It’s that time of year where I generally check my credit scores, reevaluate the credit cards in my wallet, and start to think about these tiny rectangles of plastic that hold so much power. A question we’ve been asked a few times at Classical Singer is what credit cards are best for singers, and the answer is. . . none. There’s no one great card for a musician, any more than there’s one great card for any general demographic. It would be like asking for one standard stuffing recipe come Thanksgiving.
But what we can do is break it down into some more digestible chunks, focusing on several aspects of the average singer’s life and career. But keep in mind that these may not be ideal choices, although they can all serve as strong jumping-off points for your own credit match. For my money, I’ve become quite enamored with the Amazon Rewards Visa, which doesn’t rank particularly high on any professionally vetted list, but serves me well for the Amazon credits I rack up when I use my card. Knowing that much of my money goes toward Amazon anyway—and knowing that I can buy just about anything I need on the website these days—means I’m aligning my spending habits in a way where it’s a win-win. For some other winning matches, read on.
If you’re an undergrad, chances are you’re probably shopping for your first credit card. This is both a plus (a clean slate and a chance to build up a strong credit history) and a minus (credit card interest rates are never terribly kind to students because of your nonexistent credit history). A consistent favorite among financial experts is the Citi Forward Card for College Students, which tailors its rewards points to many students’ spending habits: Five ThankYou points for every dollar spent on entertainment—a broad category that includes bookstore purchases and Starbucks visits—and one point for every other dollar spent. Additionally, there’s a 100-point bonus awarded every month that you pay your bill on time and stay within your credit limit.
There’s an annual cap on 75,000 points, but the least you could spend to meet that limit is over $14,000 per year. Likewise, as is the case with many point redemption programs, you would be able to purchase most rewards offered at a lower cost. Where Citi Forward also earns high accolades is in its 0 percent introductory APR for the first 7 months and no annual fee. After the introductory period, depending on how wisely you spend and pay your bills, your APR will hover between 13.99 percent and 23.99 percent, and for every three months that you stay below your limit and pay on time, they will lower your purchase APR by up to 2 percent each year. While your rewards aren’t the best in the marketplace, the perks you get for responsible spending and payments are an ideal way to build your credit history.
If your college days are behind you but your wallet still lacks for plastic, the Capital One Cash Rewards for Newcomers is a good test model. Think of it as the used car you buy when you’re 16 to practice with before you buy your first brand new car in your 20s. There’s a 2 percent cash back perk for travel-related purchases and 1 percent on everything else. It’s small, but it adds up over time—paying for a night at the movies every year or so. An uncomplicated rewards structure is a great entry into the myriad benefits offered by the big-gun credit cards—and while the lack of an annual fee may entice you to stay loyal to this card for a while, its high APR (24.9 percent) means you’ll want to use this one for a year or so at most, build up a good history, and then transfer to another provider with better rates.
For Frequent Fliers
A favorite of many is once again Capital One, which boasts both the Venture and the VentureOne card. The former comes with a $59 annual fee that kicks in after the first year. The VentureOne card offers no annual fee and 1.25 miles credited per dollar of every purchase. Apart from that, the perks are identical, chief among them a one-time bonus of 10,000 miles if you spend $1,000 in the first three months. This gets you $100 in travel. Your miles can be redeemed for any travel expense, and there are no blackout dates, no cap, and no expiration date—and you can redeem your points with any airline. For the VentureOne Rewards card, there is a 0 percent APR introductory rate currently until December 2013, whereupon the APR varies between 11.9 percent and 19.9 percent. Its counterpart’s APR is between 13.9 percent and 20.9 percent. If you plan to spend in the range of five figures each year, the perks outweigh the fees on the Venture card. Otherwise, the VentureOne card will do you just fine.
If you prefer to divert your loyalties and rack up more sign-on bonuses, the Chase Sapphire Preferred card is a handy alternative if your credit is faultless. They offer up 40,000 bonus points if you spend $3,000 in the first three months (which equals about $500 in travel costs), give two points per dollar spent on travel and restaurants, and one point per dollar on all other purchases, and they offer a 20 percent discount on travel booked through Ultimate Rewards. Be prepared to pay for these perks, however, as the annual fee (following a free introductory year) is $95. If you’re a very frequent traveler, this could end up balancing out. But if you are more firmly rooted to one place at this stage in your career, you may be spending more than you need (especially with a 15.24 percent APR that can go as high as 29.99 percent).
