A credit card is one of the most convenient financial tools that you own. You can make large purchases without needing to carry around large quantities of cash. You don't have to constantly run to the ATM to pay for your groceries, and they make online purchases a cinch. Perhaps the best reason for doctors to use credit cards is that they offer valuable consumer protections and rewards.
However, just because they’re convenient doesn’t mean they are without dangers. Credit cards charge massive interest rates and fees, and if you're not on top of your payments, they can quickly spiral into tens of thousands of dollars worth of debt, even for a high-income professional. Make sure you pay your balance in full every month to avoid that catastrophe. In fact, if you find yourself paying interest on a credit card more than once or twice in your life, you will probably be better off just cutting them up and using cash, checks, and debit cards.
By choosing the right card or cards, a doctor or other high earner can maximize convenience while potentially saving money on purchases or earning free travel, making it worth the effort to find the right card for your situation.
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Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
You Spend More When You Use Cards
Before we get into discussing specific categories of cards, another warning seems appropriate. Besides the rather obvious warning that credit cards should not be used for credit (think of them as convenience cards), you should also know that you are likely to spend more if you do your spending with credit cards. This can be very helpful if you are a chronic oversaver with spending anxiety, but if you are struggling to get your savings rate up to 20% or higher, you might not want to use a card at all. Psychological studies show that our spending goes up when the pain of parting with our hard-earned dollars goes down.
Now, if you're OK with these two risks (as Katie and Jim Dahle are since they put almost all of their spending on credit cards), let's talk more about specifics. Here are some of the best credit cards for doctors who are looking to take advantage of everything those little pieces of plastic can offer.
Cash-Back Credit Cards
Cash-back credit cards are among the cards that are easiest to use. Whenever you swipe your card, you’ll get some money back.
What Are Cash-Back Credit Cards?
Cash-back credit cards are cards that reward you with simple cash every time you make a purchase. Typically, you get cash back equal to a percentage of your purchase. You can then redeem that cash back for a statement credit against your card balance or a direct deposit to your bank account.
Like rewards credit cards, cash-back cards typically come in two forms: category-based and flat-rate.
How Much Money Can You Get from Cash-Back Credit Cards?
The amount that you can earn from a cash-back credit card depends on the type of card you choose.
For a flat-rate credit card, 1.5% cash back is pretty standard. There are some cards that offer as much as 2% back on every purchase.
Category-based cards offer higher earning rates. It’s not unusual to see 3% or even 5% cash-back rates for category-based cards, and some can go even higher.
If you’re willing to carry around multiple cards and put in the effort to use the right one at every type of store, you could earn 3% or more on average. Depending on how much you spend each month, that can be big savings.
Who Should Consider Cash-Back Credit Cards?
Cash-back credit cards are a good choice for people who like to keep things simple. Cash is the most basic form of reward there is. There’s no need to worry about getting the best value for your points or anything like that. Instead, you can simply consider the cash you earn as a small nest egg to put toward an exciting purchase or a discount on everything you buy.
Best Cash-Back Credit Cards for Doctors
The best cash-back credit card depends on your willingness to put in the effort to maximize your rewards.
If simplicity is the goal, there’s nothing wrong with getting one flat-rate cash-back card with the highest possible rewards rate.
If you’re looking to max out your earnings, think about the kind of places that you shop and look for category-based cards that offer high rewards rates at those types of stores. If you fill your wallet with two or three cards that give you higher rewards at the stores you shop at most frequently, you can earn more than you’ll get with a flat-rate card.
Travel Rewards Credit Cards
Travel rewards cards give frequent travelers the opportunity to earn free travel and to travel in style.
What Are Travel Rewards Credit Cards?
Travel rewards credit cards offer their customers a variety of travel-related perks and rewards. When you use them, you may be able to get credits toward common fees, like checked bag fees. You also can earn rewards that you can put toward future flights or hotel stays.
How Do Travel Rewards Credit Cards Work?
Travel reward credit cards usually come in one of two forms:
Co-branded cards are created with a partnership between a specific travel brand and a credit card issuer. Usually, these cards will be branded with the hotel or airline’s name. These cards offer rewards that are tied to that brand, usually as airline miles or hotel points. However, they also offer perks like hotel status, free stays, seat upgrades, etc. They’re a good choice for people who are loyal to a specific travel brand.
Generic travel cards are not tied to a specific hotel or airline brand. Instead, they usually offer rewards in the form of more generic points. You can often transfer these points to a variety of travel partners or redeem them for flights and hotel stays through the card issuer’s travel portal.
Who Should Consider a Travel Reward Credit Card?
Travel reward credit cards are, of course, best for people who like to travel a lot. They can offer perks that help you save money on vacation or earn free trips. If you don’t travel very often, a more generic rewards card or cash-back card will likely be a better choice.
Best Travel Rewards Credit Cards for Doctors
The best travel rewards credit card depends on your travel habits.
If you’re loyal to a specific hotel or airline brand, getting a branded credit card is a great idea. They can accelerate you toward earning status with that chain and offer great benefits like free nights or seat upgrades.
If you just like to travel as inexpensively as possible or you don't need to stay at the same hotels or use the same airlines, go with a more generic travel card.
Reward Credit Cards
Rewards credit cards tend to have lower fees (often no fee) than premium cards with more of a focus on rewards than perks.
What Are Reward Credit Cards?
Rewards credit cards, as their name implies, are cards focused on rewarding you for using them. Each time you use a rewards credit card, the issuer will give you points that you can use for rewards.
