2% cash back credit card without extensive credit history

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Topic Author
dannyboy
Posts: 65
Joined: Tue May 17, 2016 10:51 pm

2% cash back credit card without extensive credit history

Post by dannyboy » Tue Jun 30, 2020 1:46 am

Hi BH!

I currently have a Chase Freedom Student credit card (1% flat-rate cash back) that I got ~ 6 months ago, primarily because my parents bank at Chase (I'm a full-time student and still dependent). Before that I had a no-reward Chase Slate card that was opened nearly two years ago. I don't spend a ton but I hate leaving money on the table, so I've been looking for a no-fee 2% cash back card to replace my current card. I have generally solid financial habits, and my Experian FICO-8 score is 725 (my VantageScore is 743 but I've heard no one cares). While I have never missed a payment, my oldest card is < 2 years old and I don't have many sources of credit, which work against me.

I'm wondering if it's futile with my FICO score to apply online for, say, the Citi Double Cash or the Fidelity Signature Rewards cards, both of which offer 2% flat-rate cash back. They appear to require "excellent credit," and I don't want my score to drop from a hard pull if I have no chance of getting the card anyway. If this does seem futile, is there any way to improve my chances? I don't have a relationship with Citi, and while I technically have a 403(b) at Fidelity, it's for a job I started two weeks ago and there is no money in the account yet. I'd appreciate any insight, as I don't have a ton of experience with this. Thanks in advance! :)

Danny

khram
Posts: 58
Joined: Sat Dec 16, 2017 1:36 am

Re: 2% cash back credit card without extensive credit history

Post by khram » Tue Jun 30, 2020 3:05 am

The score itself is fine but won't matter as much as your history. You can try and find out. Maybe things are different now in a recession. Fidelity (Elan) approved me for 4-5x the credit limit that Citi did.

If you get declined, you could try a 1.5% card like CapitalOne or Wells Fargo.

If you really don't spend much, out of the 4, CapitalOne lets you redeem rewards at any amount. But so does Chase Freedom, which is 1.5% back, though you have the student version. I am not sure how the student version is different.

If your score drops from 1-2 pulls, it's not a big deal, and it won't be by much. Are you buying a car on credit soon? If not, it very likely doesn't matter. Don't micromanage your credit score. Optimize for wealth.

A bigger way to make money from cards is churning. Typical offers are open a card, spend $500 in 90 days, and get $100 in credit. Or spend $3000 in 90 days and get $500 in credit. Then afterwards, the cards are often good enough to still give you 1-1.5% back.

I didn't always spend enough for that, but I put a month, or some portion of a month, of rent on my credit card. I paid a 3% fee for that, but the sign-up bonus more than made up for that. Or you can do things like buy gift cards, assuming you have enough cash to pay off the bill.

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rterickson
Posts: 308
Joined: Fri May 01, 2015 3:48 pm

Re: 2% cash back credit card without extensive credit history

Post by rterickson » Tue Jun 30, 2020 10:52 am

If you sign up for an account at Credit Karma they will give you recommendations for cards to apply for ranked by odds of approval.

Topic Author
dannyboy
Posts: 65
Joined: Tue May 17, 2016 10:51 pm

Re: 2% cash back credit card without extensive credit history

Post by dannyboy » Tue Jun 30, 2020 11:37 am

khram wrote:
Tue Jun 30, 2020 3:05 am
The score itself is fine but won't matter as much as your history. You can try and find out. Maybe things are different now in a recession. Fidelity (Elan) approved me for 4-5x the credit limit that Citi did.

If you get declined, you could try a 1.5% card like CapitalOne or Wells Fargo.

If you really don't spend much, out of the 4, CapitalOne lets you redeem rewards at any amount. But so does Chase Freedom, which is 1.5% back, though you have the student version. I am not sure how the student version is different.

If your score drops from 1-2 pulls, it's not a big deal, and it won't be by much. Are you buying a car on credit soon? If not, it very likely doesn't matter. Don't micromanage your credit score. Optimize for wealth.

A bigger way to make money from cards is churning. Typical offers are open a card, spend $500 in 90 days, and get $100 in credit. Or spend $3000 in 90 days and get $500 in credit. Then afterwards, the cards are often good enough to still give you 1-1.5% back.

