Even if you’re a cheap­skate, there’s a credit card for you

The Charlotte Observer (Sunday) - - Business - BY GRE­GORY KARP As­so­ci­ated Press

Cheap­skates and low spenders aren’t the ideal credit card cus­tomers for banks be­cause they’re typ­i­cally not as prof­itable as fast-swip­ing spendthrifts who rack up fi­nance charges. Still, banks of­fer credit cards with fea­tures that can fit well into a fru­gal life­style.

Some penny pinch­ers pre­fer pay­ing only with cash, es­pe­cially if they think the pain of hand­ing over dol­lar bills in­stead of plas­tic helps to rein in spend­ing. But credit cards can have ap­peal for their abil­ity to help build credit, along with the al­lure of get­ting some­thing for noth­ing with re­wards cards.

There’s no such thing as a “best” credit card. The key is find­ing one that fits your spend­ing habits – even if your habit is to spend lit­tle, ex­perts say.

“If you look at dumb things that smart peo­ple do, that’s one of them – get into a prod­uct that’s not for them,” says Paul Golden, spokesman for the Na­tional En­dow­ment for Fi­nan­cial Ed­u­ca­tion. “Peo­ple who live more on the fru­gal side tend to be much more thought­ful and cau­tious about how they’re us­ing credit. So they’re re­ally go­ing to be look­ing at the fea­tures of a card.”

Four-per­son U.S. house­holds an­nu­ally spend an av­er­age of about $80,000, ac­cord­ing to the U.S. Bu­reau of La­bor Statis­tics. Much of that can be charged to a credit card.

But what if you spend nowhere near that much?

Here are credit card fea­tures that may ap­peal to low spenders:

No an­nual fee: Many cheap­skates might find pay­ing an an­nual fee for a credit card too much to stom­ach when so many cards, even ones with com­pet­i­tive re­wards, charge none. That’s es­pe­cially true if they’re us­ing a card in­fre­quently, Golden says.

Re­wards on prac­ti­cal spend­ing: Re­wards cards are good for peo­ple who pay off their monthly credit card balances in full. That prob­a­bly de­scribes cheap­skates. And be­cause fru­gal types don’t do much dis­cre­tionary spend­ing, they’ll likely pre­fer re­wards cards that give ex­tra points for ev­ery­day spend­ing.

Cash-back re­wards: A fru­gal life­style of­ten means a sim­ple one, which jibes with easy-tounder­stand cash-back re­ward pro­grams, as op­posed to com­pli­cated points and miles sys­tems. In a re­cent J.D. Power study, 36 per­cent of credit card cus­tomers said they don’t fully un­der­stand the re­wards avail­able to them. Cash-back cards rack up re­wards in the most straight­for­ward and use­ful way.

No spend­ing tiers or re­demp­tion thresh­olds: Card is­suers some­times pro­vide re­ward in­cen­tives to spend more. But low spenders will have trou­ble meet­ing spend­ing thresh­olds to get bet­ter re­wards and sign-up bonuses. And some cards have a min­i­mum amount for re­deem­ing points.

Re­wards not tied to a brand: Cheap­skates typ­i­cally aren’t brand loyal; they like to shop around for the best deal. So credit cards af­fil­i­ated with brands aren’t likely a good choice be­cause op­ti­miz­ing them re­quires spend­ing heav­ily with that brand.

Bank loy­alty re­wards: Some cards is­sued by large banks give out­sized re­wards to card­hold­ers who keep piles of money in the bank’s check­ing, sav­ing and in­vest­ment ac­counts. Be­cause stash­ing money in the bank is a cheap­skate’s go-to move, it’s a win­ning fea­ture.

High in­ter­est rates: No­body prefers high in­ter­est rates, but fru­gal­is­tas who pay their monthly balances in full won’t pay fi­nance charges, so they don’t care about cards that have high rates.

Bud­get­ing tools: Us­ing a credit card for most pur­chases means you can eas­ily ex­am­ine your spend­ing by read­ing your monthly state­ment.

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