Sorry for the long post, started typing and went a little crazy. That said, I hope this helps.
My wife and I have three cards: Southwest, Premiere Disney Visa and Discover. While, I am not a financial expert, but I have tried to educate my self about being fiscally responsible.
We got the southwest card almost 10 years ago. When I got it, we were living closer to an airport that southwest flew out of and regularly traveled for work. We got tickets very frequently and many times sold them back to our small business for cash. It was great. Since moving outside Richmond, VA, we rarely travel with southwest.... though that may change when the merger with airtran is complete.
At this point we have only kept the card for the credit history, more about that below.
I got the Disney visa when they were offering 12 months no interest on all purchases. We use it mainly to finance Disney trips (6 month interest free) and use the rewards to help offset the cost. We switch to the premier card as soon as it was offered. which yields us more bonus points.
In the last 2 years, we have made our discover card.... and now the discover it card our most used. The rewards it consistently offers are higher then the disney card. In some cases up to 5x rewards. Last year they had a promo where all online purchases over the holidays got 5% rewards. We typically do all our christmas shopping online, and the bonus was especially welcome.
My personal credit card advice is to use a card that matches your buying habits. If you shop at a retailer a lot.... you may be better off with their credit card (like disney,
amazon, target, etc) as the highest rewards are when you shop at that store. Otherwise a good general card is your best bet. You also need to keep in mind how you choose to pay your balance vs complete payoff each month. If you choose to carry a balance, you need to be aware of the APR. Some cards have really really high interest rates.
I also want to chime in about credit score, since it will determine so much about you financially... and also tell so much about you. Basically, a credit score tells a few things about you: first are you a financial risk, second do you pay your bills on time, third, what is your credit history, fourth do you have any bad debts, and finally what is your credit to debt ratio. Those 5 things are the majority of what makes up your credit score. There is one other thing.... how frequently do you request credit checks for new accounts.
Keep in mind, it isn't always cut and dry what does and doesn't yield higher scores. I have heard from some "experts" that carrying a balance is better... others advices against. Basically a lender wants you to pay on time so they get the money back for the loan. Although a Credit card company puts a higher value on those who keep some balance. I have heard of people who have gotten their card canceled for never keeping a balance. It isn't common, but it can happen.
Your score fluctuates. For example, when you ask for a lender to check your score, it can dip a little. Too many requests in a short period of time can really add up. Also, when you establish a new line of credit it will dip a little, But as you prove to be a responsible person to lend money to your score comes back stronger.
Personally I think the other factors are just as important towards your score. So here is my advice to getting a higher score.
First, always pay your bills onetime. It doesn't have to be a complete payoff (although that saves interest). Paying your bills shows that you are a safe bet to lend money to. Consequently, not paying on time can raise your interest rate, cause late fees and many other unpleasant results.
Second, don't cancel cards. Even when you don't use them any more. Having well established history of credit is very important. Rather then cancel it, just stop using it. If it has a fee, and you aren't using it, ask if the fee can be waived. Sometimes they will let you put it on hold, where the account is still active, but you aren't actively using it.
Third, your credit to debt ratio. This one isn't thought of as much but it can be a big deal to credit card companies and lenders. Having 5 cards each with $1000 limits and the total owed across all of them is $4000 means you have and 80% debt ratio. On the other hand if you have 3 cards with $4000 limit each and you have the same $4000 debt across all the cards means you only have 33% debt ratio. This is important to lenders. They don't want customers who are going to have multiple cards that are always maxed out. Basically this could mean that they don't get paid.
Fourth, periodically, you should review your credit report. If there are mistakes call the company who put it there and work to resolve it. Get those things off the report. That can help heal your score. This is especially important before making a large purchase.... like a mortgage. It is shocking the difference alf an interest point can make on your mortgage when you factor it in over 30 years.
Last, in my opinion, the difference between people who have really high credit scores and the typical 650 score, is the ability to say no. "if you sign up for our card you can save 5%" can be appealing now, but doesn't mean it is helping your credit report. Too many credit inquiries can say to lenders that you are too reckless with your finances. Not that you can never request credit... just be smart.
Ultimately, you need to protect that score. It will follow you around for the rest of your life and can dictate so much about you. Having a really good score can open a lot of doors and save you a lot of money.