I didn't always spend enough for that, but I put a month, or some portion of a month, of rent on my credit card. I paid a 3% fee for that, but the sign-up bonus more than made up for that. Or you can do things like buy gift cards, assuming you have enough cash to pay off the bill.
Thanks for the feedback, khram. I won't be buying anything major (car, house, school, etc.) on credit in the near future, just applying for credit cards. I have considered churning cards, but I thought I needed to wait until my credit history was a bit more robust; I can't imagine banks racing to give me card after card when I'm not even sure I'll be able to get one that I want. I could be wrong though.
rterickson wrote:
Tue Jun 30, 2020 10:52 am
If you sign up for an account at Credit Karma they will give you recommendations for cards to apply for ranked by odds of approval.
Thanks for the recommendation, I'll give that a try!

khram
Posts: 58
Joined: Sat Dec 16, 2017 1:36 am

Re: 2% cash back credit card without extensive credit history

Post by khram » Tue Jun 30, 2020 12:22 pm

You're probably right, churning isn't the right approach for you right now with limited credit history + recession. Just saying not to over-prioritize chasing rewards if it means spending more -- there are easier ways for frugal people to make some cash off the banks, even if you have to wait a couple years to try.

If you have a job with direct deposit (making a certain amount, which maybe you don't if you're a student), you can score some cash that way too. Deposit a certain amount within 90 days to their checking account and make $300-400.

Topic Author
dannyboy
Posts: 65
Joined: Tue May 17, 2016 10:51 pm

Re: 2% cash back credit card without extensive credit history

Post by dannyboy » Tue Jun 30, 2020 1:08 pm

khram wrote:
Tue Jun 30, 2020 12:22 pm
You're probably right, churning isn't the right approach for you right now with limited credit history + recession. Just saying not to over-prioritize chasing rewards if it means spending more -- there are easier ways for frugal people to make some cash off the banks, even if you have to wait a couple years to try.

If you have a job with direct deposit (making a certain amount, which maybe you don't if you're a student), you can score some cash that way too. Deposit a certain amount within 90 days to their checking account and make $300-400.
That's a good thought. I'll probably just stick to basic credit cards rewards for now, but I appreciate the ideas!

Topic Author
dannyboy
Posts: 65
Joined: Tue May 17, 2016 10:51 pm

Re: 2% cash back credit card without extensive credit history

Post by dannyboy » Tue Jun 30, 2020 3:37 pm

In case anyone is interested/in a similar scenario, I just applied and was approved for the Citi Double Cash Mastercard (2% flat-rate cash back) with a $3,000 initial credit limit (which is quite low but fine for my current spending habits). While Experian originally told me my FICO-8 score was 725, the Experian FICO score that appeared on my application was a 734; maybe Citi used a different version of the score in my application.

Thanks to all for the advice, as always. :)

RudyS
Posts: 1818
Joined: Tue Oct 27, 2015 10:11 am

Re: 2% cash back credit card without extensive credit history

Post by RudyS » Tue Jun 30, 2020 5:00 pm

Good job! I see it didn't take you long!

hayhayday
Posts: 52
Joined: Tue Jan 15, 2019 12:42 pm

Re: 2% cash back credit card without extensive credit history

Post by hayhayday » Tue Jun 30, 2020 7:34 pm

Discover likes thin\clean files and offers double cash back for the first year - 2% everything and 10% in rotating category. If you dont qualify for the standard product they usually offer a 2nd tier one with normal rewards but high apr which shouldnt matter if you pif. Would be good stop gap\ credit builder for a year when you should have much easier time getting higher tier accounts

Beach
Posts: 238
Joined: Tue Jan 10, 2017 5:48 pm

Re: 2% cash back credit card without extensive credit history

Post by Beach » Wed Jul 01, 2020 10:05 am

Citi Double Cash has been a great card, 2% back on everything. No idea if I would have been denied if my credit wasn't great

Topic Author
dannyboy
Posts: 65
Joined: Tue May 17, 2016 10:51 pm

Re: 2% cash back credit card without extensive credit history

Post by dannyboy » Wed Jul 01, 2020 3:40 pm

RudyS wrote:
Tue Jun 30, 2020 5:00 pm
Good job! I see it didn't take you long!
Yep, it took me all of two hours to become impatient :)
hayhayday wrote:
Tue Jun 30, 2020 7:34 pm
Discover likes thin\clean files and offers double cash back for the first year - 2% everything and 10% in rotating category. If you dont qualify for the standard product they usually offer a 2nd tier one with normal rewards but high apr which shouldnt matter if you pif. Would be good stop gap\ credit builder for a year when you should have much easier time getting higher tier accounts
Thanks, I appreciate the feedback; I'll have to check out some of the Discover cards.
Beach wrote:
Wed Jul 01, 2020 10:05 am
Citi Double Cash has been a great card, 2% back on everything. No idea if I would have been denied if my credit wasn't great
Yes, it seems great to me too! :sharebeer

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