Why you should consider switching your credit card.

When beginning your travel hacking journey, you will have many questions pertaining to credit cards and how to use them. A question that is asked by many beginners is "Which credit card is best for me?" This question, like most others, depends on your goals, as well as how much time you are willing to invest. Some people enjoy the simplicity of a card that gives them a flat reward across all their spending, while others take a more aggressive approach to give them bonuses in different categories. (More on this later) However, in both these cases there is nothing wrong with applying for a new credit card, and today we'll explain why.

First of all, there is nothing wrong with keeping your old credit card. It simplifies your finances and is easy to keep track of. However, by having only one credit card, you are depriving yourself of the opportunity to earn additional rewards. While some credit cards offer rewards on all purchases, these cards often offer low cashback rates. This means that you could be making more money on the same purchases you make every day. For example, the Kroger World Mastercard offers a measly (1%) on purchases made in the store and then offer even less (0.5%) on purchases made anywhere else! Compare that to Discover IT or Chase Freedom Unlimited which offer a base cashback of 1% and 1.5% respectively. That means that unless you were to shop entirely at Kroger, you'd be missing out on .5% to 1% cashback on most of your purchases. Over the course of the year, you'd be missing out on hundreds of dollars. Take a moment to look at your current card's base cashback rate. If it's under 1.5%, you're probably better off getting an additional card, or switching out your old one entirely.

A large benefit of getting a second credit card is you could qualify for a signup bonus. A signup bonus is an additional reward granted to new cardmembers upon spending a certain amount within a predetermined amount of time (Usually 3-4 months) This bonus could come in a variety of forms, including cash back, travel perks, or credit card reward points. Some sign-up bonuses can be quite high ($750 bonus when you spend $4,000 in three months for the Chase Saphire Preferred). It may be worth applying for a card just to get the signup bonus! After you have gotten the bonus you can downgrade or cancel the card. Just be sure to wait at least a year before doing either, as banks will catch on if you cancel immediately. Just remember that you should never be spending money you wouldn't otherwise spend just to meet a sign-up bonus.

As if the signup bonus alone wasn't good enough, you may also qualify for special cashback rates for your first year or so. An example of this: Discover will double all cash back earned within the first year. Considering Discover also offers rotating 5% bonus categories, this means that you could earn as much as 10% cashback on purchases in your first year! These introductory rates are only available to new cardholders, so it may be advantageous to consider switching to a different card, at least for a time.

Now that I (hopefully) have interested in switching your credit card, it's time to talk about your options. There are a few types of credit cards. Some offer a flat rate across all categories, while others give higher rates for certain types of purchases (Travel, gas, groceries, restaurants, etc.). Some other cards have categories that change based on the month, and usually offer high rates on these purchases. Which card is right for you depends on your shopping habits and how much tracking you want to do. If you don't mind putting in the effort, then we recommend a card that has rotating categories such as the Discover Cashback or the Chase Freedom Flex. Both of these cards offer a high cashback rate (5%) on various categories throughout the year. Historically these categories have included Gas stations, grocery stores, amazon.com, Walgreens, restaurants, and more. If you don't like tracking your purchases, we recommend a card that earns you a high cashback rate in ALL categories. Our personal recommendation is the Chase Freedom Unlimited. With this card, you can earn a flat 1% cashback on all purchases, 3% at restaurants and pharmacies, and 5% on all travel booked through Chase. Both the Freedom Flex and Freedom Unlimited payout in Chase Ultimate Rewards points, which are worth a penny each and can be redeemed for a statement credit or direct deposit. They both have a great sign-up bonus ($200 cashback for the first $500 spent in three months). If you enjoy travel, you should consider a travel credit card, with the Chase Saphire Preferred and the Chase Saphire Reserve being our top picks. Although these cards come with annual fees, they offer a variety of travel perks that offset the fees if used regularly. They also offer 2X the points on dining and travel, and when you redeem those points, you can get 25% more value out of them.

In the end, the choice is up to you as to which card to choose. If you are signing up for a card with rotating categories, be sure to look up which categories the company has previously offered rewards on, and ensure you spend enough in these areas to make the card worth it. Additionally, remember to check to see if the card has an annual fee before signing up.

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