Many rewards cards have low or no annual fees. But they also lack the perks offered by premium credit cards.
Rewards credit cards typically fall into one of two types:
Category-based cards offer differing rewards rates based on the type of purchase made. Some cards have categories that change every so often while others have fixed categories. For example, you might get a card that gives you 3x points on groceries, 2x on gas, and 1x on everything else.
Flat-rate cards give you the same rewards rate on every purchase, such as 2% back on everything you buy.
Flat-rate cards have the benefit of being easier to deal with. There’s no need to worry about which card to use to earn the most rewards. However, category-based cards can earn you two or three times more than the best flat-rate card if you use them at the right locations. You just have to remember which credit cards are best for which purchases.
What Kind of Rewards Do Credit Cards Give?
Rewards credit cards usually award you credit card points. These points are like a currency with a variable value. Card issuers often let you redeem these points for a variety of things, ranging from flights and hotel stays to merchandise, gift cards, or cash.
Some card issuers also let you transfer your rewards points to hotel or airline loyalty programs.
The nice thing about rewards cards is that there are sometimes redemptions that offer great value. If a point is typically worth one cent, you might be able to find some opportunities where you can redeem points at a much higher value.
The drawback is that finding these opportunities can be difficult and that it can often be hard to understand the true value of your rewards balance.
Who Should Consider a Reward Credit Card?
Rewards credit cards are a great choice for people who want to have flexibility around the rewards they earn from their credit cards. You can use credit card points for all sorts of redemptions or even turn them into travel rewards, making these cards highly flexible.
What Kind of Reward Credit Cards Should Doctors Use?
Doctors should focus on rewards credit cards that offer the best earning rates for their spending habits. If you shop at a number of different businesses, consider a flat-rate card. However, if you shop at just a few specific stores, look for a high-earning category-based card that offers bonus rewards where you shop.
Premium Credit Cards
Premium credit cards are popular with many people for the perks they offer, but it’s important to make sure you’re getting your money’s worth.
What Is a Premium Credit Card?
A premium credit card is a credit card that offers exclusive benefits and perks at the cost of a high annual fee. These perks can be impressive, letting you travel in luxury, getting credits toward various offers or items, and earning immediate status with hotels and airlines. However, the fees often reach as high as $500 or more per year. Perhaps most famously, The Black Card by American Express, which seems to function more as a by-invitation-only status symbol than a credit card, charges a $10,000 application fee and a $5,000 annual fee.
These cards do offer rewards, but those are usually secondary to the perks they provide. They’re definitely not for everyone, and you’ll need to have strong credit to qualify.
What Are the Benefits of Premium Credit Cards?
Premium credit cards have many benefits.
The primary reason to get one is for the perks and opportunities offered. Common perks of having a premium credit card include:
- Access to airport lounges
- Credits for airline fees
- Credits for travel programs like TSA PreCheck or Global Entry
- Airline and hotel status
- Concierge services
- Large sign-up bonuses
Who Should Consider a Premium Credit Card?
Premium credit cards are designed for a specific type of person. Their high annual fees and credit score requirements mean that they’re largely aimed at people who are doing well financially.
However, just because you can qualify for a premium credit card doesn’t mean you should apply for one. These cards usually have lackluster reward structures compared to less expensive cards. That means that it’s important to make sure that you’ll take advantage of the perks the card provides.
For example, imagine a card with a $500 annual fee. You want to make sure that you get at least $500 worth of value out of the perks, like fee credits, airport lounge access, and hotel status. Most premium credit cards revolve around travel, so if you’re a frequent traveler, it’s easy to get more value than the cost of the annual fee. If you only travel once or twice a year, these cards might not be a great fit.
Best Premium Credit Cards for Doctors
Choosing the right premium credit card can be hard, but remember that most revolve around travel perks. The precise perks they offer vary, so it’s important to compare the cards available and choose the right one for your situation.
Credit Cards for Physicians Who Own Their Own Practice
If you have your own practice, that opens up the world of business credit cards.
Business credit cards are aimed at companies, and they typically offer benefits that are more applicable to businesses than individuals. They also offer rewards on purchases that are more common for business owners, such as at office supply stores.
You’ll want to base the business credit card you choose on the size of your practice and the type of items it buys. However, these cards offer very lucrative signup bonuses and ongoing rewards, so they’re very much worth getting if you’re eligible.
As a general rule, business credit cards offer lower rewards than personal credit cards. It can also be difficult to get credit limits as high as your business may need. Some of the business cards The White Coat Investor has worked with over the years have offered credit limits that are a tiny fraction of our monthly earnings and repeatedly refused to raise them.
What Kind of Credit Cards Should Medical Students and Residents Use?
If you’re a medical student or resident, your priority is likely to keep your costs low. That means a no-fee rewards credit card or a cash-back card is likely the best choice. Focus on cash-back cards that offer a reasonable rewards rate without charging annual fees.
If your credit history, or lack thereof, is making it hard to qualify for rewards credit cards, consider student cards or secured credit cards. These are much easier to qualify for and can help you start building your credit score. Remember that you do not need to carry a balance to build credit. Putting one purchase a month (gasoline? subway fare?) on the card over the course of a couple of years will likely give you good enough credit to obtain a mortgage.
Credit cards are powerful tools, but it’s important to use them properly, ensuring that you always pay your balance in full. If you can avoid paying interest on your credit card balances, signing up for a rewards card can be a great way to save money or earn points toward future vacations.
The White Coat Investors has partnered with CardRatings for our coverage of credit card products. The White Coat Investor and CardRatings may receive a commission from card issuers.