In the modern era of consumer credit, understanding how to repair your credit score has become essential. Building credit and learning to do it correctly is more important than ever. For members of the military, choosing the right credit card can offer significant advantages over using a debit card.
Why Choose Credit Cards Over Debit Cards?
Some financial advisors say the only plastic card in your wallet should be your debit card. However, credit cards offer several benefits that debit cards do not.
Debit Cards
Debit cards are linked directly to your checking or savings accounts and only allow access to the money you’ve already earned. They help users stay within their budget since you’re not borrowing money, and there’s no interest or payments to track.
However, debit cards lack robust fraud protection. If your debit card is compromised, it can devastate your bank account and leave you unable to pay bills. Credit cards, on the other hand, provide a high level of financial protection. If a credit card is compromised, the company will handle the fraud investigation since it’s their money at risk.
Debit cards also lack the points and perks associated with credit cards, which can offer significant savings and benefits when used responsibly.
Credit Cards
Credit cards can be problematic if used irresponsibly, but for those who pay off their balance monthly, they offer many perks and protections. Credit cards provide greater fraud protection, significant rewards like cash back and travel incentives, and often waive annual fees and lower interest rates for military members.
What to Know Before You Apply
Before applying for a credit card, consider these important steps:
- Check Your Credit Score: A higher credit score can secure better interest rates and terms. Aim to improve your score by understanding how it’s calculated and paying off existing debt.
- Get Out of Debt: Reducing your debt can increase your credit score and your ability to manage a credit card effectively. Military members have access to tools and resources to help manage debt.
- Avoid Credit Card Interest Payments: The key to benefiting from credit cards is to pay off your balance monthly. Interest payments can quickly negate any rewards or perks.
The Best Credit Cards for Military Members
Here are some top credit cards for military members, each offering unique benefits:
1. Chase Sapphire Reserve Card
- Annual Fee: $550 (waived for active-duty military and spouses)
- Rewards: 50,000 Ultimate Rewards Points after spending $4000 in the first three months.
- Benefits: $300 annual travel credit, 3X points on dining and travel, Priority Pass Lounge Access, $100 Global Entry/TSA Precheck credit, and more.
2. American Express Platinum Card
- Annual Fee: $695 (waived for active-duty military and spouses)
- Rewards: 100,000 Membership Rewards Points after spending $6000 in the first six months.
- Benefits: 5X points on airfare and hotels, $200 in Uber credits, $200 airline fee credit, Priority Pass and Centurion Lounge Access, Hilton and Marriott Gold Status, and more.
3. American Express Blue Cash Preferred
- Annual Fee: $95 (waived for active-duty military and spouses)
- Rewards: $300 cash back after spending $3000 in the first six months.
- Benefits: 6% cash back on groceries, 6% on streaming services, 3% on transit and gas, and 1% on other purchases.
4. USAA Cashback Rewards Plus
- Annual Fee: None
- Rewards: 5% cash back on gas and military base purchases (up to $3000 annually), 3% on groceries (up to $3000 annually), and 1% on other purchases.
- Benefits: 4% APR for active-duty military members, no foreign transaction fees.
5. Capital One Quicksilver Cash Rewards Card
- Annual Fee: None
- Rewards: 1.5% cash back on all purchases.
- Benefits: 0% introductory APR for balance transfers and new purchases for 15 months, 4% APR for active-duty military, no foreign transaction fees.
After Active Duty
When transitioning out of active duty, evaluate whether the perks of your current credit cards are worth the annual fees that may apply post-service. Instead of closing accounts, consider downgrading to no-fee cards to preserve your credit history and continue benefiting from your established credit lines.
Final Thoughts
Choosing the right credit card can significantly benefit military members, offering rewards, protections, and perks tailored to their unique needs. By managing credit responsibly and leveraging the benefits of these top cards, service members can enhance their financial stability and enjoy numerous advantages