Best credit cards of 2017 depends on how you spend

Playing credit card roulette has become a sport for deal seekers, as issuers pile on the incentives. “The competition is intense, the rewards just keep getting better,” said Lisa Gerstner of Kiplinger.com and the Kiplinger Letter. “The six largest credit card issuers are spending twice as much on card rewards as they did in 2010.”

Reading Gerstner’s report (“The Best Rewards Credit Cards, 2017”) and another in the September 2017 issue of Consumer Reports (“How to Cash In on Cash-Back Credit Cards”) might be dizzying.

Both suggest there is no easy way to determine “the best card.” Marketers shape cards to appeal to special interests and habits. So a responsible card rater must do the same, taking into account how you live and what your needs and interests are, and then calculating the payback based on your spending. Are you a single male or female professional who eats out and travels for work or pleasure? A family of four that spends heavily on groceries and gasoline? Retirees on a budget?

Also — have you the perseverance to “game” the system — signing up for deals, and then getting out as the “free introductory year” ends? While never forgetting to pay your card on time?

“The interest rates on reward cards can be as high as 25 percent,” warns Queen Village-based CPA Steve Ramm. “If you don’t pay punctually, you can quickly wipe out all the money saved by using those cards with ‘cash-back’ rewards and no annual fees, which are the generally the best deals, in my book.”

Cashing in

Consumer Reports found that users can earn up to 40 percent extra cash back by strategically using two cards instead of one. So where to start?

Almost every financial “authority” loves the Citi Double Cash MasterCard. Users earn 1 percent per purchase, and then another 1 percent when you pay the bill (on time) for a total of 2 percent, returned as a check, bank account credit (Citi or another), or gift card.

Kiplinger also top-rates for “savers” the Fidelity Rewards Visa Signature Card, paying 2 percent on all purchases. Its hook? Money is deposited into an eligible Fidelity Investments account (or up to five) including brokerage, retirement, 529 college savings, and even a friend’s or relative’s account.

Splitting the difference

As your cards proliferate, you may need (as Ramm does) to put notations in marker or sticky tape on the back of each to keep the incentives straight.

The free Citi Costco Anywhere card earns 4 percent cash back on the first $7,000 in gas purchases, 3 percent on restaurant and travel charges, 2 percent at Costco/Costco.com. Everything else is 1 percent.

American Express Blue Cash Everyday (its no-fee card) offers 2 percent back on grocery bills totaling up to $6,000 annually. (Superstores such as Walmart and Target don’t qualify. I use the latter’s house brand card for 5 percent off every day on every item.) Gas is 2 percent back, everything else 1 percent.

The AMEX Blue Cash Preferred card raises the grocery kickback to 6 percent and does 3 percent at select department stores and gas stations, but costs $95 annually.

Travel rewards

We’ve heard of people going around the world on the bonus miles from travel-centric charge cards.

The free BankAmericard Travel Rewards Visa card offers new customers 20,000 points when you spend $1,000 in the first 90 days.

The free Discover It Miles calculates 1.5 miles per dollar on all purchases, with miles doubling the first year of use.

Among cards with fees, Kiplinger is high on Barclaycard Arrival Plus World Elite MasterCard, delivering 50,000 bonus miles when you’ve spent $3,000 on the card in the first 90 days, with its $89 annual fee waived the first year. The newsletter also touts the Chase Sapphire Preferred Visa, which comes with a 50,000-point signing bonus when you spend $4,000 in the first three months. Chase calculates 2 points per dollar spent on travel and dining.

Cautionary notes

Ramm suggests that travel cards are overrated once the honeymoon is over as you’re paying “retail value in points for airfare and hotel rooms that could otherwise be purchased for a lot less” and leftover points are “useless.”

Kiplinger’s Gerstner warns against signing up for lots of bonus-points-endowed cards and then canceling, as “that negatively affects your credit rating for a while, remaining points in your account expire. Chase is well-known for the “5-24” rule. If you’ve applied for more than five cards in the last 24 months, they might reject you.”