Current Best Cash Rewards Credit Card (In the US, 2010)

Here is my situation, I think it will help a lot of other young people here:

I'm a senior in college (age 21) and I have been using a Bank of America Student Card for ~5 years. I have built up great credit, and I think I'm overdue to enter the world of reward based credit cards. I am not intending to carry any balance from month to month, so I will consider APR/interest rates pretty much irrelevant for this post. (For those that might not know: All of that APR bullshit only applies if you don't pay all of your balance each month. If you can't afford to pay it all, you can make the "minimum payment" on what you owe that month, and pay interest on the difference. Note, that compiling credit card debt in this fashion is how people screw themselves over. Pay it all on time, and credit cards will be your best friends with benefits .)

Here's what I have learned so far:
The choices below are the two best choices for people in my situation, namely they want maximum cash back benefits, but are not very concerned with travel benefits.

The Discover More Card

Positives: No Annual Fee. There are rotating categories of 5% cash back on things like Gas, Restaurants, Movies, etc. In addition the card gives 5%-20% cash back on extensive list (~150) of online retailers. Some of interest to this forum would be like Brookes Brothers 5%, Saks Fifth Ave 5%, Armani Exchange 5%, Bannana Republic 5%, Puma 10%, Ralph Lauren 5%, 7 for all mankind 5%, Jos A Bank 5%, and many many more (JK on Jos A Bank being liked here, but its still 5% off ). In addition, you can more than double cash back by converting it to gift cards at a smaller, but still significant list of venues. To sweeten this even further, Discover is offering a $75 rebate if you spend $500 in 3 months for new card members.

Negatives: Discover is less widely accepted than Visa/Mastercard. You have to re-sign up for the rotating rewards program each quarter to participate (but points never expire, and I'm pretty sure this doesn't apply to the online merchant 5%-20% off program). Baseline cashback on all purchases before hitting 3k total spending is 0.25%. There is a 2% fee on purchases made outside of the US.

Summary: Very Nice!!! Lets see what Chase has to offer.

Decent Summary (with merchant list):
http://www.askmrcreditcard.com/disco...tinumcard.html

The Chase Freedom Visa/Mastercard

Positives: This is Chase's competitor to the Discover More Card. It's accepted at more locations than the Discover More Card (Not sure how important this is yet). It has many of the same perks, but no additional ones. Chase offers more online merchants places with cash off greater than 1% than Discover, but the % off tends to be 5% or less (Where Discover is 5% minimum), with almost none exceeding 10%. Yoox is 5% off, Brookes Brothers is 2%, Banana Republic is 4%, J. Crew is 2%, Ralph Lauren is 3%, Saks Fifth is 5%, etc.

Negatives: Does not offer the feature to convert points to gift cards which can more than double their value at certain locations.

Summary: Overall, the discounts and cash backs are excellent, and the baseline cash back is greater than what Discover offers. Unfortunately, the difference between 0.25% and 1% on general cash back b/w the discover and chase cards is not very significant, because this is not the true value prop of these cards (which is discounts in the 5-20% range). If you are spending enough for the 0.75% margin to matter, you'd do better with a card out of this spending range.

Decent Summary (With Merchant List):
http://www.askmrcreditcard.com/chasefreedomcard.html

Current winner for me is the Discover More card

While Chase offers a much larger selection of merchants, I don't think it will pay off for me. With the beginning of the semester approaching I will definitely spend $500 in the next 3 months (Books, Booze, and other personal rewards for finishing the MCAT). The $75 translates to 15% back on that $500. I am also not frugal enough in my spending to consider 0.75% a worthwhile advantage for baseline returns with Chase (The next $10 impulse buy I make will more than negate the extra 0.75% from $1000 spent on the chase card). The best long term option is to get both and use whichever has the best deal going for each individual purchase, but I'm not going there (Yet).

So those are my thoughts, and I'll probably apply for the Discover card this afternoon. If anyone has anything to add, I'd love to hear it.

Also consider:

American Express Blue Cash

up to 5% cashback
- No Annual Fee
- Competitive APR 9.24%
- Double warranties on all purchases
- 90 day accidental damage/lost/stolen insurance
- In-house Return Policy
- Awesome Customer Service

IMO one of the top credit cards

Best rewards card for travel is Amex Starwood Preferred guest

I rarely see places that accept Discover now. I would not get that as a primary card.

The % off for cash back would only be helpful if you can get that on top of other cash back sites like ebates. I'm guessing you have to enter through the card's online portal to get that, so it doesn't seem like anything special. If you have a b of a card already, they have their own cash back portal for online shopping sites.

If you shop at Costco, or are planning to, the Costco Amex card has good rewards from what i recall. I'd do that or the blue amex.

Read the fine print on a lot of the big rewards cards...often it only kicks up to the full % after an annual spending limit (that you probably won't hit as a college student).

I am sort if indifferent on cashback cards. Sure, its better than nothing--although really you are just contributing to price increases since Visa/MC reward cards cost more than regular Visa/MC (amex cards all process at the same rate though).

I would rather get something cool than an insignificant statement credit...free hotel stays or free flight upgrades sound like a better deal even if the payoff is only the same %-wise (though people who game the Starwood card tend to get far more than one penny per point). A vacation is a nice perk (and forces it to be used in a nice way) while the miniscule cashback will just get absorbed into your monthly payments and you will never see the benefit.

Of course if your spending goal looks like $500 in 3 months...you won't earn **** so maybe you should just wait for a good sign up promo and for your spending to increase. The SPG amex recently had a promo that gave you 30k points if you spent $1000 in 3 months...30k points gets you a few nights in a nice hotel, more nights on cash+points or 35k AA miles (5K bonus for every 25k...and this is easily a domestic flight).

Edit: Don't forget about the Schwab card...2% across the board but it has to go into a schwab brokerage account (you are free to then transfer it out). Fidelity used to have one too but you can't get it anymore. 2% without a spending floor is pretty good...but still insignificant and won't even be noticed on your monthly bills (you might be better off *keeping* it in the brokerage account in the form of a roth IRA...then at least you are passively filling your retirement account)

Originally Posted by thiefclothes

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Also consider:

American Express Blue Cash

up to 5% cashback
- No Annual Fee
- Competitive APR 9.24%
- Double warranties on all purchases
- 90 day accidental damage/lost/stolen insurance
- In-house Return Policy
- Awesome Customer Service

IMO one of the top credit cards

This is what I use also. The only reason why I got an Amex blue card was to by John Lobb shoes at Neiman Marcus. Now I use it as much as I can. Only drawback is that a lot of places don't accept Amex so I still use my BoA Visa cash back card occassionally which only earns me 1% back.

Ive been really happy with Chase Freedom-- using their points-- 1% on general, 3% on top three categories each month, and when you build 200 points, you can redeem for a $250.00 check.

Ive been shocked at how fast this adds up when youre using the card for as much as possible.