Are You a Millennial? Here’s How to Choose the Best Credit Card With the Greatest Perks for You.


It’s no secret that basically every for-profit business on the planet is in pursuit of millennials, whether it’s selling smartphones, clothes, or fast food. But my personal favorite aggressive millennial attention seeker? Banks.

With newfound competition in payment apps like Venmo, banks are desperate to boost their credit card business among young people, which is great because anyone (i.e., you!) can reap more and greater perks: Sign-up bonuses are at a record high, rewards are getting more generous, and, yes, instead of plastic you can now whip out cool cards made of titanium or stainless steel. “It’s kind’ve a mic-drop moment when you’re at dinner and there’s this argument over who will pay,” says Sean McQuay, credit and banking expert at NerdWallet. “When the metal clinks on the table, there’s no further debate.”

Whether it’s flashing a cool card or upping your savings, here’s how to take full advantage of the banks’ newfound generosity.

The clink that changed everything

To get the new Chase Sapphire Reserve card, introduced last year, you have to pay a $450 fee. Sounds outrageous, right? Well, that’s until you actually run the numbers. Cardholders get an annual $300 travel credit, which you can use on anything from plane tickets and hotel rooms to Uber rides and parking garages. (Doing the math, that effectively drops the annual fee to $150.) Plus, you get 3 points, or what amounts to 3% cash back, on restaurant and travel expenses. And if you spend the points through Chase’s “ultimate rewards program,” you get 11⁄2 times the value. So when spent on travel, that’s like getting 4.5% cash back. And the kicker: a 100,000-point sign-up bonus, or the equivalent of $1,500 in travel cash when spent through Chase.

“The sign-up bonus effectively covers the annual fee for 10 years,” says McQuay—as long as you make use of that $300 travel credit each year. McQuay says he had always recommended cash-back cards over travel cards, but “Reserve has changed the math.” “The fees I pay pale in comparison with the benefits I get,” says John Ulzheimer, a credit card expert and points ninja.

Why so generous?

Well, it helps to understand two things about the banking business. First, Chase, like most banks, pays less than 1% on savings accounts. But it charges 16–23% to borrow money on the Sapphire Reserve. That’s a sweet profit margin. And credit cards have become an especially important line of business in the wake of the Great Recession because government regulators cracked down on many of banks’ other businesses.

Banks hope you will carry a balance and pay those crazy interest rates. If you do, it will cost you far more than you’ll ever get in benefits, so these cards are only worth it if you pay off your balance in full every month.

And here’s another thing to understand about banks and credit cards: Stores pay a 2–3% “interchange fee” on every credit card transaction. Most of that goes to the banks, a smaller portion goes to Visa, MasterCard, or Amex. Guess where that money comes from? It comes from you, because the store increases prices on everybody to account for the fee. McQuay thinks that Chase is basically refunding those fees to customers with its generous rewards in a bid to boost its already dominant market share.

The bottom line? Every time you buy something you’re paying a little extra to cover the cost of credit card transactions, even if you pay with cash. But if there’s one way to get that money back, it’s getting a rewards card that pays you. “There’s no excuse for people not to be getting 1.5% or 2% for every single purchase,” says McQuay.

McQuay suggests that you start by thinking about where you spend your money, because certain cards give you more cash for certain kinds of spending. Then focus on what kind of rewards you want. Here are a few spending categories and the cards he recommends for each:

Gas and groceries

The Amex Blue Cash Preferred card will give you 6% cash back on groceries and 3% back on gas and some department stores. It charges an annual fee of $95, so you have to spend more than $31 a week on groceries to cover the fee.

Travel and restaurants

This is where the Sapphire shines, because you’ll get 3% cash back on these categories, which is effectively boosted to 4.5% if you spend it through Chase. Another category to consider: affiliated cards, which peg rewards to a specific airline or hotel. If you fly American Airlines all the time, for instance, the Citi/AAdvantage Platinum Select World Elite MasterCard is a good choice. Delta frequent-fliers should consider the Amex Delta cards, which come in Gold, Platinum, and the $450 annual fee Reserve card. The escalating list of benefits includes perks such as early boarding, seat upgrades, a free annual companion ticket, and, for Reserve cardholders, unlimited access to airport lounges.

The same logic applies to hotel-affiliated cards: They’re useless if you don’t frequent that hotel chain but can be a great deal if you do. The Marriott Rewards Premier Credit Card will give you extra points whenever you stay at a Marriott, a big sign-up bonus that could be worth up to 10 free nights (depending on the property). Bonus: It’s metal.

You carry a balance

If you need to borrow money, your only concern should be getting the lowest possible interest rate—preferably zero. Say you have a $5,000 balance. At 15% interest, you’re looking at annual fees of $750, wiping out all these benefits. Go sign up for the Chase Slate card, which offers 0% interest for 15 months, and, importantly, charges nothing for the balance transfer. Most credit cards will hit you with a 3% or 4% fee to make that transfer. That gives you 15 months to pay off your credit card.

You want simple

If you don’t want to think about airline mile maximization and what card is right for what spending category, here’s your solution: the Citi Double Cash card. As long as you pay the monthly minimum (though you really should pay it off in full), you get 2% cash back on everything. That’s not a bad deal; and since it’s plastic, you don’t have to worry about setting off  metal detectors when you travel. 

Jack Otter is the author of Worth It…Not Worth It? Simple & Profitable Answers to Life’s Tough Financial Questions.

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