Flights: The Magical 25% bonus. Let’s say you redeem 20,000 Starwood points to your American Airlines frequent-flier program. Starwood will give you a 25% bonus — that’s 5,000 points — which is a HUGE bonus to get free flights faster. This is worth a ton in free flights.
- Hotels: You can stay at hotels for just 2,000 points, which is great if you just need a basic place to stay. But if you want ultra-luxury, Starwood has top-of-the-line properties (including the St. Regis and even higher-end resorts) that will accept your Starwood points. Here are the cheapest hotels and most expensive.
- Customer service: I fanatically test the customer service of companies I work with. My goal is for them to call me a diva in writing. I opened a second Starwood card (biz + personal) and somehow, they didn’t connect the card to my Starwood account. That meant that I had lost something like 15,000 points over the last few months. I sent them an email and a few hours later, they said, “We’ve retroactively applied your points.” Done. I love it.
- Starpoints® bonus: earn up to 25K bonus points — 10K with your first purchase and another 15K when you spend $5K within the first 6 months of Card membership – enough for a weekend getaway to a Category 4 hotel like the Westin Savannah Harbor Golf Resort & Spa
- Free Hotel Nights: redeem Starpoints at over 1,100 hotels in over 100 countries worldwide — with no blackout dates
- Earn 2 Starpoints® for each dollar of eligible purchases charged directly with hotels and resorts participating in the SPG® program
- Earn 1 Starpoint® for each dollar of eligible purchases
- $0 introductory annual fee for the first year, then $65
- Terms and Restrictions Apply.
My final test was this: The world’s best consumers of credit cards are management consultants at firms like McKinsey, Bain, and BCG. That’s because basically the only thing these consultants care about is points. Many of my friends have over a million points and are anal — even more than I am — about their choice of cards.
They love their credit cards more than their girlfriends! True.
I know a bunch of friends who work at these places, and every one uses this card. DONE!
Downsides with AMEX credit cards
Few things here.
One negative thing is that AMEX isn’t always accepted (it is about 95% of the time in NYC, less so elsewhere), so I have to carry a backup Mastercard/VISA.
Second, not everyone qualifies for AMEX. They are stringent about who they accept so you may be rejected.
Third, they give you a low credit limit. You can request a credit-limit increase in 60 days, then 6 months later, so if you do get this card, set your Google calendar reminders. (How I got around this: I paid it off multiple times/month so I could spend what I needed to.)
Places to read about this Starwood card
You should always do your own research. Here are 2 places to see what others have said, as well as understand the perks/rewards in great detail.
Other travel credit cards I recommend
I know that this card isn’t for everyone.
That’s why I turned to one of my friends, Chris Guillebeau to get his other top 3 favorite travel credit card picks.
Chris has traveled to 193 countries (yes, that’s every one of them) and he regularly earns more than one million miles a year, with the majority coming through credit card bonuses and other non-flying activity. One reason he was able to do this is because half of his trips were nearly free — all paid for with miles and points from his rewards credit cards.
Here’s everything you need to know about travel credit cards. If you just want the highlights, keep reading.
1. Chase Sapphire Preferred® Card
First up is the the Chase Sapphire Preferred® card.
What Chris loves about this card:
- Double points on all dining and travel expenses.
- No foreign transaction fees.
- You can get the annual fee waived the first year — so it makes signing up a no-brainer.
If you don’t have it already, now’s the time to get started.
2. The Chase Freedom Unlimited (SM)
What Chris loves about this card:
- When you spend $500 in the first three months, you instantly get $150 cash back
- No annual fee — ever.
- Unlimited 1.5% cash back on all purchases.
3. The Platinum Card® from American Express
What Chris loves about this card:
Even though this card comes with a steep $450 annual fee (that can’t be waived), it comes with a TON of great benefits for heavy travelers including:
- Lounge access in the U.S. and throughout the world.
- $200 credit that can be used for airline extras on any carrier.
- Reimbursement for your Global Entry application.
- No foreign transaction fees on any purchases.
Want more? Here’s everything you need to know about travel credit cards, or head over to Chris’s site, Cards for Travel, for more info on of any of these cards and more travel tips.
Other credit cards I recommend
If you are a weirdo and hate traveling, (1) get a life, and (2) the best cashback card is the Fidelity 1.5% cashback card. I have one of these, but only use it as a backup. Starwood is my primary.
Should you keep your old credit card?
My recommendation: If you’re looking for a good credit card, apply for this and if you get accepted, KEEP YOUR OLD CARD (don’t close it, which will negatively affect your credit). But start transitioning your auto-pays to this card and start accumulating miles.
Your goal should be to get at least 3 free hotel stays this year, but most of you will be able to do much more than that.
If you want my favorite credit card
If you’re interested in getting this card, here’s a link to see if you’re approved.
Depending on their offer, you can usually get 10,000-30,000 points upon signup.
Example: Up to 25,000 Starpoints (use, e.g., for 2 free nights at a Category 5 Hotel like the Westin Maui Resort & Spa or Le Parker Méridien New York).
P.S. I have a few special, obscure tools I use with my credit card to optimize the experience. I’ll write about those in the future.
Tomorrow, the best savings account for 2016.
Bonus: Get more exclusive Credit Card perks
You can now get a full chapter of my New York Times bestselling book, I Will Teach You To Be Rich, on optimizing your credit cards for free.
It’ll help you tap into even more perks, max out your rewards, and beat the credit card companies at their own game.
I want you to have the tools and word-for-word scripts to fight back against the huge credit card companies. To download it free now, enter your name and email below.