Credit Cards, a Biblical Christian View: Part 1, Dangers

Credit Cards, a Biblical Christian View: Part 2, Benefits

More Resources on Biblical Financial Stewardship

Best Deals on Credit Cards:

A Biblical Christian View


Credit card rewards programs can be a valuable way to save a few percentage points on what you spend.  Again, it is important to reiterate that they are worthwhile if–and only if–you avoid the dangers of using credit cards by totally avoiding high-interest debt and by guarding against and avoiding the danger of overspending.  The article below is the third part of a study on credit cards; before reading it, I highly recommended that you read Credit Cards, a Biblical Christian View: Part 1, Dangers and Credit Cards, a Biblical Christian View: Part 2, Benefits.  Before applying for any credit card, it is also a very good idea to  obtain a free copy of your credit score and credit report by clicking here.

 If you have a good credit, you should be able to get at least 2% cash back on all your purchases while getting a higher percentage, frequently 5% or 3%, on certain categories of purchases.

Cash Rewards Cards–Flat Rate of 2% Cash Back on all Purchases


Some credit cards offer a flat rate of cash back on all purchases, while others increase the rate of cash back depending upon how much one spends.  In my opinion, the two best cash back credit cards are the Citi Double Cash Mastercard and the Fidelity Investment Awards Visa Card.  The Citi Double Cash card gives you 1% back in cash as soon as you make a purchase, and then an additional 1% when you pay the purchase off.  Since you should be paying your bill in full every month, that means with only a small time delay you are getting 2% cash back whenever you use the card.  The Fidelity Visa gives you a straight 2% back as long as the money is transferred into a Fidelity Investments account.  If one does not have a Fidelity account, then you get a lesser amount.  However, it is very easy to open up a Fidelity account, and while (of course) Fidelity wants you to keep the money with them, you can withdraw the money from the Fidelity account to your linked back account as soon as it is deposited.  I have both of these cards and have found them to provide good customer service.

There are other cash back cards out there; one that offers a cash back rate that is competitive with the Fidelity Visa is the Capital One QuickSilver Rewards Visa Card, which provides a flat 1.5% cash back on all purchases.  Do not confuse this card with the Capital One QuickSilver One Rewards Mastercard, which also gives 1.5% cash back but has a $39 annual fee.  (None of the cards described above have an annual fee.  For the average person, paying an annual fee for a credit card is not a good idea.)  Many credit cards offer 1% cask back, and some offer even less.  It is rarely worthwhile to use a credit card that gives less than 2% cash back when one that gives 2% cash back (and also has good customer service) is available.

c. 4% Back on All Purchases

There is a way to get c. 4% back on all purchases that you make with a certain credit card.  I believe that it is worthwhile enough to have its own page devoted to it;  click here to find out how to do this.

Cash Rewards Cards–Specific Categories get up to 5% Back


5% Back on Gas and Groceries


Some credit cards offer less than the flat 2% cash back on all purchases but allow customers to get a higher percentage on certain categories.  A card that offers 5% back on gas, groceries, and bookstores (including is the Sallie Mae MasterCard.  (You can apply using the link here, but the online application tries to force you to sign up for e-statements.  You can get normal statements by applying over the phone at (800) 307-0341.)  Other purchases receive 1% cash back.  The card is designed for students who wish to apply the cash back to their college loans, but anyone, student or not, can have the cash back in the form of a statement credit.  The only significant drawback is that the 5% rate is only available for the first $250 a month spent on gas and groceries combined, and on the first $750 spent at bookstores.  Of course, both the husband and wife in a family could get one, and then the 5% would be available on $500 a month on the combined gas and groceries category and $1500 on the bookstore category.

