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Recently, I received the question below from a reader:
Hey Jacob! I had a quick question I wanted to run by you. I think I should get another credit card, and I was wondering if you had any suggestions.
I currently have a Chase Freedom Visa that I use all the time. I was thinking of getting a Mastercard for diversity of cards (in case Visa is not accepted somewhere) and maybe something with good miles points. I got an application for a US Airways Mastercard that has great benefits, but it carries an annual fee and that generally goes against what I think a credit card is for. I don’t use my car very much, so I don’t think getting a gas credit card would make much sense. But anyway, if you have any advice to pass along that would be great! Thanks.
What advice would you give this reader? Should they get a second credit card? If so, what type of credit card would you recommend?
That’s a good question you have there! Personally, I think it’s a good idea to have a couple of different credit cards in the unlikely event that you lose one and need a backup for personal use.
There really is no diversification benefit as far as getting several credit cards in the event that one of the companies fails like you would diversify with stock investing, since 1) Mastercard and Visa I believe are owned by the same people and 2) the institution that actually ‘loans’ you the money for the transaction is the bank that you have the card with (Chase, for example). Mastercard or Visa only handle the path through infrastructure.
In addition, in the past 4 years, I personally have not been to an establishment that accepted MasterCard, but not Visa, so I think you would be OK with getting either type of card.
In general, credit cards with annual fees aren’t worth it unless you are REALLY going to utilize the card for the benefits. For example, airways credit cards aren’t worth the annual fee unless you fly every week or use the card to pay for work trip flights.
There are a lot of great no annual fee credit cards out there. This web site gives a good list of them if you want to take a look –http://www.creditcards.com/reward.php.
I use the Chase Freedom Card that you have for all of my purchases, but I also have a Chase BP Credit Card that I use for all of my gas purchases. It gives 5 percent cash back for all purchases at BP gas stations and has no annual fee. You might think about getting a gas credit card for your second card as well! Hope it all works out for you and thanks for your question!
***Photo courtesy of http://www.flickr.com/photos/imtfi/5867775813/lightbox/