Alternatively, if you can afford the brand loyalty when it comes to airlines or hotels, a credit card linked to one particular company can reward you for consistency. American Express wins out in this category with the Gold Delta SkyMiles card. Again, for frequent travelers, the $95 annual fee (which kicks in after the first year) can be easily subsidized with a few transatlantic flights. If you spend $500 on the card within your first three months of membership, you’ll earn 30,000 bonus miles and then will otherwise earn double the miles on Delta purchases and one mile for all other “eligible” dollars. There’s also free checking for your first bag, priority boarding, 20 percent off of in-flight food and entertainment, and the occasional promise of an upgrade. Your airline loyalty is probably as unique as your spending habits, but Delta is a safe one to align with for the number of destinations, frequency of flights, and generally solid prices. If you can’t afford to stick to one airline yet, however, don’t. You can always switch over later.
If you are serious about making your art a business (as all of you should be), or perhaps if you run a boutique company or voice studio on the side, making your business the primary focus of your credit can come in handy when it comes to paying the bills and handling expenses. Chase Ink tops a number of lists for its lack of annual fees and big payouts on small business purchases. Chase Ink Classic will reward you with travel (2 percent rewards on gas and hotel expenses) and telecom and cable services, and 5 percent on office supplies and your phone-Internet-cable bills—on the first $25,000 spent annually in each category. You can gain free airport lounge access and earn rewards in the form of gift cards that go toward a number of useful items like TurboTax software. There’s also a $200 cash back bonus if you spend $3,000 in the first three months.
Chase Ink Cash gets more to the point with payouts in cash versus the Classic’s Ultimate Rewards Points system, and the 2 percent rewards apply to gas and dining rather than gas and lodging. You also miss out on airport lounge access, though that alone shouldn’t be a deal breaker. And if you find yourself using your kitchen cabinets to store scores and you have your favorite restaurant’s take-out menu memorized, earning cash back on your meals out is a bold benefit. When it comes to cash versus goods, a safe bet is to always take the cash.
The savings on a Blue Cash Preferred Card can net you $384 in rewards (following a $75 fee) yearly, according to NerdWallet.com, which cites the American Express Blue Cash cards as its top pick for families. Where they pay out big is on purchases at “U.S. standalone supermarkets,” which means that your Stop & Shops, Trader Joe’s, and the like will earn you 6 percent cash back on up to $6,000 spent (the cash back drops down to 1 percent thereafter). If you prefer to source your groceries at Costco, you’re out of luck. Still, for any family of two or more people, you know how quickly that $6,000 can add up, and 6 percent of that on its own is $340. There’s also 3 percent cash back offered on gas and department store purchases.
You can also hack the system a bit and rely on your grocery store (if it’s big enough) for other purchases. Trader Joe’s sells reasonably priced wine and beer, most large chains have walls of gift cards to everywhere from Starbucks and Amazon to Barnes & Noble and iTunes. The cash back can be redeemed as a statement credit, which is perhaps the wisest way to spend your cash back rewards anyway—and if you spend $1,000 within the first three months of membership, they’ll kick in another $150 reward dollars. The trick here is to know what AmEx counts as grocery store or a department store (Amazon falls into the latter category), and to comb through those details thoroughly before you commit to signing up. Here is an object lesson in conscious shopping in order to maximize your benefits.
If you are trying to rebuild bad credit, you have my sympathy. You’re going to have to grit your teeth and accept some harsh rules while you get your credit score back up to snuff, and rewards should be the last thing on your mind right now. There are very few deals that you can expect, and if a card company tells you no credit check is required or that their APR is more than 30 percent, then run away!
Consider going the route of a secured credit card, such as the Capital One Secured Master Card, which requires a security deposit—between $49 and $200—that then determines your spending limit, starting with $200 monthly. The annual fee is a reasonable $29, and your APR will sit at 22.99 percent. It’s not great, but it’s a good start, and you have the backing of the Capital One name versus some more dubious companies that solely provide offers to those with credit issues. Creditnet.com, a favorite resource for all things plastic since 1995, has voted this the best card for improving your credit for 2013.