Another card worth considering is the the Pentagon Federal Credit Union Platinum Rewards Card. This credit card gives one 5 points on gas paid for at the pump, 3 points on supermarket purchases, and 1 point on all other purchases.  You can redeem the points for Visa gift cards that can be employed wherever credit cards are accepted, so they are not much different than cash.  For years the points were exactly equivalent to cash, so that 5 points was the same thing as 5% cash back, but relatively recently Pen Fed reduced the value of the points (without sending out any notice) so that 1 point is only 85% of cash value.  In other words, if one received 5% cash back then spending $100 on gas would lead to $5 back, and 5 points was the same thing as $5.  Now, however, 5 points is only worth 85% of $5, that is, $4.25.  In other words, the card does not really offer 5% cash back on gas, 3% cash back on groceries, and 1% on everything else anymore; it now offers 4.25% back on gas, 2.55% back on supermarket purchases, and 0.85% back on everything else (5 x 0.85 = 4.25; 3 x 0.85 = 2.55; 1 x 0.85 = 0.85).  I do not appreciate the fact that they reduced the value of the points without any notice, nor the fact that it is nearly impossible to find out that the points are not really equivalent to dollars until one has already applied for the card, employed the card, and then attempted to redeem points.  Also, the fact that they reduced the value of the points in the past makes me wonder if they will do it again in the future.  Besides this negative, there are two others that I believe should be mentioned.  First, the card application page states: “Cardholders may sign up for free electronic statement notification to avoid paying a $1.00 fee for mailed paper statements.”  In other words, if you want to get your credit card statement in the mail, you will have to pay $1 every month.  There are certain exceptions to this rule, and I was able, after dealing with some of their representatives, to continue to get free paper statements even after this rule was initially instituted (some time after I first got this credit card), and I continue to get free paper statements without any problem today.  I have quite a few bills that come in the mail every month, and I would have a hard time keeping track of everything without physical paper statements.  Second, their customer service, while not terrible, is also not the greatest.  Since Pen Fed is a credit union that offers credit cards, not a financial giant offering a credit card, at times one wants to speak to a human being about a credit card issue and it is not that easy.  Despite these negatives, the Pentagon Federal Credit Union Platinum Rewards Card is, in my opinion, worth recommending because few cards offer 4.25% back or higher on gas all year round, and the 2.55% back on groceries is also not shabby.  For other sorts of purchases, the 0.85% cash back is not very good.  One other positive about the card should be mentioned–it imposes no foreign transaction fees, so it is a good card to use outside of the United States.

Pentagon Federal Credit Union also offers the PenFed Platinum Cash Rewards Visa Card, which offers 5% back in cash on gas if one meets certain conditions listed on the website.  Otherwise one earns only 3% back on gas, and, if the conditions are not met, one is assessed a $25 annual fee after the first year.  The card does not give any cash back at all on purchases other than gas.  The same $1 a month fee as described above applies if one wants paper statements instead of e-statements.  It has no foreign transaction fees.

In order to get a Pen Fed credit card, one needs to become a part of the credit union.  People in the military, employees of the United States government, and various other parties can join the Pentagon Federal Credit Union for free.  Everyone else can also join, though, by making a small one-time donation to a military charity or a military advocacy organization.  Join the Pentagon Federal Credit Union by clicking here.

The Blue Cash Preferred American Express Card provides customers with 6% back at U. S. Supermarkets (up to $6,000 per year in purchases), 3% back at select department stores, and 1% back on everything else.  However, it has a $75 annual fee.  If you spent the entire $6000 a year on groceries, you would get $360 cash back.  Subtracting the $75 annual fee, one is left with $285 net cash back, which is 4.75%–and that is the very best deal you can get if you spend exactly $6,000 a year on groceries.  The annual fee makes this card, in my opinion, inferior to the Sallie Mae MasterCard and the Pentagon Federal Credit Union Platinum Rewards Card discussed above.

c. 5% Back on Travel


You can get 5 points back per dollar spent on airfare with the PenFed Premium Travel Rewards American Express Card, as well as 1 point per dollar on other purchases.  The card has no foreign transaction fees.  I do not own this card, but I suspect that points convert the same way that they do with the PenFed Platinum Rewards Card described above, so that 5 points is equal to 4.25% cash back and 1 point is equal to 0.85% cash back.

5% Back on Some Utilities and Office Supplies


The Chase Ink Cash Business Card offers 5% cash back on cellular phone, landline, internet and cable TV services, as well as office supply stores, each account anniversary year, for up to $25,000 a year in combined purchases, as well as 2% cash back on the first $25,000 spent at gas stations and restaurants.  Other purchases earn 1% cash back.  The Chase Ink card has great customer service.  Of course, it is a business card.  However, if you have any kind of self-employment income at all, whether from selling items on E-bay, to being a Mystery Shopper, to having an e-book for sale, to teaching music lessons, to doing odd jobs for others, to filling pulpits in churches or teaching Bible college classes where you receive financial recompense in addition to spiritual blessings from the Lord, you have a business.  You can identify as a Sole Proprietor, use your name as the business name, and use your Social Security Number as your business tax identification number.  However, you should be careful about using a business card for personal use;  see the article here for information.  (You also ought to be sure that you are paying taxes on your income, Romans 13).

