Consumer Reports’ Credit Cards Worth Holding

Consumer Reports’ Credit Cards Worth Holding

In the November 2009 issue of Consumer Reports magazine, they had a rundown of “credit cards worth keeping.” This is an especially useful list now that terms are changing and many of us are considering moving on. Here are Consumer Reports’ picks:

Balance-Transfer Cards

Consumer Reports likes American Express Clear, PenFEd Visa Platinum and People’s United Bank Platinum MasterCard. These cards have APRs hovering between 12.24% and 17.24% with the People’s United Bank card having a 13.99 variable rate. What makes these cards attractive for balance transfers is that they have low APRs and fees for balance transfers. The Amex carda nd the Peoples United Bank card both have 0% introductory periods, and the Amex card has no balance transfer fee. The PenFed card, one of the most popular credit union credit cards – there’s no introductory rate for balance transfers, but you get a low 5.99% rate for life. Of course, you’ll have to pay $20 to join the credit union – but that’s small potatoes (especially considering many credit card companies are now levying annual fees anyway, such as Bank of America).

As far as rewards go, the People’s United Bank card has none. The Amex card gets you a $25 gift card for every $2,500 in purchases and a free annual credit report with score (neat!). The PenFed card gives you 5% cash back on gas, 2% on groceries and 1.25% on all other purchases, which rivals one of our favorite rewards cards, the Discover More Card.

Low Rate Cards

If the interest rates are killing you, Consumer Reports recommends holding on to Iberiabank’s Visa Classic and Simmons Frist Visa Platinum. Of course, getting your hands on these cards isn’t as easy as your typical card. The Iberiabank card requires you to show proof of income and to disclose your employment history for the last 6 months.

The Simmons card is nice because it has a low default rate of 16.25% which only kicks in after 2 late payments within 6 months. None of these cards get rewards, but the money you’ll save on finance charges is a reward in itself.

Cash Back Cards

For responsible (or perhaps just wealthy) card holders who pay off their cards in full each month, cash-back cards are the way to go. Consumer Reports recommends the Amex Blue Cash, Capital One No Hassle Cash Rewards, Fidelity Rewards American Express and Schwab Invest First Visa. The last two are interesting choices – they are linked to your account with Fidelity or Schwab and are clearly more geared towards folks with some money to plunk down on mutual funds or stocks. All these cards get 2% cash back except for the Amex card which gives you cash rewards up to 5% after you spend over $6,500 for the year. Another perk: the Capital One and Schwab cards have no foreign transaction fee, a rare feature these days.

Other Tips

Aside from their recommendations, Consumer Reports suggests getting “association cards” through employers, unions and other affiliations. For example, the USAA offers favorable cards for veterans. Teachers can get good deals from the National Education Association.

And as we have mentioned earlier, credit unions are an excellent way to go. Because they are member owned, their interests are more skewed towards card holders (rather than investors) and they typically tend to have less fees.

You’ll also want to make sure your credit score is in good shape if you decide to jump ship. Remember: closing an account can adversely affect your credit by skewing your debt to credit ratio. If your rates were raised based on your credit rating, the chances of you finding another, more favorable card may not be very good – especially after closing your account.

If you’re shopping for a new credit card, you should also check out some of these other resources:

* MYC’s Discover Escape Card Review
* CreditCards.com: Weekly Credit Card Rate Report
* MYC’s Discover Miles Card Review
* BankRate’s National Credit Card Rate Averages
* MYC’s Chase Freedom Card Review

Photo by .larry page

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