The financial challenges of a resident physician’s family are unlike that of any other profession. Starting out in a new career and trying to establish oneself financially is stressful enough, but tack on to that six figures of debt and you are facing an uphill battle. After four long years of forgoing many of life’s pleasures for the sake of education, income is finally streaming in. Along with that income will come a plethora of credit card offers. While credit cards can be a key element to achieving your financial goals, what is the best card for medical residents?
Residency is a pivotal time for establishing strong fiscal habits and setting yourself up for long-term financial success. Credit cards provide invaluable opportunities to this process, including earning rewards, fraud protection, building credit, an easy way to track spending, and peace of mind in emergencies. Offers are alluring by design, but if they don’t align with your needs and goals, they can wreck your finances. Responsible use of a fitting card can set you up for financial freedom and opportunities, such as owning a home or practice.
While many credit cards appear similar, subtle nuances can have big financial repercussions. For example, paying on a large balance for an extended period can result in hundreds, if not thousands, in interest savings, with even a 1% difference in APR. If your goal is to pay off a major purchase or debt with no interest, many cards offer an extended 0% introductory offer on purchases and balance transfers. Other cards offer rewards you can redeem for cash, miles, hotels, or products.
Best Card: Overall
When it comes to the overall best credit card for medical residents, the most beneficial features to look for are introductory and ongoing APR, rewards, and late penalties. The National Institutes of Health Federal Credit Union (NIHFCU) Signature Cash Rewards card mixes a little of all these features into a comprehensive card designed for the young physician. With the 15-month, 0% introductory APR on purchases and balance transfers, you can pay off a major purchase or pay down debt without the burden of interest for over a year.
This card also offers simple, yet lucrative rewards that you can redeem for cash, gift cards, merchandise, travel, or charity donations. Rewards cards can be more hassle than they’re worth when factoring in limitations such as changing categories, registration, and redemption restrictions. The NIHFCU Visa Signature Cash Rewards card offers tiered rewards categories, but without registrations or restrictions.
What sets this card apart from the pack is the relatively low post-introductory APR of 10.99% to 15.99%, variable. This is compared to the rates of other leading cards with similar features between 12.99% and 24.99%. Two percentage points may sound insignificant, but can add up to thousands in interest savings over the life of the card.
The NIHFCU Signature Cash Rewards card assesses a fee for late payments, but does not impose a penalty APR, which can raise rates up to 29.99%, skyrocketing interest charges. The residency years are hectic, and life happens, so this perk can be an invaluable insurance policy.
If your credit history is young, your odds of approval are greater than most cards with similar features, as you only need fair credit. The only real drawback to this card is the 1% foreign transaction fee. However, unless you do extensive overseas travel with this card as your only option, the other benefits far outweigh this caveat.
It’s important to note that, while this card is the all around winner, each family is unique in their financial status, needs, and goals. The most important factors to consider when researching a credit card is how you will use it and what you hope to get in return.
Best Card: Rewards
If rewards better fit your lifestyle, the Citi Custom Cash card offers 5% cash back on purchases in your top spending category, then 1% on all other purchases. This card also comes with a $200 cash back bonus after spending $750 in three months. Late penalties in the form of a 29.99% APR and a $40 late fee are the drawbacks to this card, but autopay can be a straightforward solution.
Best Card: Longer Payoff
If you need longer than 15 months to pay off a debt or purchase, the Citi Simplicity card extends its 0% introductory APR offer to 21 months, giving almost two years of relief from interest. Plus, this card has no late penalties. The only tradeoff is no rewards.
Choosing the best card to use during medical residency can seem like one more complex task to check off, but following the above guidelines with clear goals in mind can help navigate the sea of offers to find the best fit for your needs.