5% Back on Rotating Categories


A number of credit cards offer 5% back in rotating categories that typically change each quarter of a year.  That is, some categories receive 5% back in January-March, then others in April-June, then others in July-September, and finally others in October-December.  Cards with rotating 5% back categories include the Chase Freedom Card and the Discover It Card,  The U. S. Bank Cash + Visa Signature Card allows you to pick two (usually rather narrow) categories in which you can receive 5% cash back.

While the 5% back is nice, the rotating quarterly categories can be confusing and difficult to keep track of.  You usually need to contact the card company every quarter to activate the 5% categories, or you do not get the higher rate.  Sometimes the categories are good, sometimes they are not, and sometimes they are hard to remember and you may find out you are getting 1% back when you thought you were getting 5%.

Summary on Cash Back Cards


In summary, by using the right credit card, you can consistently get c. 5% cash back on gas, groceries, and many other categories from your cell phone to your Internet bill.  You can also get at least 2% cash back on all your other purchases.  If you avoid the dangers of credit card use, these rewards can help you to be a good steward of your financial resources.  Be sure to tithe on whatever credit card rewards you receive–in the eyes of God, they are “increase,” and you are to tithe on all your increase (e. g., Deuteronomy 14:22).

Rewards Points vs. Cash Rewards

Many credit cards do not offer cash back, but points of some kind.  If you are thinking about getting a card that offers points instead of cash, make sure to figure out what the actual cash value of the points is.  One credit card may determine that 100 points is the same thing as $1, another may say that 1,000 points is the same thing as $1, another may say that 10,000 points is the same thing as $1, others may have a variety of other amounts that are equivalent, and another credit card may not allow you to redeem points for cash at all, but only for other things such as airline flights, merchandise, or gift cards.  A downside of points is that the company can more easily reduce the value of accumulated points than they can simply take away cash back.  For example, consider how Pentagon Federal Credit Union reduced the value of their points without even notifying their customers (as I described above when reviewing their credit cards).  If points can be redeemed for gift cards that you are actually going to use (such as for gas stations in your area, or large merchants such as Walmart or Target), then they have a value closer to cash than if they can only be redeemed for, say, gift cards to restaurants that are luxuries, not necessities.  Points redeemable for flights, hotels, and so on are obviously much more useful for some people than for others, and in certain situations cards with preferential point redemption may be better than cash for some people.  For example, if a person who needed to fly frequently could either redeem points for cash at a 1:1 level, or can redeem points for airline tickets where points are worth more than the simple cash equivalent, he may find that the points on a particular credit card are superior to simple cash back in his situation.  Keep in mind that credit card companies only get a few percentage points on each dollar spent in fees from merchants, and they cannot give their total body of customers rewards that are worth more than what they are making from merchants without going bankrupt.  In general, I prefer simple cash back to the complexities credit cards offer with points, especially if the points are not directly redeemable for cash, but this preference may not hold for everyone.


Best Deals on Opening Bonuses


A variety of credit cards offer hefty opening bonuses.  I have personally gotten an offer in the mail for a credit card that gave a newly approved applicant 150,000 points, equivalent to $1,500, and also another one that offers new cardholders $750.  There are a number of cards that have opening bonuses of $500 or more.  Generally speaking, you should only open a credit card account if the card is one that you think you will actually use–opening a card simply to get an opening bonus is usually not a good idea.  It certainly is not a good idea, in the vast majority of situations, to open a credit card at a department store or some other retail outlet for something like $10 off a purchase or 30% off one item.  Credit card companies make offers far better than that, and since opening a new card can, at least temporarily, lower your credit score, you ought to refrain from unnecessarily applying for credit cards just to get a small opening bonus.  On the other hand, if a card is willing to give me $500 or $600 to try it out, I am definitely going to give it serious consideration.  If you find a card that you believe would be beneficial, before filling out an online application spend five minutes searching the internet for opening bonuses associated with the card.  If, say, the normal webpage states that the card has a $100 opening bonus, search for that card and the words “$200 opening bonus” or “$250 opening bonus.”  If the bank website states that the card comes with an opening bonus of 50,000 points, which are worth $500, search for the name of that card and “70,000 bonus points” or “60,000 bonus points.”  That small amount of time could net you some extra cash; if it does not, you are only out a few minutes.

