What to Look For In a Credit Card

Before I start jumping into credit card recommendations, I wanted to explain what you should be looking for in a credit card. "Ryan told me to get this one", while flattering, is not an acceptable reason.

Again, if your plan is not to pay the bill in full, then I'd suggest stopping here and go back to your debit card. Banks are counting on you not to pay your bill in full, which means they can charge you high interest rates, ultimately making you pay more for your expenses and negating any purpose of credit card rewards in the first place.

With that in mind, this is what to consider:

The annual fee

I only have one card with an annual fee, and the perks make up the difference, but that is the lone exception in my wallet. I don't think any assistant really needs to spend any money out of pocket on annual fees for a credit card unless you can truly justify the perks. 

Foreign exchange fees

If you're going to travel abroad and are new to the credit card game, I'd look for a card that doesn't charge you fees to use it internationally. Sometimes it can't be helped, especially if it's a card you like, but those foreign exchange fees can add at least 1% to 2% on purchases, and you have nothing to show for it; it's just a cash grab. 

Side note: if you're in a foreign country and you're given the option to charge your card in US Dollars instead of the local currency (or in credit card terminology, dynamic currency conversion), decline; the foreign exchange rate here is generally worse, and if you use a card that has foreign exchange fees, you'll still be hit with those fees. You're better off taking the rate your bank gives you.

MasterCard, Visa, Discover, or American Express

These are the four big processing networks where merchants tell banks to charge your credit card. 

For the most part, it doesn't matter, although American Express and Discover are accepted in fewer places, especially internationally, compared to Mastercard and Visa. 

My view is that you should have at least one MasterCard and one Visa at some point in your life. However, there are a few things I should mention:

1. Costco famously only accepts Visa in stores, although you can use MasterCard and Discover on their website.
2. I have read that foreign-issued Visa cards may not work when trying to reload train passes in Japan, although MasterCards and American Express cards do.
3. Discover cards do work in Japan if the merchant accepts JCB (Japanese credit network), and in China if a merchant accepts UnionPay (Chinese credit network, which is the #1 payment processor in China), although you'll have to convince the merchant it will work.

Cashback or Points?

There are two schools of thought on this, and what is likely one of the more important questions you'll have as you consider credit cards.

With cashback, you earn a certain percentage of your transaction back in cash, which at some banks can be converted to rewards points. That said, cashback is yours to use, period. No hoops to jump through, and it's instantaneous. If you're someone who's not a huge traveler or wants immediate gratification of extending your budget (especially as an assistant), cashback is probably the better option for you.

With points, you earn a number of points per dollar, which you can use to make travel arrangements (or redeem for other things, although generally, travel is the best value). This will involve research and figuring out when, where, and how to redeem your points. There are countless websites about how you can make the most of these, but in short, if you're looking to travel, make your dream vacation come true, and be patient, I'd consider these.

I have a mix of credit cards that use both systems, which I think allows me some flexibility. I must admit how nice it is to get cashback at the end of the month for my grocery purchases and then sending it to my checking account, although on the other hand, I'm trying to plan a spur-the-moment trip to France and I somehow may have enough points to cover the trip (probably in economy, so don't get too jealous).

The highest I've seen for most credit cards is the rewards rate of 5%/5x, up to a certain monthly or quarterly limit. The lowest I've seen is 1% cashback or 1 point per dollar, which you can do a lot better on.

How Do I Spend My Money?

Take a look at your most recent expenses and see where you spend the most money. Most credit cards will give you higher amounts of rewards for certain categories (like restaurants, and groceries). If you're willing to track your rewards and be mindful of rotating categories on certain cards, you can find ways to make this system worth your while. Otherwise, you should get a credit card that gives the same amount of rewards for each purchase (generally 2%/2x).

In Closing

What works for me may not work for you, and I advise you not to apply for credit cards in quick succession (which looks really bad for your credit report). I've gotten my cards through years of maintaining excellent credit, paying bills on time, being mindful of my shopping habits, and learning how to play the rewards game. In theory, banks should hate me because I don't pay interest or late fees. They do make money by taking a cut of every transaction I make, but I'm gleeful that I'm beating the banks at their own game.