Advice on credit cards?

[TakeruK]

One reward (or travel) mile per dollar spent is pretty good, but like biostatdude said, you don't get to fly 1 mile for each travel mile you have. For example, for Aeroplan miles (Air Canada), it costs about 26,000 reward points to get a free flight within North America (which is probably valued at $600-ish, if you fly from one end to another). For these types of rewards programs, you usually earn one mile per mile flown, and if you don't fly often, then this is probably the fastest way to ramp up miles. 

 

For cards for fees, what I usually do is try to work out how much reward miles/points I could earn with this special card vs. a free card that also gives me points. I'll probably only sign up for a card with fees if the difference in benefits is worth at least twice the cost of the card. 

 

For international students that might fly internationally a lot, the travel points might be worth more to them, since the long flights can be really expensive, or perhaps you can redeem a smaller number of miles/points to upgrade from economy to business class. I've heard of some people doing "Mileage Runs", where they fly around in a loop over the span of e.g. 24 hours for no reason other than gaining miles to be used later. This works best when they take advantage of cheap flights, and there are online communities devoted to this, e.g. http://www.flyertalk.com/forum/mileage-run-deals-372/

 

In addition, some credit cards also offer a large number of bonus miles for signing up and gives you stuff like free checked bags. So if you do this often, that could be a better deal than the free credit cards that also grant points.

 

From considering a bunch of different free cards in Canada and the USA, I think, on average, if you trade in your reward miles or points for cash rewards (e.g. gift cards), you can get about $1 back per $100 you spend on the card. Many banks give you the option of getting "cash back", which ranges from 0.5% to 2% depending on the circumstances instead of earning reward points, so I think this is about equivalent.

[jehane]

How long do you have to wait before getting a credit card?  I arrived in the US just over a month ago, and opened a checking account almost straight away.  I applied for a credit card from the same bank and just received a rejection letter on the basis that my checking account hasn't been open long enough.  I realise that I've probably now damaged my previously non-existent credit rating.    btw, I actually went into the bank to discuss it and apply, and the people I spoke to know that I'm a recently arrived international student.  

 

And in this day and age, why aren't there international agreements for checking credit history?  

[Andean Pat]

And in this day and age, why aren't there international agreements for checking credit history?  

 

Absolutely!

 

Here we don't have "scores" but credit cards and other credit granting institutions keep track of "good" payers. I have been offered at least 5 credit cards in the last five years, I even have cards I don't use and banks keep calling me to sell me more products because I am "such a good client". Although they say it to flatter me, it is true that I pay back what I spend, especially in the last year or so when I have been paying lots of dollars (GRE, TOEFL, applications, visa fee, SEVIS fee, apartment fee, blah blah blah). 

 

So why cannot Visa in my country tell Visa in the US that I deserve a nice tiny plastic credit card?

[Tupacalypse]

Lots of good advice, TakeruK! I just wanted to build on your advice about credit reports - the third major bureau is Experian. I get a report every four months by staggering these three. I just have reminders on my google calendar. Folks, you can do this through annualcreditreport.com, NOT freecreditreport.com that is advertised all the time! The first is legit and the latter is scammy.

 

Also, I have been trying to build good credit the past few years; here's some additional tips:

 

- Set your checking account up to autopay the balance every month. No chance of mistakenly missing a payment!

 

- Watch your debt-to-limit ratio. Stay under 20% to build good credit. Putting everything on the card for rewards/points is good ONLY IF you can do so without ending up with a high debt-to-limit ratio. While you build up to that high limit, an alternative is a rewards debit card. I have a checking account with Perkstreet that I've been quite pleased with. SunTrust offers a debit card that gives Delta miles that may be of interest to those of you in the US Southeast.

 

- I started off with a $500 secured card from my credit union, and have been calling them every 6 months (again, using a calender reminder) explaining that I am trying to build credit and asking to have the limit raised. It's like negotiating - I ask them to double my limit every time, and so far, and they have either said yes or come back with a lower but still better-than-before offer each time. I do this not because I need the higher limit right now, but because I might one day and because it builds good credit history.

This advice is awesome.  I went to my Bank of America account the other day (the only credit card I have is the Bank of America rewards) and applied online to increase my credit line by $400.  They just checked my credit and it was instantly approved.  This should raise my credit a fair amount of points next month instantly just for sheer credit ratio.