Oftentimes credit cards with generous opening bonuses in the $500 range have significant minimum spending requirements, such as, for example, spending $3,000 or $5,000 within the first few months of obtaining the credit card.  If you are blessed to get an opening bonus worth $1,000, you are likely to have to spend $10,000 to obtain it.  Obviously, it is not good financial stewardship for you to spend $5000 wastefully to recoup $500.  However, there are ways to “spend” the money without really spending it and thus meet minimum spending requirements for credit card opening bonuses.  Here are a few ways:

1.) You can purchase and give yourself gift cards that are cash equivalents.  If you go through Ebates, you can even get cash back on the purchase of American Express gift cards that can be used just like cash wherever American Express is accepted and save some extra (sign up here).

2.) You can also purchase gift cards for specific merchants that you would use anyway at a discount.  If you know in the next few months you will get $500 in groceries at Walmart, you can purchase a discounted Walmart gift card and get part of the way to your required purchase balance to get the opening bonus.

3.) You can make purchases in advance that you would need to make in any case, such as refilling the heating unit in your house with oil or natural gas, paying in advance on your car or home insurance, and so on.

4.) You can also pay your taxes or other bills with a credit card through organizations such as Official Payments.  (The IRS offers a list of companies through whom you can pay your taxes with a credit card here.)  While they typically charge a fee, such as, for federal taxes, between 1.87% and 2.35%, so it is generally not worth it to use such a service simply to pay your tax, if you are able to meet your minimum purchase requirement in such a manner it could well be worthwhile.

Annual Fees


Some credit cards–including those with some of the highest opening bonuses–have annual fees.  However, many other cards, including the vast majority of those recommended above, have no annual fee.  Unless the benefits you receive from a card with an annual fee very clearly outweigh what you could get from a similar card with no fee, I would recommend keeping only cards that do not charge you anything.  Credit card companies make plenty of money from the fees they assess merchants and from people who foolishly fail to pay off their balances in full every month.  Why should you pay them an annual fee just to have their card?

This fact does not mean that, if, for example, I received an offer for a credit card with a very large opening bonus (for instance, $500 or more), with no annual fee for the first year, but an annual fee for subsequent years, I would not seriously consider applying for the card.  The credit card company appears to be convinced that their product is so good that they can offer a huge bonus to people to get it and waive their annual fee the first year, believing that they will willingly pay the annual fee in subsequent years.  I do not believe it is wrong to take them up on such an offer, and, if the card turns out not to be worth the annual fee, to close it within the initial year and keep the opening bonus.  However, I do not think it is Christ-like to repeatedly open and close a card of this kind in multiple years to rake in repeated opening bonuses.  Christians are to love their neighbors as themselves, and that includes people who own credit card companies.  Giving a card a try once because of a very attractive opening bonus, and then closing it, can be done with an upright conscience; repeatedly opening and closing a card with no intention whatever of keeping it is simply milking the company for money and does not meet the Christian standard of conduct of doing (and even thinking about) what is true, honorable, just, pure, lovely, virtuous, of good report, and praiseworthy (Philippians 4:8) but is a violation of the Eighth Commandment, “Thou shalt not steal” (Exodus 20:15).

Concluding Summary

In summary, you can get 2% cash back on all purchases with a credit card, as well as 5% back on gas, groceries, utilities, and many other categories.  There is even a way to get c. 4% off on just about all your purchases.  Thus, if–and, it must be repeated, ONLY if–you avoid the dangers of credit card use, then a careful and judicious employment of credit cards can be part of sound Biblical financial stewardship.


Credit Cards, a Biblical Christian View: Part 1, Dangers

Credit Cards, a Biblical Christian View: Part 2, Benefits

More Resources on Biblical Financial Stewardship