Last week, we discussed Shopping Dos and Don’ts for your credit health to keep up your credit score as you move into the holiday season of giving and spending. Unless you are going cold turkey on spending, chances are you will be gift-shopping, vacation-planning, and prepping for holiday festivities even before October hits.
If you’re in the market for new credit cards, we share our recommendations. The following cards require a good to excellent credit score (they offer premium terms, after all), and remember that when you apply for a credit card, the hard inquiry will ding your credit score a few points. If you know how to manage credit well, then these options will help you ring in a happier holiday season as you spend.
1. Best Balance Transfer Credit Card: Capital One Platinum Prestige Credit Card
The best way to save money on your current debt is to use a 0% balance transfer card, which allows you to transfer existing debt and carry it interest-free for a limited time. Capital One Platinum Prestige gives you a 0% intro APR until September 2011 and generously low 3% balance transfer fees (fees are typically 5%). While it also has 0% intro APR on purchases until September 2011, the optimal use of a balance transfer card is to pay off your existing debt during the 0% APR period without adding new debt.
2. Best Low Interest Credit Card: Citi Platinum Select MasterCard
If you’re doing heavy duty spending in the following months, getting a credit card with a low interest rate is your best bet to minimize interest costs. We recommend the Citi Platinum Select because it offers a 0% APR for 12 months on purchases, which means you’ll pay no interest on your coming holiday expenses. After that, the APR can reset to as low as 11.99% if your credit qualifies. However, a low-interest rate card shouldn’t encourage you to spend beyond your means; you are still paying interest, but a low-interest card helps you carry your balance. Also, watch out—just one late payment will cause you to lose your great rate and skyrocket to a penalty rate.
3. Best Rewards Card: Chase Freedom Visa
If you consistently pay off your credit card in full every month, you deserve a rewards credit card. It’s the best way to pay yourself back when you spend. A long-time favorite is the Chase Freedom Visa Card, which has a full 1% cash back on all purchases and an additional 5% cash back in popular, rotating categories. Plus, we love cash back credit cards amongst rewards cards, especially with Freedom’s no expiration on earnings, no spending tiers, and no annual fee. Chase kicks in an extra $100 if you spend $799 in purchases in your first 3 months. Be warned that rewards credit cards typically have high interest rates. They are most beneficial when you don’t carry a month-to-month balance, or else you’ll paying back in interest much more than you’ll be earning in cash back.
4. Best Credit Card Alternative: PerkStreet Financial’s Debit Card
PerkStreet is running the debit card market with one of the most rewarding debit card programs to help you avoid credit card debt blues. This is also a great option for poor-fair credit consumers because you don’t need credit to get a debit card, and also a smart alternative if you don’t have self-control with a credit card. PerkStreet offers 2% cash back (more than many credit cards) on all non-PIN purchases if your balance is above $5,000 (1% if under $5,000), and an additional 5% cash back at certain retailers. The account comes with free checking and free ATMS, and you can score cool stuff like coffee and music—but we say stick to the cash back so you can earn while you spend. However, a debit card can’t build your credit and help your credit score—but using one will keep you from falling into holiday debt hangover.
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