Why Clark Says You May Need To Shop for a New Credit Card

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When was the last time you took inventory of your credit card spending habits?

It turns out that many Americans may be using the wrong type of credit cards these days.

Swiping the wrong credit card for a purchase could cost consumers in a number of areas, including:

  • Interest owed on the purchase
  • Rewards earned on the purchase
  • Fees for making the purchase

On a recent episode of his podcast, money expert Clark Howard warned consumers that they may need to shop for a new credit card based on their financial situation.

In this article, we will walk through some of the things you need to consider when assessing whether you have the right type of credit card. And, if you don’t, we’ll help you determine the best place to shop for a new one that fits your needs.

Be Honest: Are You A Net Payer or Not?

The most important step in determining which type of credit card is right for you is being honest with yourself.

Do you pay your credit card bills on time and in full each month? No matter what? And do you have enough money in reserve to cover an unexpected expense without having to run a credit card balance to cover it?

If so, you’re what’s referred to as a “net payer.”

Clark says this type of consumer is a good fit for a rewards credit card. Whether it be with cash back or travel rewards points, net payers can actually make money off their everyday purchases by using a credit card and paying the bill in full each month.

But there’s a catch: Rewards credit cards typically carry a high-interest rate (many times 25% APR or more!) as a way for the bank to offset these rewards. So being sure you’ll pay them off each month is a must.


“If you’re a net payer, rewards cards can be fantastic because the interest rate doesn’t matter.”

Clark says a 2% cash back card, such as the Citi Double Cash® Card, is a great place to start your card shopping if you’re new to the rewards game. It’s like getting two cents back on every dollar you spend.

Clark carries several rewards credit cards in his wallet. One of his favorite cards is the Capital One Venture X Credit Card, which helps him earn rewards on everyday purchases and offers airport lounge access during his frequent travels.

“It’s one of those areas that is a guilty pleasure,” Clark says. “Because I’m getting those rewards off of other people’s expenses: the merchants and the other people who run balances. But that’s the way the game works.”

Balance Carriers Should Do This Instead

Rewards credit cards are a bad idea for consumers who carry credit card balances. In fact, running balances with rewards cards could actually cost hundreds of dollars per year in interest payments.

Clark says paying 25% APR interest for 2% rewards is like chasing fool’s gold.

“Forget the rewards if you’re running balances,” Clark says. “Rewards credit cards are so rewarding for the right person, and so unrewarding for others. Don’t do it anymore. Don’t make the bank rich.”

If, after an honest assessment of your finances and payment history, you determine that you’re likely to carry a credit card balance at some point … you need to take a different path forward.

You should consider applying for a new credit card with a low, fixed APR.

Clark says credit unions are a great place to shop for this type of credit card. You’re likely to find a credit union that offers a fixed interest rate that can be less than half of what a rewards credit card would charge.

“Their business model is to serve their members,” Clark explains. “And so that’s why the interest rate on a credit union credit card is normally going to be half what it is from a bank. The bank is using it as a giant profit center, but the credit union is just trying to cover write-offs and run that credit card operation at what’s ultimately breakeven.”

Other Issues That May Require Shopping for a New Credit Card

If you have a good handle on your status as a net payer or balance carrier, that doesn’t necessarily mean you have the perfect credit card for you.


There are some other concerns that could make you a candidate for shopping around:

  • Are you paying a hefty annual fee for a credit card? The benefits you’re receiving may not be worth it. It’s worth taking the time to add up the value of your rewards and benefits and comparing it to the annual fee you’re paying. If you’re not seeing a good value, you may want to consider switching to a no annual fee credit card instead.
  • Do you travel outside of the United States often? Swiping a Visa or Mastercard has become a popular and convenient replacement for exchanging cash currency before and after a trip. But which credit card you use to make your international purchases matters. You’ll need a card that has no foreign transaction fees to avoid paying a 3-5% penalty on each purchase you make outside of the U.S. (Bonus tip: Make sure you pay in the local currency when swiping your credit card. This will help you avoid more unnecessary conversion fees.)
  • Does your rewards credit card match your spending habits? If you’ve determined that using a rewards credit card is right for you, there may still be some card shopping to be done. You’ll want to maximize your credit card rewards by having a card that rewards the areas you spend the most. This is why Clark recommends a flat rate cash back card, but you can supplement that with a card that pays more in spending categories like gas or grocery shopping.

Have you shopped for a new credit card recently? We’d love to hear how it went in the Clark.com community.

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