Best Credit Cards for Parents of Young Kids

Having young children is an enjoyable, challenging, and expensive time of life. If you are going to be spending so much money, why not try to get cash back, points, or other credit card perks? If used wisely, credit cards can save you a ton of money by generating extensive rewards on your normal everyday spending.

That is, if you have the right credit cards.

Best Credit Card Tips for Parents with Young Kids

Before you run off to apply to every credit card company under the sun, you need to know what to look for in your next credit card. Each situation is different because every family spends money in different ways. Knowing your own family’s spending habits is key.

Criteria for Selecting a Credit Card

Here are some criteria to consider when picking out a credit card:

• No annual fee (unless you will get significantly more rewards than on other cards and the difference is worth the annual fee).
• Rewards make sense for your family’s spending.
• One card that covers 90% of your spending needs is better than five cards covering 95% of your spending – make your life as simple as possible.

How Many Credit Cards to Juggle

Theoretically you could carry 16 different cards around for each specific spending situation. Card A is for the grocery store. Card B is for the toy store. Card C is for gas.

But that is complicated. You’d have to keep a laminated chart in your wallet or purse to remember which card goes to what store.

That having been said if you think two cards will give you the best possible return on your spending there is nothing wrong with that. Having a couple of cards to maximize your returns can make sense, but only if you can handle it. You are shooting yourself in the foot if you get three new credit cards and can’t handle the responsibility. You’ll likely end up with credit card debt that wipes out all of your rewards and cash back.

Target Specific Stores or Categories

If you only fill up your gas tank once per month then a gas rewards credit card isn’t going to do you much good. Target the categories that you spend money on the most. For young parents this is likely things like groceries, pharmacies, and general spending at stores like Wal-Mart and Target.

3 Credit Cards for Parents of Young Kids to Consider

Here are three cards to choose from to help you earn great rewards while having young kids.

Fidelity Rewards American Express Credit Cards

American Express offers a handful of cards that are tied to the brokerage company Fidelity. These cards offer 2% cash back on all spending. That cash back can be deposited into a Fidelity investment account, a 529 account for your child’s education costs, or a retirement account. If you choose the investment account the money can be withdrawn easily. You have to wait until you spend $2,500 and earn $50 in rewards before the money is deposited, but they allow you to set up automatic transfers so every time you hit the $50 cap it transfers into your account.

This card gives a healthy cash back amount for all of your spending. It is a great general purpose card for those times that you don’t have a rewards card tied to a specific type of spending.

PenFed Platinum Rewards Visa Card

PenFed Rewards cards are certainly one option to consider. Pentagon Federal is a credit union you can join if you are a member of a couple of specific organizations:

• You work for the US government or are in the US Military (or are roommates with someone who is).
• You work for specific organizations that have teamed up with PenFed in the local area.
• You join one of two other organizations: Voices for America’s Troops or the National Military Family Association; the former has a $15 one-time fee and the latter has a $20 one-time fee.

The rewards card is fantastic: 5 points per dollar spent on gas, 3 points per dollar spent on supermarket purchases, and 1 point per dollar on all other spending. Points are worth 1 cent, so the 5 points per dollar on gas is like getting 5% cash back. (You can convert points into gift cards including Visa gift cards that you can spend anywhere.)

TrueEarnings Card from Costco and American Express

If you are a young parent you might just have a membership to Costco. Buying in bulk can reduce your costs if you actually use everything you buy. Costco only takes cash, debit cards, or AMEX. They have teamed up with AMEX to offer the TrueEarnings card. It is an AMEX credit card and Costco card combined. You get 3% back on gas at all US gas stations (including Costco) up to $4,000 per year in purchases, 2% back at US restaurants, 2% back on travel, and 1% back on all other purchases. There is no annual fee as long as you pay your Costco membership.

Which card seems right for you? Leave a comment!

Kevin Mulligan is a debt reduction champion with a passion for teaching people how to budget and stay out of debt. He's building a personal finance freelance writing career and has written for RothIRA.com, Discover Bank, ING Direct, and many others.

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